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Money Laundering Offences : What to Do If You Suspect an Employee

Money Laundering Offences : What to Do If You Suspect an Employee

What are your legal obligations as a business owner if you suspect an employee of wrongdoing? We were recently consulted by the owner of a small accountancy business who had been approached by a colleague who had discovered some discrepancies in a file that could indicate that another employee was involved in money laundering. The client thought that there might be an innocent explanation but wanted to know whether he could approach the employee to investigate or whether he had to report the matter to the authorities.

Money laundering is an increasing area of concern for many companies and we have recently provided a lot of advice on this issue. Accountancy businesses are covered by the Money Laundering Regulations and it is vital that they implement certain controls. One of the primary controls is appointing someone within the business to carry out the role of money laundering reporting officer. If anyone in your business knows or suspects that money laundering is taking place, they must tell the nominated officer. In the absence of a nominated person, concerned employees should come to the business owner. In addition to the primary money laundering offences under the legislation, there are two secondary offences – failure to disclose money laundering and tipping off.

‘Tipping off’ is when someone informs a person who is suspected of money laundering in such a way that it may affect an investigation. Austerity cutbacks and pressures at work have caused a surge in fraud committed by employees, according to a recent survey by accountancy firm KPMG. The value of fraud by employees almost doubled to £25.1 million over the past year, while cases of insider fraud rose to 35 from 22 in 2011. Around 80% of fraud-related financial losses within firms was caused by either management or employees last year., and insider fraud has been responsible for bringing some firms to their knees. As the deemed nominated officer, the business owner must review the information they have received and decide if it needs to be reported to the Serious Organised Crime Agency (SOCA). If you are already suspicious, you must inform SOCA without delay. Serious criminal sanctions can be imposed for any breaches of the legislation, including doing nothing.

Our specialist Corporate Regulatory team can guide you through regulatory law and make sure you don’t fall foul of the authorities. Whether you want to audit your policies and procedures or need support during an investigation, call us on 01895 207866 and speak to our specialists for plain English advice.