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HMRC internal manual

Money Laundering Regulations: Compliance

Accountancy Service Providers (ASPs): ASPs and specific Money Laundering risks

The following risks (not necessarily exhaustive or capable of being spotted by all ASPs) are matters which could form the basis of a realistic risk assessment by an ASP.

  • Does the client handle large amounts of cash? If so are any of its sales or purchases of goods in excess of 15,000 euros? Is the client or its customers registered as an HVD?
  • Does the client trade in mobile phones, computer chips, camcorders or similar high value easily transported commodities in which there may be MTIC (Missing Trader Intra Community) fraud? MTIC is a VAT fraud involving the importation of goods from an EU country by a UK based trader. The imported goods are not subject to VAT. The goods are then sold to another UK trader and VAT is charged. The importer then goes missing and does not pay the VAT to HMRC. The goods are then sold several times within the UK (with VAT being correctly accounted for) before being exported free of VAT to an EU based trader. The end UK trader then claims the VAT back on the cost of the goods acquired.
  • Supplies of goods for sale are obtained from legitimate sources with particular emphasis on the sale of alcohol and tobacco goods.
  • Is the source of working capital used in the client’s business satisfactorily accounted for? For example does the business have bank loans, overdraft, development grants. Are there loans from other sources? If so are they satisfactorily explained?
  • Offshore clients
  • Complex corporate structures that obscure beneficial ownership
  • Is the client’s business comparable with similar businesses operating in the same field in the same geographical area?
  • Are there any unusual transactions that appear outside the norm of the clients usual trading?
  • Is the lifestyle of the client consistent with the level of profit/remuneration extracted from the business?
  • Is the client a PEP (Politically Exposed Person) or have any business dealings with any PEPs?
  • Long distance clients with no connection.