Recruiters have reacted with a mixture of criticism and concern to the government's new money-laundering regulations that could see individual recruiters sent to prison for up to five years (see Recruiter, 28 November 2007).

Speaking at a seminar organised by Blake Lapthorn Tarlo Lyons in London, law firm partner Frances Lewis explained that under the Money Laundering Regulations 2007 that came into effect on 15 December 2007, certain categories of recruitment businesses would be caught by the new law and would be required to register with Revenue and Customs.

"You are going to need to register if you do executive search or if you are a payroll agency," said Lewis.

Executive search firms need to register by 1 April and payroll companies by 1 July. It was an offence not to do so, said Lewis, with up to two years in jail for those who don't comply.

"The whole ball game changes once serious criminal penalties are involved," Kevin Barrow, a partner at Blake Lapthorn Tarlo Lyons told Recruiter.

Speaking after the seminar, Julie McCarthy, a legal counsel at Anders Elite, told Recruiter: "I think it makes it very difficult to do our job. More red tape doesn't help business."

Andrew Middleton, a director of Zenon Recruitment, said: "Because our company does executive recruitment and supplies specialist executives to the aviation industry, we are caught by the legislation. It's a serious concern."

Stephen Smith, a senior solicitor at Blake Lapthorn Tarlo Lyons, said: "The key issue is to appoint a money-laundering reporting officer. This is the person who is personally and criminally liable."

Money Laundering Regulations 2007: Key Facts

Who is caught by the regulations?

• Recruitment agencies involved in supplying permanent or interim directors, board level staff, company secretaries, or partners of a partnership

• Payroll agents


Any company falling within the regulations must:

• Register with HMRC

• Appoint a money-laundering reporting officer

• Put in risk-based systems and controls covering:

adequate procedures

customer due diligence

training of staff

record keeping