Introduction and Overview
- Effective from 30 September 2017 after gaining Royal ascent in April earlier that year
- Radical overhaul of the Proceeds of Crime Act 2002 (POCA) anti-money laundering and confiscation regime
How does this Affect Businesses and Individuals?
- Companies and partnerships – criminally liable for failure to prevent tax evasion by either a member of their staff or an external agent
- Even where the business was not involved in the act or was unaware of it
- Includes solicitor, accountants and other professionals providing tax advice
- A prosecution could lead to both a conviction and unlimited penalties
- Although tax evasion is already an offence, in the past it has was not possible to ascribe criminal liability to the firm where it occurred
Are there any Exclusions?
- A business may avoid criminal liability where it can show that it had implemented reasonable prevention procedures
- or where it can show that in the circumstances it would have been unreasonable or unrealistic to have expected it to have had procedures in place
What should I do as a Business Owner?
- Firms should ensure they have adequate internal control and procedures in place to mitigate the risks
- These should be reviewed periodically and suitable levels of monitoring and staff training should be implemented
Risk assessments
- Risk assessments should be carried out for the following:
- products
- services
- client data
- and internal systems that could be used to facilitate tax evasion
Procedures and Internal Controls
- Following a risk assessment, the firm may decide that an upgrade of procedures and internal controls is required to deal with the risk identified. These could include:
- Making clear to employees that the firm is committed to preventing the facilitation of tax evasion
- Including clauses in contracts with employees and external contractors requiring them not to engage in facilitating tax evasion, and to report their concerns straightaway
- Providing staff training on recognising and preventing financial crime
- Providing a safe whistle-blowing procedure
- Monitoring and enforcing prevention procedures
- Regular reviews of prevention procedures and changing them where required
Other Important Outcomes of the Act
- In addition to the above, the Act allows for Unexplained Wealth Orders to be served on individuals suspected of a serious crime to explain the sources of their wealth
- Any proceeds of crime can be seized by the authorities
- Further powers for authorities to investigate suspected money laundering or terrorist financing
- New orders to require someone to disclose information they may have on money laundering