1. Money laundering is where money obtained, because of a crime, is used to pay for services or goods. Although the term ‘money laundering’ is usually associated with organised criminal activities, it can include a suspicion that someone you know, or know of, is bene fiting financially from dishonest activities, e.g. non-payment of income tax.
2. People involved in handling criminal property look for ways to secure and safeguard the proceeds of their criminal activities. Al though other ways exist, cash is the mainstay of criminal transactions, being the most reliable and flexible, and having little or no audit trail.
3. Criminals often transport cash out of the UK using couriers, usually through airports, to pay into banks overseas. They use this money to purchase property abroad, or to pay to their families.
4. In the UK, the most popular method of money laundering is thought to be the purchase of property, followed by investment in front companies, or high cash turnover businesses (often legitimate businesses) , or by funding a lifestyle. After property, the most significant assets bought by criminals are jewellery, artwork, antiques, cars and boats.
5. Criminals invest cash in financial products with a view to selling them quickly (if necessary at a loss). Criminals also use trusts to launder money because of their secretive nature and flexibility, often using front companies to hide identities. Gambling large amounts at relatively low odds is also used, since winnings are usually received in the form of cheque payments.
6. Criminals use ‘layering’ to confuse the audit trail. This involves passing transactions through several stages, often eventually bank ing the proceeds of business income and transferring the money overseas to a country whose regulatory regime is weaker.
7. Examples of money laundering can include:
large cash payments;
asking for cash refunds on credit card payments; or
overpaying bills, e.g. council tax or rates, then asking for cash refunds.
8. Appendix A details examples of possible situations involving exposure to money laundering and the proceeds of crime. Appendix B lists the current Money Laundering legislation.
9. There are three main offences:
Concealing: knowing or suspecting a case of money laundering, but concealing or disguising its existence.
Arranging: becoming involved in an arrangement to launder money, or assisting in money laundering.
Acquisition, use or possession: benefiting from money laundering by acquiring, using or possessing the property concerned.
10. There is also a ‘third party’ offence – failure to disclose one of the three main offences detailed above.
11. None of these offences are committed if:
the persons involved did not know or suspect that they were dealing with the proceeds of crime; or
a report of the suspicious activity is made promptly to the Finance Director.
12. Money laundering offences may be tried at a magistrate’s court or in the Crown Court, depending on the severity of the suspected
offence. Trials at a magistrate’s court can attract fines of up to £5,000, up to 6 months in prison, or both.
13. In a Crown Court, fines are unlimited and with possible prison sentences of between two to 14 years.
14. Our policy is to:
prevent, where possible, Shoreham Vehicle Auctions and its employees being exposed to money laundering.
identify the potential areas where money laundering may occur and provide staff with guidance and training to help prevent money laundering.
report all suspicions to the Finance Director – contact details below.
15. Responsibility for identifying acts of money laundering is moving away from government agencies and more towards organisations and their employees. The Shoreham Vehicle Auctions have assigned the following responsibilities for anti-money laundering measures our business: Account Manager
16. The Account Manager will review all reported money laundering allegations and decide whether the transaction / circumstances are suspicious. The AM will report suspicions to the National Criminal Intelligence Service (NCIS) and the Police, as appropriate.
17. It is each employee’s responsibility to remain vigilant and report any suspicions to help us prevent and detect money laundering. Failure to report a suspicion of money laundering may lead to disciplinary action. Furthermore, Solicitors and Accountants have a professional duty to report any suspicions of money laundering.
18. If you suspect a case of money laundering:
Do not tell the customer about your suspicions.
Report your suspicions immediately to the Accounts Manager as follows:
Julie Abrehert (Accounts Manager)
Telephone: 01903 851 200
Email: julie@shorehamvehicleauctions.com
Keep all records relating to the transaction(s). If you are unsure about what records or information to keep, please ask the FD
Examples of possible situations involving exposure to money laundering and the proceeds of crime:
- Any transaction involving an unusually large amount of cash should cause concern and prompt questions to be asked about the source. This will particularly be the case where the value of cash paid exceeds the amount due to settle the transaction and the person(s) concerned ask for a non-cash refund of the excess.
- If the person(s) concerned use trusts or offshore funds for handling the proceeds or settlement of a transaction. The reasons for this should be questioned.
- Care should be exercised, and questions asked, where:
A third-party intermediary becomes involved in a transaction.
The identity of a party is difficult to establish, or is undisclosed;
A company is used where the ultimate ownership of the company is concealed or difficult to verify; and/or
A party is evasive about the source or destiny of funds.
Please remember that the money laundering regime adopts an ‘all-crimes’ approach. While the above examples are largely concerned with significant transactions, money laundering offences may apply to a very wide range of more everyday activities within an organisa tion. For example:
being complicit in crimes involving the falsification of claims;
facilitating employment on which tax is not paid. All employees should be paid via the payroll. Advice about self-employed status should be obtained from HR prior to engagement.
Summary of current legislation and regulations
The legislation which embodies the UK anti-money laundering regime is contained in:
The Proceeds of Crime Act 2002 (POCA), as amended by The Serious Organised Crime and Police Act 2005 (SOCPA). POCA pro vides for civil recovery of the proceeds from crime.
The Terrorism Act 2000 (TA 2000) (as amended by the Anti-Terrorism Crime and Security Act 2001 and the Terrorism Act 2006). The TA relates to the proceeds of terrorism and terrorist financing.
The Money Laundering Regulations 2007. These are concerned with measures to restrict the opportunities for money laundering.
POCA and TA 2000 contain offences which may be committed by individuals or entities, whereas the 2007 Regulations deal with the systems and controls which businesses are required to have and contain offences which may be committed by businesses as well as the key indivduals within them.