TAXREP 50/07
MONEY LAUNDERING: MLR 8: GUIDANCE FOR BUSINESSES
Memorandum submitted in July 2007 by the Tax Faculty of the Institute of Chartered
Accountants in England and Wales in response to a invitation to comment
on draft guidance published in June 2007 by HMRC
Contents
Paragraph
Introduction
1-2
General comments
3-6
Detailed comments
7-10
Annex A - Who we are
Annex B - The Tax Faculty’s Ten Tenets for a Better Tax System
ICAEW Tax Faculty, Chartered Accountants’ Hall,
PO Box 433, Moorgate Place, London EC2P 2BJ
www.icaew.com/taxfac
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+44 (0)20 7920 8646
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The Tax Faculty of the Institute of Chartered Accountants in England and Wales
TAXREP 50/07
Money laundering: MLR 8: Guidance for Businesses
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MONEY LAUNDERING: MLR 8: GUIDANCE FOR BUSINESSES
INTRODUCTION
1.
We are pleased to have the opportunity to comment on draft Public Notice MLR8
exposed on 11 June by HMRC at
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_
nfpb=true&_pageLabel=pageExcise_ShowContent&propertyType=document&id=HM
CE_PROD1_027562. We have confined our comments on the draft guidance to a
few major points and have not undertaken a comprehensive scrutiny. We
commented in memorandum ICAEW REP 48/07 (submitted in May 2007) on the
previous draft guidance published in March 2007 and have not necessarily repeated
all the points in our previous submission even where they have not been taken up in
the draft under review.
2.
We look forward to seeing a draft of Notice MLR X on Registration referred to in para
1.1.
GENERAL COMMENTS
3.
We welcome the fact that at paragraph 1.1 your guidance follows our
recommendation in ICAEW REP 48/07 to refer Accountancy Services Providers
(‘ASPs’) to the CCAB guidance. This will ensure that all those within the ASP sector
will be subject to the same guidance and prevent attempts at regulatory arbitrage.
4.
Your guidance in many places reads as if it sits more comfortably with the
undertaking of transactions or buying and selling currency than with the provision of
services, and to this extent seems to be aimed more at Money Service Businesses
(‘MSBs’) and High Value Dealers (‘HVDs’) than for Trust Service Providers (‘TSPs’)
and Company Service Providers (‘CSPs’). Examples are paragraphs 1.10 (see
Detailed Comments below) and 6.10. A way round this might be to provide two sets
of guidance, one for MSBs and HVDs and one for TSPs and CSPs or to refer the
latter two categories to private sector professional body guidance, as for ASPs.
5.
Paragraph 6.7: Identifying the beneficial owner will need to be redrafted to include
Trust Service Providers once the draft Money Laundering Regulations 2007 have
been finalised. Para 6.7 as presently written is based on the definition of beneficial
ownership as proposed in the draft regulations published by HM Treasury on 22
January 2007. You will probably be aware that the Treasury is considering how to
change their draft regulations to align with English trust law – their original draft
followed closely the 3rd Money Laundering Directive which we assume is based on
continental trust equivalents.
6.
Overall, the guidance is easy to read and is a good example of Plain English.
DETAILED COMMENTS
7.
We suggest that the CCAB website address shown at para 1.1 should be
http://www.ccab.org.uk/documents.php?subaction=showfull&id=1076922069&archive
The Tax Faculty of the Institute of Chartered Accountants in England and Wales
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=&start_from=&ucat=2& as this is the page on the CCAB website that introduces the
CCAB guidance rather than the webpage at the address given which is a list of
Documents, Reports and Statements covering a miscellany of topics. An even better
link would be our own money laundering website page at
www.icaew.com/moneylaundering, which includes not only the CCAB guidance note
but also later guidance on related issues, for example Proceeds of Crime Act
Privilege Reporting Exemption. The CCAB guidance note is currently being updated
to incorporate all relevant issues and Treasury approval under s.330(8) POCA 2002
will be sought.
8.
Paragraph 1.10 does not include the fact that possession of the proceeds of one’s
own crime is a money laundering offence. This is another example of where the
guidance is perhaps aimed more at those who undertake transactions rather than
those who provide services.
9.
In the first bullet of paragraph 6.6, the words ‘through a bank account’ should be
deleted.
10.
We assume that at paragraph 7.8.8 you will be cross referring (as does the CCAB
guidance) to the excellent Joint Money Laundering Steering Group (JMLSG)
guidance on customer due diligence at Chapter 5 – see
http://www.jmlsg.org.uk/content/1/c4/68/86/Final_Part_I_030306.pdf. You also refer
more specifically to the JMLSG guidance in paragraphs 1.5 and 13.8 – we suggest
that these cross references should use consistent wording. A general comment to
the effect that where the firms you supervise follow the JMLSG guidance, adapted for
the own circumstances, that will be acceptable to you, might also be helpful.
PCB
11.7.07
The Tax Faculty of the Institute of Chartered Accountants in England and Wales
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ANNEX A
WHO WE ARE
1. The Institute of Chartered Accountants in England & Wales is a professional body
representing some 128,000 members. The Institute operates under a Royal
Charter with an obligation to act in the public interest. It is regulated by the
Department of Trade and Industry through the Accountancy Foundation. Its
primary objectives are to educate and train Chartered Accountants, to maintain
high standards for professional conduct among members, to provide services to
its members and students, and to advance the theory and practice of
accountancy (which includes taxation).
2. The Tax Faculty is the centre for excellence and an authoritative voice for the
Institute on taxation matters. It is responsible for tax representations on behalf of
the Institute as a whole and it also provides services to more than 11,000 Faculty
members who pay an additional subscription.
3. Further information is available on the ICAEW Tax Faculty website at
www.icaew.com/taxfac or telephone 020 7920 8646.
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ANNEX B
THE TAX FACULTY’S TEN TENETS FOR A BETTER TAX SYSTEM
The tax system should be:
1. Statutory: tax legislation should be enacted by statute and subject to proper
democratic scrutiny by Parliament.
2. Certain: in virtually all circumstances the application of the tax rules should be
certain. It should not normally be necessary for anyone to resort to the courts in
order to resolve how the rules operate in relation to his or her tax affairs.
3. Simple: the tax rules should aim to be simple, understandable and clear in their
objectives.
4. Easy to collect and to calculate: a person’s tax liability should be easy to
calculate and straightforward and cheap to collect.
5. Properly targeted: when anti-avoidance legislation is passed, due regard should
be had to maintaining the simplicity and certainty of the tax system by targeting it
to close specific loopholes.
6. Constant: Changes to the underlying rules should be kept to a minimum. There
should be a justifiable economic and/or social basis for any change to the tax
rules and this justification should be made public and the underlying policy made
clear.
7. Subject to proper consultation: other than in exceptional circumstances, the
Government should allow adequate time for both the drafting of tax legislation
and full consultation on it.
8. Regularly reviewed: the tax rules should be subject to a regular public review to
determine their continuing relevance and whether their original justification has
been realised. If a tax rule is no longer relevant, then it should be repealed.
9. Fair and reasonable: the revenue authorities have a duty to exercise their
powers reasonably. There should be a right of appeal to an independent tribunal
against all their decisions.
10. Competitive: tax rules and rates should be framed so as to encourage
investment, capital and trade in and with the UK.
These are explained in more detail in our discussion document published in October
1999 as TAXGUIDE 4/99; see http://www.icaew.co.uk/index.cfm?route=128518.
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