Society denounces HMRC legislation
10 September 2012
The Recruitment Society is campaigning against the money laundering regulations introduced in December (Recruiter,>/i> 6 February) that could see recruiters sent to prison for up to five years.
The Recruitment Society is campaigning against the money laundering regulations introduced in December (Recruiter, 6 February) that could see recruiters sent to prison for up to five years.Steve Huxham, chairman of the Society, told Recruiter he would bring the issue up as part of a lobby of Parliament by SME trade associations in early March.
Speaking on behalf of the Recruitment Society, Huxham said the regulations were "a complete nonsense".
"I am not convinced that HMRC (Her Majesty's Revenue & Customs) knows how recruitment agencies operate," he added.
Under the Money Laundering Regulations 2007, recruitment agencies involved in supplying permanent or interim directors, board level staff, company secretaries or partners of a partnership must apply to register with HMRC by 1 April.
They must also appoint a money laundering reporting officer, and put in risk-based systems and controls covering customer due diligence procedures, training of staff and record keeping.
Recruiters caught by the regulations who fail to comply could face a prison sentence of up to five years, as well as an unlimited fine.
Huxham said: "The guidelines seem to suggest that recruiters who get involved in placing company directors and company secretaries in permanent positions need to register, but there are two problems.
"First, it's not the agency who actually makes the appointment. The agency may draw up the shortlist, but it's the client who decides.
"Second, there's only fee. There's no money in and money out, which is the whole point of money laundering, so the basic requirement for money laundering to occur is not met."
Huxham said everyone wants money laundering stamped out, but added that this legislation was like a very blunt and ill thought-out instrument, which will add to overhead costs for all recruiters, particularly those with multiple branches.
Responding to Huxham's comments an HMRC spokesperson said that money laundering was "not as simple" as Huxham believed. "A recruitment agency could be used to appoint directors to a company involved in money laundering or terrorist financing," he said.
