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TOUGH new rules on money laundering are ringing alarm bells among accountants and financial advisers. From 1 March they will be required to report to the police any clients they know or suspect to have evaded tax. If they fail to do so, they can be jailed for up to 14 years.
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One accountant said: 'This is causing huge concern, not just for us but for lawyers and other advisers - even estate agents. The penalties are draconian and the rules cut across our duty of confidentiality to our clients.'
The Institute of Chartered Accountants supports the change, but has been working for months to reduce the practical difficulties.
A catalogue of tough new measures to combat terrorists and drug dealers has already imposed strict requirements on accountants to 'blow the whistle' on these criminals. The change on 1 March will add tax evasion to the list.
Advisers will be required to inform the National Crime Intelligence Service if they have a reasonable suspicion that evasion has taken place.
The definition of 'money laundering' has been widened to cover those who keep the proceeds of their own illegal acts without moving them elsewhere.
Last week, the Consultative Committee on Accountancy Bodies told its members that 'speculation' about where a client got his money is not enough to trigger an alert.
Felicity Banks, secretary of the CCAB working party, says members must consider whether there are ' reasonable grounds' for suspicion.
She said: 'We have done a lot of work over 18 months to clarify how this can operate.'
The legislation, under the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2003, also requires 'whistle blowing' by people such as estate agents, car salesmen and antique dealers.
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