The failure to disclose offence for accountants

Section 330 of the Proceeds of Crime Act 2002 makes it a criminal offence for someone working in the regulated sector, which includes accountancy and tax practices, not to report money laundering they know of, suspect, or have reasonable grounds to know of or suspect. The report must go to the firm’s nominated officer or the National Crime Agency as soon as practicable. Failing to report carries up to five years in prison, and the main statutory escape route, a “reasonable excuse”, is narrow.

Who can commit the offence?

The offence applies only where the information came to the person “in the course of a business in the regulated sector”. Schedule 9 to the Act defines that sector. For practices, the key entries are the provision of accountancy services to other persons by a firm or sole practitioner who does so by way of business, the provision of material aid, assistance or advice in connection with the tax affairs of other persons, statutory audit work, and acting as an insolvency practitioner.

The explanatory notes to the Act make two points worth remembering. The duty reflects the view that people in the regulated sector should exercise a higher level of diligence than other businesses. And where a business carries out some listed and some unlisted activities, only those carrying out the listed activities are caught. Information picked up purely socially, outside the course of business, does not trigger the offence, although ICAEW’s helpsheet points out that you cannot “un know” something about a client that will affect your professional work.

What are the four conditions?

Section 330 is built from four conditions, all of which must be met:

1. Knowledge or suspicion (s330(2)). The person knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in money laundering.
2. Source of the information (s330(3)). The information behind that knowledge, suspicion or reasonable grounds came to them in the course of a business in the regulated sector.
3. Usefulness (s330(3A)). They can identify the other person or the whereabouts of any laundered property, or they believe, or it is reasonable to expect them to believe, that the information will or may help to identify them.
4. No report (s330(4)). They do not make the required disclosure to a nominated officer or to a person authorised by the Director General of the NCA as soon as practicable after the information comes to them.

“Money laundering” is defined in section 340(11) as an act that is an offence under sections 327, 328 or 329, an attempt, conspiracy or incitement to commit one, or aiding and abetting one. Because those principal offences cover any benefit from criminal conduct, including tax evasion, the duty is much wider than the phrase suggests. The principal offences are explained on our page on the principal money laundering offences. Section 330 contains no minimum amount.

Why is “reasonable grounds” such a low bar?

The explanatory notes describe section 330(2)(b) as introducing a negligence test. The offence can be committed where a person had reasonable grounds for knowing or suspecting, even if they did not actually know or suspect. An accountant who fails to put two and two together, where a reasonable professional would have, is still exposed.

The only statutory softening of that test is the training defence in section 330(7). It applies to a person who did not actually know or suspect and whose employer had not given them the training specified by the Proceeds of Crime Act 2002 (Failure to Disclose Money Laundering: Specified Training) Order 2003. The defence protects the untrained employee, not the firm or its principals, which is one reason supervisors focus on AML training records.

What must be reported, and how quickly?

Section 330(5) defines the required disclosure: the identity of the other person if known, the whereabouts of the laundered property so far as known, and the information on which the knowledge or suspicion is based. In a firm the disclosure is normally an internal report to the nominated officer, usually the MLRO, who then decides whether to report to the NCA. A sole practitioner with no nominated officer reports directly to the NCA. Section 330(9A) allows a relevant professional adviser to consult the nominated officer for advice without that conversation counting as the disclosure, provided it is not intended as one.

“As soon as practicable” is not defined. It runs from when the information comes to the person, not from when the file is reviewed or the job is finished. The nominated officer has a parallel duty in section 331 to pass reports on to the NCA, with the same reasonable excuse defence in section 331(6). How the firm’s reporting route works is covered on our MLRO role page.

What counts as a reasonable excuse?

Section 330(6)(a) says no offence is committed if the person has a reasonable excuse for not making the required disclosure. The Act does not define the phrase. HMRC’s Economic Crime Supervision Handbook, at ECSH23000, puts it as a defence available where a person can demonstrate they had a reasonable excuse, which places the onus on the person relying on it to show why.

Several common reasons for staying silent are unlikely to qualify:

• Client confidentiality. Section 337 says a disclosure made in the course of a profession to a nominated officer, as soon as practicable, does not breach any restriction on disclosing information, however imposed. Confidentiality is therefore not a barrier to reporting.
• The amount is small. There is no threshold in section 330.
• The client has promised to put it right. If the suspicion relates to past conduct that produced a benefit, the proceeds already exist.
• Fear of losing the client or the fee. Commercial reasons sit uncomfortably with a statutory duty.

Section 330(8) also requires a court deciding whether the offence was committed to consider whether the person followed relevant guidance approved by the Treasury, which for accountants is the CCAB guidance. Where a decision is made not to report, the reasoning should be written down. ICAEW’s suspicious activity reports helpsheet gives the example of a police raid on a client’s premises: in most cases a report is needed, and if the accountant is convinced of the client’s innocence they should carefully document the decision not to report.

What other defences and exceptions are there?

• Privileged circumstances (s330(6)(b), (7B), (10), (11) and (14)). A relevant professional adviser, meaning an accountant, auditor or tax adviser who belongs to a qualifying professional body, does not commit the offence where the information came to them in privileged circumstances, such as when giving legal advice. It does not apply to information given with the intention of furthering a criminal purpose. This is covered in detail in our page on the privilege reporting exemption.
• Training (s330(7)). As above, for those who did not actually know or suspect.
• Overseas conduct (s330(7C)). No offence where the person knows or believes on reasonable grounds that the laundering is happening outside the UK, it is lawful there, and it is not of a prescribed description.

What are the penalties?

Under section 334(2), the section 330 offence is punishable on summary conviction by up to six months’ imprisonment, a fine or both, and on indictment by up to five years’ imprisonment, a fine or both. The same maximum applies to the nominated officer offences in sections 331 and 332. Telling the client about a report is a separate offence; see our page on tipping off.

How might this arise in practice?

Illustration only. A bookkeeper at a practice prepares VAT returns for a café. Card takings in the bank match the till reports, but cash takings recorded on the till fall to almost nothing for three months while purchases stay level. The bookkeeper notices the pattern, assumes the owner is “just busy” and files the returns as instructed.

The bookkeeper may not have actually suspected anything, but a reasonable person with that information would have had grounds to suspect that takings were being suppressed and tax evaded. The second and third conditions are met because the information came through regulated work and identifies the client. The right course was an internal report to the MLRO when the pattern was spotted. If the firm had not trained the bookkeeper, section 330(7) might protect that individual, but not a partner who reviewed the same figures. Our guide to money laundering red flags lists similar warning signs.

What are the common mistakes?

• Treating suspicion as requiring proof. The test includes suspicion and reasonable grounds, not certainty.
• Waiting until the year end or the next meeting before reporting.
• Telling the client that a report has been made, which risks the separate tipping off offence.
• Relying on privilege for compliance work, such as preparing returns, that is not legal advice.
• Failing to record why a matter was not reported.

Solar Protect runs fee protection schemes for accountancy and bookkeeping practices. See how our accountant schemes work or read fee protection schemes for accountants.

Related Accountapedia entries

• Internal suspicion reports to the MLRO
• Suspicious activity reports for accountants
• Reporting a suspicion about a former client
• Tax evasion and money laundering reporting
• Defence against money laundering (DAML) requests
• Misleading the auditor: the section 501 offence
• The offence of concealing documents from HMRC

Sources

• legislation.gov.uk: Act 2002 c. 29, section 330
• legislation.gov.uk: Act 2002 c. 29, schedule 9
• legislation.gov.uk: Act 2002 c. 29
• ICAEW: Suspicious activity reports
• legislation.gov.uk: Act 2002 c. 29, section 340
• legislation.gov.uk: SI 2003/171
• ICAEW: Issue 29 september 2023
• ICAEW: Firm wide risk assessments q and a
• legislation.gov.uk: Act 2002 c. 29, section 331
• GOV.UK: Manual page ECSH23000

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.