Skip to Main Content
Get started
Legal & Financial

Money laundering and contracting

Last updated: 31 March 2022

Money laundering and contracting

On the face of it money laundering and contracting seem miles apart, but they are in fact too close for comfort. Money laundering – the process whereby criminals conceal, transfer or seek to retain the proceeds of their crime – comes under the Proceeds of Crime Act 2002. Because money laundering encompasses criminal acts (and tax evasion qualifies as a criminal act) accountants (and others) have to report any concerns to The Serious Organised Crime Agency (SOCA). If an accountant thinks that a client should be paying taxes but the client disagrees the accountant has no choice but to report it or become liable.

In particular, firms (such as accountants, estate agents, service companies and others) must have specific systems and reporting obligations in place in respect of money laundering or face criminal prosecution, fines and even imprisonment. And it is not just firms that are under scrutiny. Individuals who suspect money laundering also have reporting obligations or risk committing criminal offences. Similar obligations apply in relation to funds that are intended for financing of terrorism.

In April 2006, SOCA took over the functions of the National Crime Squad (NCS), the National Criminal Intelligence Service (NCIS), and the role of HMRC in investigating drug trafficking and related criminal finance and some of the functions of the UK Immigration. It is a very powerful agency.

Accountants cannot claim client confidentiality and they must not “tip off“ their client that they are going to report them. What is more this also includes past activities and the activities or related third parties too. Perhaps a new accountant thinks a client should have been subject to IR35 in the past but the old accountant failed to spot it? By law the new accountant should still report it. These are serious pressures for accountants, as they have no choice but to follow the law. Of course a good accountant will make sure you stay within the law and fully understand IR56 and IR35 amongst other issues.

Popular articles