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HMRC internal manual

Money Laundering Regulations: Compliance

High Value Dealers: Risks posed by overseas customers paying for goods in cash

Some HVDs export goods and are paid for them in cash. The method of payment might be by a representative of the customer travelling to the UK to physically bring the cash to the business premises. Alternatively the customer might arrange for cash to be deposited into the HVD’s bank account.

Where the overseas client makes a physical delivery of the cash the HVD should carry out the following checks.

* Identify the person bringing the cash and their relationship with the customer
* Verification of the identity of all persons connected with the transaction. An overseas company should be able to provide details of its incorporation, shareholders and directors. Internet searches on “Google” could be used for verification purposes.
* Get an explanation of why the customer has incurred travel costs to make payment. What is the economic sense of doing so?
* For non EU customers cash exceeding 10,000  euro has to be declared on entry to the UK on Form C9011. The form is in duplicate therefore a copy of it should be kept by the person bringing the cash into the UK. Copies of the form should be inspected by the HVD and a copy retained.
* The HVD should check where the customer obtained their sterling and retain proof such as currency exchange receipts.
* To reclaim VAT on the export of the goods the HVD will require proof of export. The export documents should establish the final destination of the goods and validate the customer’s VAT number.

Remote payments made directly into the bank account of the HVD pose a significant risk of money laundering. These payments may be difficult to control especially if the business is previously unaware that they are going to be made. Businesses must be able to identify that they have adequate systems in place to identify these payments within their banking records and to be able to handle them correctly. In particular the business must.

* Demonstrate that they have a procedure to monitor their bank statements
* Be able to identify the person paying the money into their account.
* Where the money has been deposited by an unknown third party in the UK under Hawala arrangements, or by a Money transmitter to net-off amounts paid out in their home country, the details of the money transmitter should be obtained.