ECSH51625 - High Value Dealer Subsectors

For ease of classification and to inform out approach to compliance and monitoring, EC-S classified the High Value Dealer (HVD) sector into the following 12 sub-sectors:

Alcohol  

Alcoholic beverages are any fermented liquor, such as wine, beer, or distilled spirits. Retail sales rarely meet the HVD threshold, other than for investment wines and spirits. 

Wholesalers must be approved under the Alcohol Wholesaler Registration Scheme [link to The Alcohol Wholesaler Registration Scheme (AWRS) -before applying to register as an HVD.

Duty suspended alcohol - goods which can be held in an approved warehouse without payment of Excise Duty until the goods are released for consumption.  Further information can be found at - Excise notices: storing and moving goods - GOV.UK (www.gov.uk) . The AML risks from duty suspended alcohol are explained in ECSH51600. 

Tobacco  

Tobacco is the dried leaves of a plant which people smoke in pipes, cigars, or cigarettes. It can also refer to the plant from which the leaves are obtained, or the leaves themselves. 

In order to: 

• manufacture or import tobacco products 
• store tobacco products in a warehouse or sell them to the trade or public 
• transload tobacco products (move them from one vehicle to another) 

 A tobacco business must be registered with the UK ID issuer. Selling and storing tobacco products - GOV.UK (www.gov.uk) . 

Transactions relating to tobacco products are high-risk, requiring enhanced due diligence under regulation 33(6)(b)(vii) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017).

Antiques 

An antique is a collectable object such as a piece of furniture or china that has a high value because of its age and quality. Transactions related to cultural artefacts, ivory or other items related to protected species, or other items of archaeological, historical, cultural or religious significance or of rare scientific value may fall into this category and require enhanced due diligence under regulation 33(6)(b)(vii) of MLR 2017.

Cars and motorcycles 

These are any motorised, road legal passenger vehicle that is powered by an engine or battery and is able to convey a small number of people. 

The majority of major dealerships do not accept cash payments, other than a small deposit.  Vehicles may be purchased by card, bank transfer, finance or part-exchange; none of which are relevant HVD payments. Most dealers will be authorised by the Financial Conduct Agency (FCA) as an Annex 1 financial institution – businesses which carry out activities including lending (e.g. forfaiters and trade financiers), financial leasing, and safe custody services.  Further information can be found at the following link - Money laundering registration | FCA .

The FCA do not supervise HVD activity unless it is in combination with other financial services, such as safety deposit boxes. 

Second-hand car dealers may be more likely to register as an HVD and will usually use a second-hand margin scheme. For more information see Using the VAT margin scheme for second-hand vehicles - GOV.UK (www.gov.uk) 

Other motor vehicles 

Any truck, multipurpose passenger motor vehicle, or other motor vehicle having a GVWR (Gross Vehicle Weight Rating) of 10,000 pounds or less, not including a passenger vehicle or motorcycle. 

HVDs may be involved in buying and selling commercial vehicles, such as heavy goods vehicles (HGV), trailers and spare parts, as well as plant and farm machinery (tractors, diggers, cranes etc).  

Many of these vehicles are exported, with cash received in the UK, either by the customer when viewing the vehicle, or by a third party visiting or resident in the UK. 

Caravans 

A vehicle equipped for living in, typically towed by a car or van. 

Caravans may be used for touring or situated on a holiday park. Some may be residential, including those used by the travelling community. 

Caravans which can be easily transported generally carry a higher risk of money laundering than static caravans. 

Jewellery & watches

Personal ornaments, such as necklaces, rings, or bracelets, that are typically made from or contain jewels and precious metal. The best-known precious metals are bullion, gold and silver. Other precious metals include the platinum group metals: ruthenium, rhodium, palladium, osmium, iridium, and platinum, of which platinum is the most widely traded.  There are only four precious stones: diamond, sapphire, ruby and emerald. All other stones are therefore called semi-precious stones.  

Broken and unwanted jewellery may be sold to a refinery for smelting. A “cash for gold” business may receive HVD payments from the refinery. Both businesses are acting as an HVD. 

A watch is a portable timepiece intended to be carried or worn by a person. It is likely that high value watches are used by criminals as an alternative payment to cash. Organised Crime Groups (OGCs) have been observed using watches and jewellery as payment for illicit drugs or other goods, such as vehicles. Watches have also featured in international bribery and corruption investigations, for example, being provided as gifts to foreign Politically Exposed Persons (PEPs) and their relatives in exchange for lucrative contracts. 

Gold 

Gold can be sold and bought in bullion bars, coins, grains or scrap and trades internationally in all forms. 

Dealers in precious metals and stones (DPMS) carry a high risk of Money Laundering/Terrorist Financing (MLTF) due to criminals and professional money launderers using alternatives to cash, such as gold and other precious metals or stones, for smuggling out of the UK to countries with large markets that specialise in these sub-sectors. - FATF Guidance on the Risk-Based Approach for Dealers in Precious Metals and Stones (fatf-gafi.org)

Enhanced due diligence (EDD) is required on transactions related to precious metals under regulation 33(6)(b)(vii) of MLR 2017.

Scrap metals 

Scrap metal refers to used metallic materials that can be recycled, encompassing a wide range of items like old appliances, car parts, construction debris, and more. It does not include gold and silver. See section 21(7) of Scrap Metal Dealers Act 2013 (legislation.gov.uk). 

Under that Act, a scrap metal dealer in England and Wales must not pay for scrap metal except by a cheque or by an electronic transfer of funds (including credit or debit card). 

Mobile phones  

A mobile phone is a wireless handheld device that allows users to make and receive calls. 

Mobile phones have been used in VAT fraud and, although individually under the threshold, they can be traded as a high value grouped consignment. 

Clothing 

Clothing is any item worn on the body. Typically, clothing is made of fabrics or textiles, but over time it has included garments made from animal skin and other thin sheets of materials and natural products found in the environment, put together. 

Retail of designer goods, including shoes and handbags, often exceed the HVD threshold. They also carry a risk of Daigou (pronounced ‘dye-go’ or sometimes ‘dye-goo’) a Chinese term which roughly translates to ‘buying on behalf of’.  Further information is available at - file (nationalcrimeagency.gov.uk)

Recycled clothing is often exported in containers to Europe, Africa and Asia. Containers are likely to exceed the HVD threshold, with cash paid for the goods either when travelling to the UK to sort the goods, or by informal value transfer systems (IVTS). 

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Other 

Any other items/goods that has not been previously mentioned.   (This content has been withheld because of exemptions in the Freedom of Information Act 2000)