Two words that no doubt conjure up scenes from cult TV shows Breaking Bad or Ozark and whilst Hollywood does its best to glamorise the act, in real life it’s often the everyday that puts small businesses at risk of committing the same crime.
The term ‘money laundering’ was coined in the 1920’s after Al Capone was caught on tax evasion charges running his criminal organisation through cash only laundromats. Today it costs the global economy an estimated £1.5 trillion every year and for many businesses it’s much more likely to occur as a result of trying to better the tax authorities.
Within the legal and financial sectors, money laundering regulations have experienced a big shake up with stricter laws and greater penalties for those that flout the rules. Paying someone cash in hand or putting through an expense that isn’t wholly for business purposes are just two examples of attempts to evade tax liabilities. These minor regulatory breaches constitute lower level money laundering offences with the crimes themselves not only attracting hefty fines but in very serious cases, prison sentences of up to fourteen years.
As Bookkeepers it’s our legal duty to look for the signs of money laundering and where any suspicion arises, take appropriate action or face prosecution ourselves. With the weight of these combined responsibilities, it’s essential that small business owners work with advisors to meet their implied duties and avoid the temptation to lower tax liabilities through illicit actions.