Money Laundering Questions

Commonly asked questions about Money Laundering

Here are four commonly asked questions in relation to anti-money laundering procedures.

1. I understand that a report has to be made if there is knowledge or suspicion of a Money Laundering offence taking place but what is knowledge or suspicion?

Knowledge is:
• actual knowledge
• shutting your mind to the obvious
• deliberately refraining from making enquiries (although bear in mind the offence of Tipping-Off)
• deliberating deterring a person from making enquiries, the content of which one might not care to know
• knowledge of circumstances which would indicate the facts to an honest and reasonable person

Suspicion is:
• not defined in legislation, but is more definite than speculation but less than proof or knowledge • must be based on some evidence even if that evidence is tentative
• it is therefore subjective. It should be highlighted that generalised assumptions, such as ‘not all cash takings are ever declared in cash businesses’ would constitute speculation and not suspicion and are therefore not reportable unless there is a specific concern.

There can be no hard and fast rules on how to recognise money laundering. It is important for all individuals to be alert to this issue and to apply their professional judgement and expertise – or if they lack expertise, to seek appropriate advice preferably from the Money Laundering Reporting Officer (MLRO). Whether to make a report is very much a subjective decision. You have to base this on the information you have available at the time and use your professional experience.

2. What happens once an external report is made to SOCA?

When the Serious Organised Crime Agency (SOCA) receive a report from a MLRO that involves accounting or tax issues it will be passed to a special intelligence unit within HMRC. This unit will consider whether it is suitable for investigation towards criminal prosecution and failing that then the report will either be considered for enquiry under a Civil Code of Practice or be referred to HMRC’s Centre for Research and Intelligence in Llanishen, Cardiff.

Where it is considered appropriate to pass intelligence on to relevant staff in taxpayer-facing offices neither the fact that the intelligence has come from SOCA, nor the identity of the original source of the intelligence, is disclosed.

Finally, it is important that all reports are considered for submission to SOCA and there is no de minimis limit. The reason for this is simply to enable SOCA (and HMRC thereafter) to accumulate reports from a variety of sources to support proceedings.

3. If at an initial client meeting (.i.e. before I formally act for the client) I have suspicions that a money laundering offence has taken place should I make a report?

A report should be made if, during the course of your work, you have knowledge or suspicion that a money laundering offence has taken place.

The important part here is ‘during the course of your work’. Therefore provided you have sufficient information to make a report then this should be done. If you decide not to make a report to SOCA then you should still document your decisions for not doing so as with other clients.

4. If the MLRO doesn’t make a report to SOCA when they should have, who is liable – the firm or the MLRO?

It is the MLRO’s responsibility to make a report to SOCA not the firms. The MLRO is personally liable if reports of valid money laundering suspicions received from members of staff are not reported to SOCA.

Anti-Money Laundering Online Training

If you want to learn more about anti-money laundering please review our
online training course on anti-money laundering regulations.