Use of Cash payments continue to fall – What is the impact on Money Laundering Risk Assessments and Due Diligence in a cashless society?



The final report from the Access to Cash Review confirms that the use of cash payments continues to fall and that Debit card payments over took cash use for the first time in 2018.


In 2009, 6 out of every 10 transactions were cash, today this has dropped to 3 out of every 10. The report predicts that in fifteen years’ time, it could be as low as 1 in 10 transactions.


Consumer groups worry about the closure of rural ATMs and bank branches, leaving people without easy access to cash. Small business associations are concerned about the growing challenges of handling cash: closing bank branches and rising charges are making it more expensive and riskier to handle cash.

What does this mean for business that still accept high levels of cash?


Within a move to a more cashless society, businesses that still take or accept cash payments for goods above €10,000 (a high value payment or HVP), must still be registered as a High Value Dealer with HMRC. A high value payment (HVP) is a payment in any currency equivalent to €10,000 which is made either in a single transaction or in several instalments which are linked. HVP’s can be made to you in person but still qualify if cash is paid directly into a bank account. A payment is a high value payment if it it meets one of the following criteria:


• A single cash payment of €10,000 or more (£8,594 as of 06.03.19 but if you exclude VAT the net figure is c£6800)
• Several cash payments totalling €10,000 or more, including a series of payments and payments on account
• Cash paid by a customer totalling €10,000 or more in any 90 day period
• Cash payments totalling €10,000 or more which appear to have been broken down into smaller amounts to come below the High Value Payment limit.


The new Money Laundering Regulations (MLR) tightened the rules on simplified due diligence (SDD) and do not allow for exemptions. Decisions on when and how to carry out SDD have to be justified on the basis of risk and you will be required to show clear evidenced processes and policies. For most High Value Dealers (HVD) most cash transactions will qualify as higher risk and so all customers and suppliers should be subject to enhanced due diligence (EDD) checks. Understanding why a business is accepting or paying cash in an increasingly cashless economy will be a key part of the risk based approached.


As the use of cash is reducing across the UK, businesses must question why cash is being used in order to identify and mitigate money laundering and terrorist financing risks. Firms are obliged to take appropriate steps to identify and assess money laundering and terrorist financing risks, to document their risk assessments and keep them up-to-date.


HMRC conduct regular business checks on companies registered for MLR and these are often very detailed meetings. Bank statements, check book stubs etc are all checked and required to ensure a clear audit trail to show the level of cash moving through business is recorded.


What should I do be doing if I accept or pay HVPs?


• Review your policies and processes. If you qualify as a HVD under the new MLR, if you are not already registered, start the process of registering with HMRC in order to continue accepting cash from customers.
• Refine your risk assessments and ensure your continuous monitoring is up to date.
• Check you have had adequate training as the penalties for non or incorrect compliance are substantial.

What if I haven’t done this?


MLR offences carry both criminal and civil penalties with previous breaches counting against your company in the future. Not only does this mean that criminal and civil penalties could be issued against the company but you could face a prison sentence and financial penalties personally. This is not limited to directors, senior managers can also face these charges. It is very important that you know and understand the risks to both you and your company.

Altion Law are specialists at advising and representing parties who have received MLR investigation notices, MLR Penalties or Assessments from HMRC. If you would like to have a confidential discussion with a member of our team, if you complete our contact us form, we will call you back at a time that is suitable for you or you can contact us directly on 01908 414990.

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