Cashing up

Be wary of inadvertent money laundering. David Sewell advises against accepting fee payments by cash

The Metropolitan Police’s Proceeds of Corruption Unit is seeking to identify “politically exposed persons”, typically members of overseas governments who have come into the country with ill-gotten-gains, who are considered likely to use the opportunity to launder these sums when paying schools fees for their children. They are also keen to identify those involved with drugs and tax evasion, who account for most of the rest of the illegal cash in the system.

ISBA’s longstanding advice to bursars has been to request all payments to be made via a bank account and only to accept cash for the first term’s fees.

While the money laundering regulations do not apply to schools as they are not a “relevant business”, schools do have to comply with the Proceeds of Crime Act, under which it is an offence to accept cash where you know or suspect it of having criminal origins. Normal people simply do not pay bills for thousands of pounds in cash. Thus payments of this size must be suspect – to the extent that they could be outside the tax system – and so wilful neglect (turning a blind eye) could make the school complicit in tax evasion.

ISBA expresses its concern for the safety of children carrying large sums of cash. They note that children from outside the EU with cash in excess of 10,000 euros have to complete a Cash Declaration Form on arrival, with potential penalties for misstatements, and HMRC has the power to seize it if they have suspicions.

David Sewell is a partner of haysmacintyre Chartered Accountants.