ECSH51600 - High Value Dealer Money Laundering Risks
The services, products and level of cash use in the High Value Dealer (HVD) sector can make HVD businesses attractive to criminals seeking to convert criminal proceeds into high value or luxury portable assets, which can be easily moved outside the UK or used to conceal the origins of criminally-derived cash. Common risks throughout the sector may present as, but are not limited to, the following:
- The HVD may have made or received cash payments over the 10,000 euros threshold before being registered with HMRC.
- Businesses may receive cash payments via couriers, intermediaries or directly from customers. The goods may be paid for overseas through a cash deposit without checking the origins of the cash or conducting relevant customer due diligence (CDD) or enhanced due diligence (EDD).
- Businesses may accept cash for “off the record” sales with a view to evading tax liabilities and the payments are not therefore shown in the records. These will invariably involve breaches of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) (e.g. no CDD will have been carried out).
- HVDs with multiple sites may have undeclared or unregistered sites which have made or accepted relevant cash payments due to poor staff training or unclear polices, controls and procedures (PCPs).
- Exported goods being paid for via Informal Value Transfer Systems (IVTS). Further information on IVTS can be found at: MSB Risk Assessment and Strategy .
Further information on HVD risks can be found at the following links:
- The National Risk Assessment of Money Laundering and Terrorist Financing 2020
- HMRC’s Understanding Risks and Taking Action for High Value Dealers
- European Commission Supranational Risk Assessment of Money Laundering and Terrorist Financing (ECSNRA)
- FATF Guidance on the Risk-Based Approach for Dealers in Precious Metals and Stones
- ECS Internal Risk Assessment and Strategy for High Value Dealers