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May 2005
Anti-Money Laundering Legislation affects everybody not just people in the regulated sector

The Money Laundering Regulations 2003 came into force last year following The Proceeds of Crime Act 2002 which has in part been amended by The Serious Organised Crime and Police Act 2005.

Too often people wrongly think that this Anti-Money Laundering Legislation does not apply to them because they do not work in the regulated sector. How untrue is that? The legislation not only places very onerous obligations on people who conduct relevant business in the regulated sector but it also has significant ramifications for everyone. Regardless of whether you are involved in relevant business or not you are exposed to the offences of Concealing, Arrangements, Acquisition, Use, Possession and Tipping Off. It is true that people who are engaged in relevant business have the added concern of committing the offence of failure to report and therefore need to implement various internal controls and reporting procedures.

Many people who have taken the time to understand this challenging legislation express views that it is unworkable. My view is that it is not ideal and I often question why some business activities are considered relevant and others arenít. Nevertheless I support the endeavour Ė if people find it difficult to benefit from the proceeds of crime then they might not commit the crime. I certainly would like to see an end to the harmful effects of drugs trafficking, terrorism and serious organised crime. Whether this legislation will help or not we will have to wait and see. It certainly will not work if we donít try to make it work.

If you are unsure whether you work in the regulated sector you need to refer to the Money Laundering Regulations 2003. To help you I have re-produced the paragraphs which define relevant business which appear in this link. I urge you to give very careful consideration to whether you are engaged in relevant business. The definitions of relevant business confuse many people. An in-house client of ours, who was very keen to avoid being classified as an organisation that conducts relevant business, carefully introduced procedures to avoid receiving more than £9,000 in cash on the sale of cars. However they then had to consider whether they provided tax advice. Typically they illustrated to owner-managers of businesses the tax implications of purchasing cars as a private individual or as company cars, and the tax advantages and disadvantages of various lease options. The message is Ďbe very carefulí. If you are engaged in relevant business and you have not implemented procedures to 'forestall and prevent money laundering' you are committing an offence which needless to say is subject to penalties. If in doubt, take advice.

I have also re-produced Part 7 of The Proceeds of Crime Act 2002 incorporating the changes made to it by The Serious Organised Crime and Police Act 2005. You can download a copy of this document from our website.

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