Fraud jail threat for IT companies
Money-laundering rules could see employees imprisoned for failing to report wrong-doing
IT firms are being warned that if they fail to report suspected fraudulent financial activity they could face a hefty fine or long jail sentence.
As a result of new anti-money-laundering government legislation, which came into effect on 1 April, firms across the UK are now responsible for reporting money-laundering suspicions to the National Criminal Intelligence Service (NCIS).
Those failing to comply with the regulations may receive stringent penalties: up to five years in prison for failing to report a suspicion, and up to 14 years for helping a money launderer.
Home Office minister Caroline Flint said: "We know that profit is the main motive for many criminals. They need to clean their 'dirty cash' before they can gain from it.
"So, by cracking down on crooked money transfers, we remove their ability to spend their ill-gotten gains and take away the incentive to commit crime in the first place."
Over recent years the channel has been hit with numerous VAT fraud scams. The highest-profile case involved Dylan Creaven, a former director at Silicon Technologies Europe, who is currently awaiting trial following an alleged act of 'missing trader' VAT fraud worth £162m.
Jon McNally, director for financial crime at accountancy firm KPMG, explained that anyone found to be conducting cash transactions worth more than £10,000 is liable for prosecution unless they have specifically registered with Customs and Excise.
"Firms really need to educate their staff on the dangers and make sure they know what to look out for, especially firms with branches across the UK that sometimes fail to adopt policy from head office," he said.
"Anyone that fails to report even a suspected fraudulent transaction has committed an offence."
Eddie Pacey, director of credit at Bell Microproducts Europe, said that although many large players already have protection against this kind of crime, smaller firms tend to ignore it.
"VAT fraud has been prominent in our sector, and in the past nothing has been done to control the grey-market imports that are flooding the UK," he said.
Some firms have complained that the regulations will add more red tape and bureaucracy, but Pacey claimed that the moves should be welcomed by the IT industry.
"These regulations will make smaller firms used to doing cash-in-hand deals question where the money came from, which is not a bad thing," he said.