The clean fight

The clean fight

HMRC discusses actions taken to tackle the threat to the accountancy sector from professional money launderers and how they impact the accountancy sector.

When we talk about crime, and the harm it causes to communities and individuals, money laundering is rarely more than an afterthought. It shouldn’t be; money laundering is key to organised crime. Without the ability to wash dirty money, criminals would struggle to further their operations and hide their assets. Money laundering underpins and enables organised crime.

What are professional money launderers?

Professional money launderers – or PMLs –are people who, for a fee, provide services to organised crime groups by laundering the proceeds of their crimes. They launder for multiple organised crime group and don’t concern themselves with how the proceeds were generated. In other words, they will just as happily launder for drug traffickers or human traffickers as they will for tax fraudsters.

Professional money launderers operate globally. They facilitate the movement of dirty money through multiple jurisdictions and are often based in countries where they (wrongly) think that they are out of reach of UK law enforcement. We also know they use multiple methods and schemes to hide the true source of funds. This includes using the expertise, skills, influence or access of others.

The impact on the accountancy sector

People working in regulated sectors, such as accountants, are of great interest to professional money launderers. By exploiting regulated and professional businesses or individuals, they can increase the veneer of legitimacy for their laundering techniques. They try to hide in plain sight and hope the system isn’t dynamic enough to catch them.

Through HMRC’s criminal investigations, we have identified several ways in which accountancy professionals can be used in money laundering schemes. For example, professional money launderers might utilise trust and company formation services to conceal the ownership of criminal assets and/or facilitate the movement of illicit funds through secrecy jurisdictions.

They may use criminally complicit professionals to falsify accounting through false bookkeeping or to create false documents in order to facilitate trade-based money laundering. For those individuals, in addition to using all the tools HMRC has to disrupt their activities, we are working with supervisors to share insight, intelligence and leverage other capabilities to make professional life for these complicit individuals extremely difficult.

However, we suspect that many accountancy professionals used by professional money launderers will likely be unaware of their role in facilitating multimillion pound money laundering schemes. In such circumstances, we don’t try to make life difficult for them. Instead, we want to focus on education, building understanding and helping professionals to spot professional money laundering exploitation and take the necessary next steps.

How to help the fight against money laundering

The more we know about professional money launderers, the better the accountancy sector can respond. The submission of Suspicious Activity Reports (SARs) is key to this. These reports are of significant value to HMRC, including in ways that are not immediately apparent. For example, we use all non-sensitive SARs as part of our routine risking processes, including our ongoing intelligence development against identified professional money launderers.

We are reaching out right across the regulated sector to reinforce the value of SAR reporting to help us build our understanding of professional money laundering networks. For more information about SARs and how to submit a high-quality SAR, visit the National Crime Agency’s SAR webpage at tinyurl.com/5639b6jc.

But we also want to listen to the experiences of the accountancy sector more generally and hear the thoughts and views of accountancy professionals themselves. Apart from SARs, are there other opportunities for the public and private sector to work together to tackle professional money launderers? Is there an opportunity to better use technology? Where should we focus our educational efforts, and can we do so jointly? We’d be really interested to hear your thoughts.

Suspicious Activity Reports

Suspicious Activity Reports (SARs) alert law enforcement to potential instances of money laundering or terrorist financing. SARs are made by financial institutions and other professionals such as solicitors, accountants and estate agents and are a vital source of intelligence not only on economic crime but on a wide range of criminal activity. They provide information and intelligence from the private sector that would otherwise not be visible to law enforcement. SARs can also be submitted by private individuals where they have suspicion or knowledge of money laundering or terrorist financing.

Who can make a SAR?

Persons working in the regulated sector are required under Part 7 of the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000 to submit a SAR in respect of information that comes to them in the course of their business if they know, or suspect or have reasonable grounds for knowing or suspecting, that a person is engaged in, or attempting, money laundering or terrorist financing.

However, even if you are not in the regulated sector, you may have an obligation to submit a SAR. You may commit an offence if you have ‘knowledge’ or ‘suspicion’ of money laundering activity or criminal property, do something to assist another in dealing with it, and fail to make a SAR.

If you’re unsure if your firm is in the regulated sector consult your regulator, professional body or trade association, or seek independent legal advice.

Submitting a SAR protects you, your organisation and UK financial institutions from the risk of laundering the proceeds of crime.

Make a SAR

The easiest way to submit a SAR is with the secure SAR Online system (see tinyurl.com/2j67j5nx). SAR Online is free, negates the need for paper-based reporting, provides an instant acknowledgement and reference number (reports submitted manually do not receive an acknowledgement) and reports can be made 24/7. Online reports will also be processed more quickly, particularly if a defence against money laundering is sought