Money laundering is not as rife as the government has claimed, and new regulations will only increase red tape burden on business, advisers have warned.

The new rules, which move beyond its original scope to include retailers and jewellers into reporting customers who could be involved in money laundering, have been introduced without compelling evidence that it is a problem, reported the FT.

'Money does not appear to be entering the financial system on anything like the scale that is being talked about,' said Jackie Harvey, a principal lecturer for Newcastle Business School at Northumbria University.

Wilkins Kennedy partner Steve Golder said businesses could be prosecuted for failing to report a suspicion of money laundering ,and will have to keep evidence checks on file for five years.

'This is a huge red tape obligation and captures an incredibly wide range of businesses,' said Golder.

Further reading:

HMRC urges business to ready for MLRs

CCAB releases revised MLR guidance