We know that money laundering is a serious crime in the UK, but why do bookkeepers need to be registered for money laundering? In this article, we discuss the importance of money laundering supervision, and the repercussions for not complying with strict regulations.
So, why do bookkeepers need to register for money laundering? Money laundering is a serious crime in the UK with the risk of both imprisonment and an unlimited fine. As such, bookkeepers need to register for money laundering supervision to ensure compliance with strict regulations.
Read on to learn more about money laundering supervision, and why it is important for bookkeeping professionals.
- Why Do Bookkeepers Need to Register for Money Laundering?
- Who Has to Register for Money Laundering Supervision?
- What are the Money Laundering Regulations in the UK?
- What is the Punishment for Money Laundering in the UK?
Why Do Bookkeepers Need to Register for Money Laundering?
In 2007 (updated in 2017), regulations came into force to limit the risk of bookkeepers and accountants being used as ‘tools’ for money laundering. The law ensures that those in the industry are aware of such threats, and of their obligations in stopping them.
As such, there are now several obligations required of a bookkeeper in relation to money laundering regulations, however the most important is to be registered with a money laundering supervisor.
Bookkeepers and accountants must register with an anti-money laundering (AML) supervisor; a body granted supervisory authority by Parliament in accordance with the Money Laundering Regulations 2017, in order to ensure compliance and best practice.
Failure to register with an AML supervisor carries up to two years imprisonment and an unlimited fine.
Who Has to Register for Money Laundering Supervision?
All accountants and bookkeepers, both employed and self-employed, must register for money laundering supervision if they operate as an accountancy service provider. According to Gov.UK, this includes:
- Tax advisors and consultants
- Payroll agents
- Custom practitioners, freight forwarders, and similar businesses
- Professional bookkeepers
Gov.UK states that the services that these professionals provide can include recording, reviewing, analysing, calculating, and reporting on financial information for clients.
What are the Money Laundering Regulations in the UK?
As well as registering with an anti-money laundering supervisor, accountants and bookkeepers must also adhere to various other money laundering regulations.
In line with changes to money laundering regulations in 2020, accounting and bookkeeping professionals must now consider new high-risk factors when assessing the need for due diligence and enhanced due diligence, as well as seek additional information in some cases:
- If there are transactions between parties in high-risk third countries
- If the customer is a beneficiary of a life insurance policy
- If the customer is a third-country national seeking residence rights or citizenship in exchange for transfers of assets
- In cases on non-face to face business relationships or transactions without safeguards
- In cases related to oil, arms, precious metals, tobacco products, cultural artifacts, ivory, or other items of value that are protected, cultural, historical, or rare
Accounting and bookkeeping professionals must also comply with Customer Due Diligence (CDD). Professionals and firms must now update records relating to the beneficial ownership of corporate clients so that they can understand the ownership and control structure of their corporate customers, and record any difficulties encountered.
There is also E-Money Thresholds for CDD regulations in which accounting and bookkeeping professionals must comply with. Recent amendments to regulation 38 means that professionals can only forgo CDD in situations where:
- The maximum amount stored electronically is €150 (£125)
- The payment method used is not reloadable, or has a monthly limit of no more than €150 (£125), which can only be used in the UK
- The payment method is only used to purchase goods and services
- Anonymous electronic money cannot be used to fund the payment method
Reporting Discrepancies to Companies House
Regulation 30A requires accounting and bookkeeping professionals to report any discrepancies to Companies House in relation to the information in which they or their firm hold on their customers compared with the information held by Companies House.
Crypto Assets Activities
Accountants and bookkeepers that deal with crypto asset activities will now need to comply with MLRs, and ensure to register for supervision.
What is the Punishment for Money Laundering in the UK?
Money laundering offences are listed under Part 7 of Proceeds of Crime Act 2002. Principal offences can be categorised as a concealing offence, an arranging offence, or an acquisition offence. There is also a failure to disclose offence.
The punishment for money laundering in the UK carries a jail sentence of up to 14 years, or a significant fine. Of course, this depends heavily on the amount of money involved in the offence, and whether or not drugs are involved.
Bookkeeping Services in Essex
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