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Crime Indicators for Accountants

One business that has boomed throughout Covid-19 is Money Laundering. Here are a few crime indicators for accountants to watch for when dealing with their clients.

Extracted from an ICAEW report:

1. Lack of Sales Records

A business of any type has no sales records and asks their accountants to calculate income on the funds received or deposited into their business bank accounts or provides their accountant with annual or monthly totals for which there is no supporting documentation.

This is an indicator of Money Laundering. Failing to keep proper accounting records is also a criminal offence under Companies Act 2006.

2. Income received at odd times of day

Statements from card payment processors show that the majority of card payments are taken between midnight and 6am for a business which is not part of the night-time economy. The client lends their card payment processing machine or account to other people or businesses and allows the monies from unknown customers to be paid into their account.

This is an indicator of Money Laundering. The receipt of income at odd times of day indicates the laundering of monies from prostitution.

3. Lack of Assets or Supplies

There is a lack of assets necessary to carry out the core activity of the business. The person / business does not appear to have purchased enough goods to generate the reported sales.

This is an indicator that the company is a front for criminality. It is also an indicator of false accounting.

4. Lack of Staff Costs

The person / business is in a service industry and has little or no staff or contractor costs but has reported an income higher than would be possible for the owners of the business to generate themselves.

There are multiple payments to industry regulators from the same account and overlapping receipts, i.e. multiple wages received from different companies on the same day or in the same period. Prevalence of receipts from agencies or umbrella companies.

These are indicators that the client may be involved in Modern Slavery and Human Trafficking.

5. Loans and Bridging Loans

Clients (people or companies) who are not widely recognised financial institutions granting loans secured on the residential properties of their customers. Loans recorded as owed to your client where there is no evidence that loans were paid out. Properties acquired by your client for significantly less than market price when the customer defaults on the loan or struggles to make repayments.

These are indicators of Extortion based on the investigations into organised crime families.


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