New money laundering regulations that come into effect on 15 December will impose additional legal responsibilities on recruiters. Failure to comply could see senior managers sent to jail for up to two years and/or face an unlimited fine.

Recruiters supplying permanent or interim directors, shadow directors, or partners of a partnership, or others in similar positions, are defined as trust or company service providers (TCSP) under the regulations, and will have a number of legal responsibilities.

These include carrying out identity checks on the organisation to whom they supply staff, identifying the risk of money laundering posed by that organisation, and reporting suspicious activity to the Serious Organised Crime Agency.

In a statement issued to Recruiter, Her Majesty’s Revenue & Customs (HMRC) explained that the reason why recruiters supplying senior level staff fell within the regulations was because “these people will have control over the assets of that company or trust and so are most vulnerable to being (willingly or unwillingly) used by criminals to launder funds”.

Worryingly, industry professionals contacted by Recruiter were either unaware of the regulations or were unavailable for comment.

Andrew Cholerton, a director of Price Guy Cholerton, who supplies staff at director and partnership level, told Recruiter: “It’s totally new to me. I have never heard of it.”

He added: “While I am all for making recruitment a more respectable activity, there is enough red tape and asking small businesses to do the government’s bidding is not necessarily good for entrepreneurship.”

Belinda Brooke, the Recruitment & Employment Confederation’s (REC) head of legal services, said: “We are still in the process of interpreting what the possible outcomes of the regulations would be and will be advising our members accordingly once we have enough information to offer practical guidance.

“The regulations are being brought into force to prevent funding for terrorism and we would support such proposals, but we would question whether any purpose would be served by including employment agencies and businesses.”

Candidates put forward by recruiters may also have to register as TCSPs, where they provide their services by way of a business — for example, through a personal