Money Laundering

Do you ever feel a deep sense of frustration when asked to supply utility bills, passports, birth certificates etc etc to prove to people who often know you well, that you are who you are and not some drug baron or mafia boss? Me too.

However, there is some sense to this apparent madness. It is all in the interests of people who pay taxes and comply with the rules of our society and is aimed at those who do not.

Money laundering is the process where money obtained by illegal means is moved about to conceal where it came from and to give it the appearance of coming from a legitimate source.

Let me give you an example. A plumber works for a company during the week but does jobs ‘on the side’ for cash at weekends. He builds up £120,000 and instructs a solicitor to buy a house using this money. The house is rented out to tenants and is then an apparently legal source of income.

However, the property and the income from it are both criminal and the solicitor and plumber have, in fact, committed a crime.

A solicitor who fails to check identities properly (back to utility bills, passports etc etc) and/or does not report any suspicion of money laundering to the relevant authorities can be sent to prison. Yes, some solicitors have already suffered this fate.

These anti-money laundering laws don’t just apply to the legal profession. It is a criminal offence to accept money obtained illegally even if you do not know it came from illegal sources.

The problem with cash is that it may only be a couple of transactions away from criminal activity. Those transactions would not be traceable, effectively making the money ‘clean’. The government has taken advantage of the fact that fewer and fewer transactions take place using cash and want to clamp down on money laundering.

The Money Laundering Regulations state that any business dealing in goods or services accepting about £10,000 cash or more for any single transaction is considered to be a High Value Dealer (HVD) and must be registered with Customs. Failing to register is not, in itself a criminal offence but you could face a civil penalty of up to £5,000.

Custom Officers can search your premises and confiscate documents or any other items, including the cash, if they suspect money laundering. To get the money returned businesses must show the source of cash was legitimate.

There are two messages – think twice before accepting a large sum of money and try not to be frustrated when asked to prove your identity rather be pleased that the government is targeting the criminals amongst us.