Apologies for my prolonged silence – illness mainly.
You may have noticed this week that William Hill has been fined £6.2m for profiting from customers who may have used the proceeds of crime to fund their bets (and in some cases definitely seem to have done so). It appears that essentially the company has been done for failing to have adequate procedures in place to prevent suspicious behaviour, despite in some cases alerts being raised. Failing to deal with money laundering and problem gambling seem to be the two issues here.
The money laundering bit is interesting. Taking your ill-gotten gains to the bookies has to be one of the least-effective methods of laundering it, missing as it does the vital ingredient of any money laundering plan – getting the money back. You may as well flush it down the toilet quite frankly. I guess that’s where the problem gambling bit comes in. However, this case does highlight just how seriously the authorities take any breach of the money laundering regulations by businesses that should probably know better (well, definitely know better in this case).
From 26 June 2017, the legislation governing this stuff is the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, the 3rd and 4th words of which give you some clue as to why the government takes it as seriously as it does. Whilst those of us dealing with clients are subject to pretty rigorous regulation via our supervisory bodies, what you may not realise is that a lot of “normal” businesses also fall within the regulations and are required to register with HMRC for these purposes.
In particular, businesses that deal in cash transactions of €10,000 (just over £8,000) or more (received or paid) are required to register with HMRC and be supervised by them. That’s not a huge amount of money is it? And it doesn’t have to be one lump. Linked cash payments that together exceed the threshold fall foul also (an invoice for £9,000 paid in installments, for example).
I won’t bore you with what you have to do in terms of registering and keeping your nose clean after registration, but it boils down to putting in place policies, controls and procedures to ensure you know where the risks of money laundering activity are in your business, and reporting suspicious activity to the authorities. A lot of this revolves around customer due diligence and monitoring. Where did the cash come from originally?
The bottom line is that the penalties for a) not registering in the first place and b) not following the rules once you are registered are potentially enormous. There are both civil and criminal offences, and you could quite easily be unwittingly committing an offence under the Proceeds of Crime Act 2002 or the Terrorism Act 2000. The scariest part for most of us is that the person in charge of the anti money laundering activity in a business (often the business owner in a small business) can be PERSONALLY liable.
So if you suspect you should be registered but aren’t, or you are and don’t do it right currently – sort it out. Don’t leave it – HMRC will get round to you eventually.
Chris Martin is a chartered accountant and business advisor and has been helping franchisees create and grow wonderful businesses for over 20 years. He is a published author and has written extensively on franchisee tax issues. He passionately believes that whilst franchising is a deservedly successful business format, franchisees are often let down by their franchisors’ failure to offer support and guidance regarding the financial side of running the business. This leaves franchisees frustrated, overwhelmed and unable to grow their businesses to the extent they should. Chris has developed simple systems, support and guidance to ensure franchisees create businesses that provide them and their families the lives they so richly deserve.