Money laundering procedures at CAB under fire

Link: Anti-money laundering efforts slammed

Concerns were raised after one auditor, who wished to remain anonymous, expressed major concerns after being told there were no money laundering procedures in place.

‘The main thrust of the Proceeds of Crime Act is that if someone comes to us saying I want to fiddle my tax by £50 we must report to NCIS. The CAB does not have to do anything,’ the auditor said.

He pointed out that, as well as giving legal and financial advice, the CAB, which has 3,200 outlets and a budget of more than £37m, handles debts for individuals who put cash into its client deposit accounts.

He cited examples of the CAB making payments on behalf of refugees in exchange for cash, because they didn’t have bank accounts – potentially an ideal money laundering process.

‘It will be much smaller sums, but probably people in a high-risk category. The legislation must sweep up everything. If you have exceptions, the whole thing is useless,’ he said.

The CAB confirmed it believed it was exempt from reporting suspicious activity to NCIS, prompting fears it may offer criminals a laundering loophole.

But there appeared to be some confusion over the ‘exemption’ after the Home Office urged the CAB to take legal advice on its status.

The National Criminal Intelligence Service was unable to confirm whether the CAB fell under the money laundering regulations but said: ‘If a particular loophole is identified we would research that and produce an assessment for government and the regulated authorities to decide how to proceed.’

Under the regulations, which came into force in March, accountants must file reports on any suspicious transactions to NCIS, or face a potential prison term of up to 15 years.

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