UK Stiffens Money Laundering Regime

by Jason Gorringe, Tax-News.com, London

01 March 2004

The UK's Money Laundering Regulations 2003 come into force today, applying to businesses dealing with high value goods, such as car dealers, jewellers, antique dealers, auctioneers and art dealers, as well as to professionals such as accountants and lawyers.

The regulations oblige firms to make reports when cash transactions with one client total more than GBP10,000.

PricewaterhouseCoopers Forensic Services department has predicted that the transition is likely to be most difficult for sectors which lack a professional or supervisory body, and therefore have less access to guidance and information. PwC Investigations and Forensic Services partner, Andrew Clark observed that:

"The extension of anti-money laundering laws leaves fewer loopholes for criminals to exploit. It will provide valuable additional information to the police, and prosecutions should rise. However, many businesses affected by the regulations for the first time will face an up-hill task to comply. Failure to do so may result in damage to company reputations and, possibly, in prosecution and imprisonment."

The regulations, which form part of the Proceeds of Crime Act 2002, have caused controversy, not least amoung the accounting and legal professions, as accountants will be obliged to report any suspicions that their clients have laundered money, or face a jail sentence themselves, no matter how small the amount involved.

Many professionals are deeply concerned by the new regime. President of the Law Society of Scotland, Joe Platt suggested that despite the fact that the Scottish legal sector was praised by the National Criminal Intelligence Service last year for the number of suspicious activity reports made, the UK's new anti-money laundering laws still present solicitors with problems. "The law penalises being up-front with your client and advising them that you are bound to disclose - tipping off the subject of a disclosure in this way is itself an offence," said Mr Platt. "So it could be criminal for a solicitor not to lie to his or her client if put on the spot - a remarkable state of affairs for a profession grounded in obligations of confidentiality and trust. Encouraging clients to be forthright, in my experience, often works in the interests of justice, but inhibiting clients could work very much against the interests of justice."

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