ECSH51600 - High value dealer money laundering risks

The services, products and level of cash use in the high value dealer (HVD) sector can make HVD businesses attractive to criminals seeking to convert criminal proceeds into high value or luxury portable assets, which can be easily moved outside the UK or used to conceal the origins of criminally-derived cash. Common risks throughout the sector may present as, but are not limited to, the following:

The HVD may have made or received cash payments over the 10,000 euros threshold before being registered with HMRC.

Businesses may receive cash payments via couriers, intermediaries or directly from customers. The goods may be paid for overseas through a cash deposit without checking the origins of the cash or conducting relevant customer due diligence (CDD) or enhanced due diligence (EDD).

Businesses may accept cash for “off the record” sales with a view to evading tax liabilities and the payments are not therefore shown in the records.  These will invariably involve breaches of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (e.g. no CDD will have been carried out).

HVDs with multiple sites may have undeclared or unregistered sites which have made or accepted relevant cash payments due to poor staff training or unclear polices, controls and procedures (PCPs).

Further risks to consider within the sector.

Is there a genuine reason for taking large volumes of cash, especially if it is only from a few customers? Why do they pay cash when other customers do not?

Does the HVD receive cash from customers in countries that have cash limits in place for taking cash out of that country? If so, how did the customer have the cash to pay for the goods?

Is the HVD an online only business? If so, how does it receive the cash?

Is the HVD an alcohol wholesaler and if so, is it registered for the Alcohol Wholesaler Registration Scheme (AWRS)? A business is not allowed to trade in wholesale alcohol in the UK unless they are registered with AWRS.

Exported goods being paid via Informal Value Transfer Systems (IVTS)

IVTS, such as Hawala, are systems of money transmission which arrange the transfer and receipt of funds or equivalent value. It is often reliant on ties within specific geographical regions or ethnic communities.

These movements of value may be settled through trade or cash businesses engaged in remittance activities. They often operate in areas of expatriate communities.

IVTS can be used for legitimate purposes, like money remittances, but are also attractive for criminal ones. IVTS are concerned with the movement of value, without the need for money to be physically or electronically moved.

Further information on HVD risks can be found at the following links: 