ECSH51550 - Why do the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) include High Value Dealers (HVDs)
Money laundering is the process through which criminals disguise the criminal origin of money and assets they earned through criminal activity. It can take many forms. In regard to HVDs, this can include:
- Exchanging cash for high value items that can be easily transferred and sold on, sometimes at a loss, such as jewellery or vehicles.
- Exchanging cash for large quantities of lower value items that can be sold onwards easily, such as alcohol.
- Exchanging cash for high value assets that are then returned, and clean cash refunded.
HVDs were brought into scope of the Money Laundering Regulations in 2003 and were required to register by 1 April 2004. The threshold for cash payments within the definition of a HVD was the equivalent of 15,000 euros until the MLR 2017. Since the MLR 2017 came into force on 26 June 2017, the threshold for cash payments has been 10,000 euros.
The MLR 2017 set out what relevant businesses such as HVDs must do to prevent the use of their services for money laundering, terrorist financing or proliferation financing purposes.
Previous to the introduction of MLR 2017 the definition of HVDs only applied to a firm or sole trader who received payments. MLR 2017 extended this to a firm or sole trader who also makes payments. Both HVDs who are involved in a relevant transaction should be checking to see that the other party is registered as an HVD if conducting their business in the UK. If the other party trades in goods by way of business, but are not registered as an HVD, the registered HVD should not continue with that relevant cash payment. The registered HVD should consider reporting this to the National Crime Agency (NCA) via a Suspicious Activity Report (SAR).