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The Criminal Finances Act checklist

The Criminal Finances Act, part of the UK government’s efforts to tackle money laundering and recover proceeds of crime, gained royal assent in 2017.  What does this mean for SME business owners and what are your Criminal Finances Act responsibilities? Here’s a Criminal Finances Act checklist to help you make sure you are compliant.

Understanding the Criminal Finance Act

Many business owners have unwittingly employed a rogue staff member who takes shortcuts, or have engaged agency staff who don’t always play by the rules. Others have set up in business with people who later turn out to be less than honest.

In October 2017, the Criminal Finances Act’s new rules came into effect. Previously, an incriminated individual would be heavily scrutinised, but the overarching company structure would often remain unquestioned. Now, companies can and will be liable for the wrongdoings of their employees.

Companies must do more than merely warn their staff against financial crime. As well as bearing the blame for an individual staff member’s indiscretions, businesses must also provide proof that they have robust internal processes to prevent such wrongdoing. If a business can’t do so, it could be incriminated. Businesses bear this responsibility with respect to external agents and consultants, not just their internal staff.

The message from legislators on financial crime is clear: no stone will go unturned. And the authorities are not simply targeting large tax avoidance schemes or corporations that are avoiding the payment of their dues.

The risk of non-compliance applies to organisations of every shape and size. This new law represents a very real risk to SMEs, and owners must make sure they fully understand subsequent Criminal Finances Act responsibilities and what it means for their business.

Falling on your sword’ is simply no longer a viable strategy. Make sure you have a clear process in place to review your business for vulnerabilities. And, if your company has ever had a problem of this kind before, learn lessons and implement change.

Criminal Finances Act checklist – How to be compliant

Here is a checklist for SME business owners to consider when reviewing their Criminal Finances Act responsibilities:

  • Conduct and record risk assessments.
  • Where you identify vulnerabilities, implement solutions.
  • People are your strength – and weakness. So always run background checks when recruiting
  • Implement a clear process for whistleblowers.

For more information on the Criminal Finance Act click here to access our PDF. Or for more advice and support, find and contact your local Haines Watts office.

Find and contact your local Haines Watts office

About the author

Steve Holden

Steve has been working in tax for more than 15 years, specialising in both tax compliance and tax advisory solutions for family businesses, high net worth individuals and trustees based in both the UK and overseas.

Although he advises on all aspects of taxation his particular areas of expertise comprise business and income tax, capital gains tax and inheritance tax. Having previously been a tax director in a regional firm of solicitors Steve also has an extensive specialist knowledge of trust taxation, accounting and administration, including charitable trusts.

Steve holds a BA (Hons) in Accounting and is both a full member and Fellow of the Association of Taxation Technicians (ATT) of which he currently sit on Council and a number of steering groups. He also offers his time as a volunteer for the tax charity Tax Help for Older People (TOP) providing free tax surgeries to the elderly on low incomes who could not otherwise obtain tax advice.

He is also a regular commentator in the Midlands media, making appearances on radio and TV as well as in the press.

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