Dishing the dirt
By: Alex Byrne – 22 January 2019
- Tax practitioners should take care to ensure that clients are not tipped off about money laundering reports.
- Understanding when a suspicious activity report should be made.
- The difference between internal and external reports.
- There are limited exemptions from making reports.
- Advisers should take care not to risk their businesses by falling foul of the anti-money laundering legislation.
In the first part of this article (‘A dirty business’, Taxation, 29 November 2018), we considered the basic principles of the anti-money laundering (AML) regulations and recognising the circumstances that might indicate suspicious activity. In this
Accountancy and tax practice staff must be properly trained on tipping off, which is covered in paragraph 6.1.20 of the CCAB’s Anti-Money Laundering Guidance for the Accountancy Sector (tinyurl.com/CCAB-5296 ). Similar paragraph references in this article refer to this guidance.
The offence of tipping off is committed when a relevant employee in the regulated sector discloses that a suspicious activity report (SAR) has been made and this disclosure is likely to prejudice any subsequent, current or contemplated investigation into allegations of money laundering or terrorist financing (MLTF).
There are some exceptions at paragraph 6.1.23 of the CCAB guidance.
- A person does not commit an offence, for example, if they make a disclosure to a fellow employee of the same undertaking.
- Nor is an offence committed if:
- a relevant professional adviser makes a disclosure to another within the same profession (for example, accountancy) but from a different firm, who is of the same professional standing, when that disclosure relates to a single client or former client of both advisers and is made only to prevent a money laundering offence; and
- is made to a person in an EU member state or a state imposing equivalent anti-money laundering requirements.
- No disclosure offence is committed if an adviser attempts to dissuade their client from conduct amounting to an offence. And no offence is committed when enquiries are made of a client regarding something that properly falls within the normal scope of the engagement or relationship. This might be to understand a specific transaction or even, for example, to ask about an invoice that does not appear to have been included on a client’s tax return.
- Individuals concerned about tipping off may wish to consult their money laundering reporting officer (MLRO). It is important that documents containing references to the subject matter of any AML report are not released to third parties without first consulting the officer.
The AML guidance advises that MLROs may seek advice from a suitably skilled and knowledgeable professional legal adviser or from the helplines and support services provided by the professional bodies (paragraph 6.1.29). A discussion with the National Crime Agency (NCA) and law enforcement may also be valuable, but the guidance warns that they cannot provide advice and are not entitled to dictate the conduct of a professional relationship.