Special Reports - Money laundering - The new money laundering rules - a special report

The new rules apply to 'everyday' crimes, and failure to get to grips with them could land you in jail, says Chris Quick.

If money laundering makes you think of fat gangsters in exotic tax havens with suitcases stuffed full of used dollar bills, think again.

The new money laundering rules, which require accountants to report suspicious client transactions to the authorities, define money laundering as possessing or doing anything with the proceeds of any criminal conduct.

This includes the proceeds of 'everyday' crimes such as theft, fraud and tax evasion - the sort of illegal activity that happens in even the smallest British town.

The rules are contained in the Money Laundering Regulations 2003, published last month and due to take effect on 1 March.

From then, providers of accounting, legal and certain other services will be required under the Proceeds of Crime Act - already in force - to report suspicions that their clients or others have committed money laundering offences. The rules impose new requirements on many accountants and threaten lengthy prison terms for non-compliance.


Rarely has an issue - and accountants have faced a lot of 'issues' in the last couple of years - sparked so much consternation.

Among the numerous questions that have arisen are: When should I be suspicious of a client? Do I have to report suspicions involving very small amounts? What exactly do I have to do? Can a client find out if I have reported them? What about accountants in business? Will I really end up in jail if I get it wrong?

The ICAEW, in an effort to provide its members with answers to these questions, has teamed up with Accountancy to put together this special report.

An article on p36 explains the thinking behind the rules and a four-page feature starting on p39 looks at what firms need to do to comply with them. On p46 we tell the salutary tale of a solicitor who failed to report a suspicious client and ended up in jail, while on p50 Treasury minister Ruth Kelly provides us with an insight into the government's aims. On p52 we take a look at the National Criminal Intelligence Service, better known by its acronym NCIS, the body to which accountants will have to file their suspicious transaction reports.

Yet to be resolved

Much still remains to be sorted out. Having lobbied for a de minimus limit and failed, the ICAEW and other organisations are talking to the authorities about how the suspicious activity reporting process will work in practice.

In addition, the final version of the Money Laundering Regulations 2003 included a provision which attempts to ensure legal professional privilege is not undermined, where it is encountered by someone other than the actual lawyer. However, the law on privilege is exceedingly complex, and doubts have been expressed on whether it will be effective in achieving even these limited objectives.

The ICAEW warns that accountants should not seek to rely on the provision without additional advice.

Those who plant their heads firmly in the sand rather than trying to get to grips with the new roles face a real risk of a jail sentence. The best way to avoid such a calamity is to arm yourself with knowledge - this is where this special report aims to help you.

This special report was jointly produced by the Accountancy editorial team and the ICAEW

Where to find more:

ICAEW website


Extensive guidance and useful links

Money Laundering Regulations 2003

(Statutory Instrument 3075)

Available free at www.hmso.gov.uk and www.accountancymagazine.com.

Look out for:

New CCAB guidance being produced before 1 March - look on icaew.co.uk.

The ICAEW is producing an anti-money laundering procedures and training manual. To find out more call CCH on 0870 777 2906

Coverage in forthcoming issues of Accountancy - to subscribe call 0870 2404388.

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