It has been reported that in December 2016 the ICAEW has severely reprimanded the director of a Leeds accountancy firm for failing to report suspicions that a client was engaged in money laundering activities.  This followed a criminal conviction for failing to report a SAR to the firms MLRO

The ICAEW’s disciplinary committee heard that between 1 November 2013 and 11 June 2014, Simon Charles Rothwell had reasonable grounds for knowing or suspecting that Ms ‘A’, a director of ‘C’ Limited and client of his accounting firm, was money laundering but failed to disclose it to a nominated officer or authorised person.

Along with issuing Rothwell with a severe reprimand, the ICAEW ruled that he should get training about money laundering within six months and pay for it himself, and also pay costs of costs of £3,279.

Background

Between January 2009 and November 2013 Rothwell provided tax and accountancy services to ‘C’ Limited, the ICAEW said. During this period HMRC started an enquiry into the corporation tax return of the company, which continued into November 2013.

On 1 November 2013, Ms ‘A’, the sole director and shareholder of ‘C’ Limited, told the defendant that she had engaged a firm of tax specialists to deal with the enquiry. She also disclosed that she had over-claimed her mileage expenses and was asking the new firm of tax specialists to negotiate a settlement with HMRC on her behalf.

Rothwell ended his business relationship with the defendant on this date.

‘C’ Limited supplied of consultancy and training services to the National Health Service.

In July 2014, police interviewed Rothwell under criminal caution. He was told that Ms ‘A’ had been involved in a large fraud against the NHS, using her company to generate fake orders for training provided by her husband, who worked within the NHS.

There was no evidence that Rothwell had any involvement or knowledge of the fraud, the ICAEW said. But he was charged with failing to disclose to the authorities his knowledge of the over-claim for expenses which Ms ‘A’ had disclosed in November 2013.

In April 2015 Rothwell, who has been in practice for 26 years, was convicted at Leeds Magistrates Court of a single offence under Section 330 of the Proceeds of Crime Act (POCA) 2002.

In October 2015, he was sentenced at Leeds Crown Court to pay a fine of £5,000 and ordered to pay a victim surcharge of £120.

Under section 330 is a criminal offence in England and Wales to know, suspect or have reasonable grounds for suspecting (during business in a regulated sector) that another person is engaged in money laundering and to then fail to disclose that to a “nominated officer” in the business.