Press Release
01 April 2008
Breathing Space for the Recruitment Industry: Deadline for AML Registration Extended
HMRC has announced that the deadline by which "Trust or Company Service Providers" must register under the Money Laundering Regulations 2007 has been extended from today until 31 May 2008.
This will come as a welcome relief in particular for recruitment companies whose businesses include the placement of candidates at director and partner level, who were only told in December 2007 that they would be treated as Company Service Providers and therefore within the scope of the Regulations.
Companies affected by the Regulations must register and ensure they have adequate client identification processes and other procedures to forestall money laundering. Members of staff must be supervised and properly trained. Failure to comply can render the company liable to a large financial penalty and individuals commit criminal offences.
HMRC is supervisor for Trust and Company Service Providers, as well as for "Bureaux de Change" operators, "High Value Dealers" and "External Accountants". It has published general guidance on compliance with the Regulations, including specific guidance for these other types of business it will be supervising – but to date no guidance has been published for those businesses that are Trust or Company Service Providers. HMRC state that this guidance will be published "in April", but no fixed date is given.
Concerns have been expressed from within the recruitment industry that compliance will be costly and they have questioned whether they are intended to be caught by the Regulations, which define "Trust or Company Service Provider" as including a person who "arranges for a person to act as a director, company secretary or partner in a partnership". Business will be expecting the guidance to make all of this clear.
Jason Collins, head of tax litigation at the national law firm, McGrigors LLP, says:
"There is a lot of uncertainty in the recruitment market right now. It is not obvious why a recruitment business involved in placing candidates as partners in firms or directors in companies might be considered to be a "Company Service Provider", let alone at risk of handling the proceeds of a crime. It is also appears arbitrary that a recruitment business can be caught – at great expense – simply because it places senior candidates, whereas other similar looking businesses placing more junior roles are not caught.
Recruitment businesses have been waiting for HMRC to publish guidance in the hope for clarity. HMRC appear to have recognised that they cannot expect compliance if they, as supervisor, do not appear to be able to articulate the impact of the Regulations – in the absence of such guidance, it is only right that this extension of time has been given. Hopefully the guidance – when it arrives – will explain exactly why and where HMRC consider the risks in the recruitment industry to lie and it will be published with sufficient notice to allow businesses to make the necessary, costly adjustments to their businesses in time for the new registration date of 31 May."For further information please contact:
Louisa Hollins
Financial Dynamics
Telephone - +44 (0) 20 7269 7108
Email - Louisa.hollins@fd.com
Andy Peat
Financial Dynamics
Telephone - +44 (0) 20 7269 7185
Email - andy.peat@fd.com