New guidelines for accountants on dealing with suspicious transactions

The updated guidance deals with statute law, regulations and professional requirements in relation to the avoidance, recognition and reporting of money laundering.

It will be published as part of the Year 2000 edition of the Members’ Handbook and will be supported by a bright red glossy leaflet to emphasise the key points, which will be sent to all active members with their copy of the Handbook early next year.

In the meantime copies of both the Guidance and the leaflet are available from the Institute by applying for Technical Release, TECH 15/99.

Accountants working in practice have come under particular criticism from the National Criminal Intelligence Service (NCIS) for suspected under reporting – NCIS believe that accountants are not fulfilling their statutory responsibilities in this area, although the institute rejects this criticism.

Under reporting could leave accountants open to criminal prosecution. The institute hopes that their new publications will help ensure that no chartered accountants are left in danger of being included in this category through ignorance.

John Young, the principal draftsman of the Guidance said:’The guidance is designed to help accountants in interpreting the law and applying it, particularly in difficult areas such as tax evasion, including foreign tax evasion. The law makes no distinction between this and other serious crime – accountants assisting a client to launder money in this area, as for the proceeds of other serious crime, will themselves commit an offence.

‘Another potential problem area is constructive trust. If accountants report suspected money laundering of the proceeds of, say, a fraud with the cash passing through a client account, they are as good as admitting that they know that the money belongs to a third party and may put themselves in the position of holding it in trust for the true owner.

‘ In reality, no civil court is likely to hold an accountant liable as constructive trustee where the issue arises only due to his having followed an obligation under criminal law, but guidance on this and related matters is included.

‘Every firm should have at least one person with a thorough knowledge of the requirements as set out in the new Guidance and every accountant needs to have a general idea of the requirements and to be constantly alert for suspicious transactions.’

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