Money laundering has become part of the vernacular. This is partially due to an increasing focus within pop culture and dramas such as McMafia, Ozark, Billions and Breaking Bad.
One of the best explanations of the interaction between tax evasion and money laundering occurred in the series Breaking Bad in 2010, when the character Saul Goodman, a corrupt attorney, explained how to launder the proceeds of drug manufacturing using a nail salon.
While this humorous explanation has subsequently proved popular with law tutors and students, it also illustrated a particular concern for law enforcement – the role of professionals in both tax evasion and money laundering matters.
Focus on professional advisers
The UK’s National Crime Agency and HM Revenue & Customs have both stated publicly that they will focus on the role of the professional adviser. The NCA’s latest National Strategic Assessment of Serious and Organised Crime described the criminal exploitation of accounting and legal professionals as a significant threat, referring to such advisers as “professional enablers” and whether they are complicit, negligent or unwitting, they are still key facilitators in the money laundering process.
In September 2018, HMRC issued an updated criminal investigation policy, which describes the kind of circumstances in which HMRC will launch a criminal investigation. As a revenue collection agency, HMRC focuses on dealing with fraud in the most cost-effective way possible, which usually means using its civil fraud procedures wherever appropriate.
- National Crime Agency and HM Revenue & Customs have both stated they will focus on the role of the professional adviser in allegations of money laundering
- HMRC received a boost to its criminal powers following the introduction of the failure to prevent the facilitation of tax evasion offences
- HMRC wants to increase the number of criminal investigations that it undertakes into serious and complex tax crime
Criminal investigation tends to be reserved for cases where HMRC needs to send a strong deterrent message or where the conduct involved is such that only a criminal sanction is appropriate.
HMRC’s policy gives examples of circumstances in which it will pursue criminal rather than civil investigations and makes specific reference to cases involving money laundering, with a particular focus on advisers, accountants, solicitors and others acting in a “professional” capacity.
Leaks of information
Over the past decade, our expectations regarding privacy have fundamentally changed due to our relationship with social media and our phones. At the same time, the world has come to grips with the financial crisis and its aftermath and many people have lost confidence in our financial system.
A symptom of these changes may be the significant leaks of data held by law firms, corporate registries, banks and financial service providers into the public domain, such as the Panama and Paradise Papers.
HMRC’s criminal investigation policy makes it clear it will use internet data, which is available to anyone, including blogs and social networking sites.
Leaked information is not expressly referenced, though HMRC is not adverse to making use of information that has been leaked – or stolen, depending on your point of view – and it has been reported that HMRC expected to collect £100m of extra tax from information revealed within the Panama Papers.
New powers to pursue corporate bodies
In September 2017, HMRC received a boost to its criminal powers following the introduction of the failure to prevent the facilitation of tax evasion offences under the Criminal Finances Act 2017.