New money laundering regulations became effective from Monday, but auditors fearful of being caught out by the rules are said to be considering the drastic action of 'defensive reporting' to protect themselves from tough penalties, which could see someone jailed for up to 14 years.

Specialist trainers and legal experts have all received first-hand reports that some accountants are planning the 'shop the lot' approach to dealing with the money laundering rules. The hope is that reporting all clients means the accountant cannot be accused of not reporting a suspicious client.

Julia Penny, technical manager at Chantrey Vellacott DFK, said: 'I have heard it a lot doing lectures all around the country. I think there are smaller firms seriously considering it.'

One tax adviser told another trainer he planned to report 'anyone who comes through my door'.

But experts warned it would be a high-risk strategy that could backfireby invalidating the protection from money laundering charges available for those who file reports. Louise Delahunty, a partner at Peters & Peters, warned: 'The defence does not work if disclosure is cynical and reports considered improper won't be valid.'

Concerns were also voiced that many firms were not taking the changes seriously. Peter Wilson, joint head of business investigations at Tarlo Lyons solicitors, said some firms were in denial, adding: 'These are far-reaching and draconian measures and probably the most significant for the businesses they cover since the introduction of VAT.'

Meanwhile, accountants welcomed new single-sheet forms to be used for reports of limited intelligence value as part of the 'dual-reporting' system negotiated by the CCAB.

David Winch, director of Accounting Evidence, said: 'These new forms are the most positive development for accountants in connection with money laundering since the publication of the proceeds of crime nill.'