High Value Dealers & The Proceeds of Crime Act 2002
High Value Dealers are defined by Section 14 (1)(a) of the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (the ‘Regulations’) as:
‘a firm or sole trader who by way of business trades in goods (including an auctioneer dealing in goods), when the trader makes or receives, in respect of any transaction, a payment or payments in cash of at least 10,000 euros in total’.
This means that any business that accepts a single cash transaction for goods in excess of 10,000 euros will be considered a High Value Dealer. In addition, a single transaction undertaken in several operations that appear to be linked will, for the purposes of the Regulations, exceed the 10,000 euros threshold. Transactions that involve a part-exchange where the cash value is under the 10,000 euros threshold but the total transaction value exceeds the limit, will not be considered. Transactions for goods and services will also not be considered unless the value of the goods exceeds the 10,000 euros threshold.
As part of the Regulations, additional requirements have been placed on businesses that exceed the threshold. This is due to the increased risk of high value cash transactions to involve criminal property and influence. The following list of High Value Dealer sub-sectors has been provided by HMRC:
- alcohol
- antiques, art & music
- auction
- boats & yachts
- caravans
- cars
- cash & carry/wholesale
- electronics
- food
- gold
- household goods & furniture
- jewellery
- mobile phones
- plant, machinery & equipment
- recycling
- textiles & clothing
- vehicles other than cars
It should be noted that this list is not exhaustive and businesses outside of the list will be defined as a High Value Dealer if they accept a transaction that falls under the Section 14 definition.
Requirement to Register
Under Section 54 (2)(a) of the Regulations, the Commissioners are required to maintain a register of High Value Dealers. The requirement to register as a High Value Dealer is a serious one and rests with the person or business themselves. Under Section 56 (1)(a) a person may not act as a High Value Dealer if they are not registered.
The registration process with HMRC can be completed online and will need to be renewed annually. Reminders will be sent to the registered High Valued Dealer to renew however the initial registration must be initiated by the person or business themselves.
Criminal Offence
The seriousness of the requirement to register is reinforced by Section 86 of the Regulations. Under Section 86(1) it is a criminal offence to contravene a relevant requirement imposed under the Regulations. With regards to High Value Dealers, this would mean it would be a criminal offence to accept cash that exceeds 10,000 euros if they were not registered as per Section 56 (1)(a).
When considering whether a person has committed an offence, consideration will be given as to whether that person followed any relevant guidance issued by or approved by the Treasury as per Section 86 (2). The guidance for High Value Dealers can be found here.
HMRC Guidance
The Guidance issued is designed to help comply with the Regulations and contains the following chapters:
- Money Laundering and High Value Dealers
- Responsibilities of senior managers
- Risk assessment, policies, controls and procedures
- Customer due diligence
- Reporting suspicious activity
- Record keeping
- Staff awareness
- High value dealer risk
- High value dealers
- Where to find more information
Without going into great detail for each chapter, High Value Dealers are held to a higher standard than normal businesses. They are required to have more stringent anti-money laundering controls and procedures in place and to conduct a significantly more thorough due diligence process. Minimum requirements are listed at the end of each chapter and offer a quick overview of what HMRC expect.
Proceeds of Crime Act 2002 (POCA) and Impact on High Value Dealers
The importance of registering as a High Value Dealer and the possible consequences of a failure to register cannot be underestimated. Under the Proceeds of Crime Act 2002 (‘POCA’), section 304 (1), it confirms that property obtained through ‘unlawful conduct’ is ‘recoverable property’. Under section 241(1) conduct is unlawful conduct “if it is unlawful under the criminal law of that part” and under section 316(4), recoverable property is “all property wherever it is and includes money, all forms of real or personal property… and intangible property”.
The impact of failing to register as a High Value Dealer but continuing to accept cash exceeding 10,000 euros in transactions is therefore severe. As a criminal offence to continue operating as High Value Dealer without registering, it follows that enforcement bodies could apply to seize, detain and potentially forfeit any property obtained as a result of this. It could be viewed that by operating without registering as a High Value Dealer would constitute unlawful conduct in contravention of the Regulations and in turn lead to cash received or assets being defined as recoverable property.
If you or your business have concerns regarding your status as a High Value Dealer, the regulations or the impact of POCA, it is important to seek specialist legal advice at the earliest possibility.
For further information about the comprehensive service our lawyers can offer, contact our specialist lawyers on 0345 872 6666, or contact the authors directly.
Sam Healey is a partner in our Business Crime & Regulation department. He can be contacted at sam.healey@jmw.co.uk.
