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HMRC internal manual

Money Laundering Regulations: Compliance

High Value Dealers: Basic compliance checks at a HVD

Some basic checks should be carried out to (a) establish the businesses trading circumstances and business model and (b) to confirm the credibility of the business.

In looking at the trading circumstances the following points should be covered.

* Who owns the business? Confirm the names of the directors or partners.
* How long has the business been trading? What are the operations of the business and what goods are sold?
* Who are the suppliers? Are they also HVDs?
* Who are the customers and how many are relevant customers?
* How credible are customers? If they are other businesses how long have they been trading? Is the customer another HVD and registered as such?
* Does the business have formal/written anti money laundering risk assessment and policies, controls and procedures?
* If visiting a new business and the Nominated Officer has previously been involved in a HVD ask what position he/she held and the reason for leaving. You would expect an experienced Nominated Officer to have a higher level of knowledge of MLR, POCA and Terrorism Act.
* How many staff are employed in the business that deal with customers making HVPs?

To form an opinion on the credibility of the business you should review company accounts. In particular.

* Are company accounts available for inspection?
* Who is the accountant and how much is charged for accountancy services?
* How profitable is the business year on year? Is it commercially viable?
* What is the cash turnover of the business? Does this reconcile with the transaction records?
* Does the turnover and profit fit with the business premises and apparent wealth of the beneficial owner? For example residential premises in a poor area but inside there are luxury furnishings and expensive cars on the driveway.
* Is the business renting its trading premises and what are the costs? How long is the term of the lease? Can the business support the accommodation costs?

Comments on the credibility of the business should be included in the summary section of the visit report and where appropriate on an Internal Report (IR).