Criminal Liability for Money Laundering: Why every business should care

Earlier this year the Dutch authorities fined a luxury goods retailer €500,000 for failing to prevent money laundering. This followed a broader investigation in The Netherlands relating to a suspected Daigou scheme. That development is notable in its own right, but it is also a useful prompt for UK businesses. It lands at a time when the UK enforcement picture is becoming more demanding, with HMRC, Companies House, the Insolvency Service and the SFO all operating in a climate of higher expectations around prevention, escalation and evidencing that controls work in practice.

What is a Daigou scheme?

Daigou is a scheme through which China's import tax laws are evaded. Luxury goods are purchased outside China (such as in the UK, Europe, Australia or North America) often through cash or cash-like transactions. The goods are then sent to ‘friends or family' as personal-use packages or gifts. These goods are then retailed within China without the required import duties being paid.

In addition to the tax evasion inherent in a daigou scheme, the layering of purchases, use of intermediaries, and high level of cash flow required to pre-fund the scheme makes it an attractive method for organised crime gangs and drug cartels to launder the proceeds of crime.

Why does this matter in the UK now?

This is not just an overseas development. UK agencies are showing signs of using their tools more actively. In August 2025, HMRC brought its first-ever prosecution under the corporate failure to prevent the facilitation of tax evasion offence. That case – against Bennett Verby Ltd – is significant not only because it is a first, but because it suggests a greater willingness by HMRC to test these offences in court.

This is part of a broader UK enforcement trend: HMRC is becoming more willing to use the legislation available to it; Companies House is using its expanded powers more actively; and the Insolvency Service is building out a more assertive economic crime role. The overall direction of travel is towards a more joined-up, prevention-focused enforcement ecosystem in which businesses are expected not merely to have policies, but to show that those policies work in practice.

How does this create potential criminal liability for UK businesses?

Although daigou schemes can be funded through the proceeds of other crimes, foreign tax evasion is itself capable of being a predicate offence for the UK's money laundering offences under the Proceeds of Crime Act 2002 (PoCA). The UK has an ‘all crimes' approach to money laundering and this includes activity outside the UK that was either:

• unlawful in the country in which the activity took place, or
• lawful in that country but would be unlawful and subject to a potential penalty of 12 months imprisonment or more if the activity had taken place in the UK.

PoCA establishes a very low threshold for its offences but also allows AML regulated sector firms to seek consent to transact (through the granting of a complete defence to a money laundering offence) and so avoid criminal liability. PoCA's primary money laundering offences and the AML regulated sector offence of failure to report (s330) are triggered where there is knowledge or suspicion of a crime (or ought reasonably to have been suspicion, in the case of s330 PoCA). The UK courts have established that the threshold for suspicion is very low - anything more than “merely fanciful”.

This leaves UK businesses exposed to the risk of liability for money laundering (and, for the AML regulated sector, failure to report suspected money laundering) in similar circumstances to those reported in the Dutch enforcement action referred to above. Indeed, UK businesses are perhaps more exposed. The overseas element of the PoCA money laundering offences could bring the daigou scheme itself into scope, without the need to establish that the source of funds used for the scheme was itself the proceeds of crime. For example, even if the source of the funds being used to make the purchase of goods is legitimate, the transaction itself might nevertheless be an arrangement for the acquisition of criminal property (s328 of PoCA) where you suspect its ultimate goal is to profit from the criminal evasion of China's import tax.

Additionally, UK businesses could also face the risk of liability under the UK's corporate criminal offence of failure to prevent the criminal facilitation of tax evasion under Part 3 of the UK's Criminal Finances Act 2017.

The UK's Criminal Finances Act 2017 also includes an overseas offence (section 46) of failing to prevent the criminal facilitation of foreign tax evasion. This offence can be triggered if any of the conduct constituting part of the foreign tax evasion facilitation offence takes place in the UK. Failure to prevent offences are strict liability offences. This means, if the prosecuting authorities can establish the necessary elements of the offence, the burden falls to the company to evidence it had reasonable prevention procedures in place at the time the activity in question took place.

The practical point is that legal exposure may arise not only from receiving suspicious funds, but from staff actively helping customers make the scheme work. That could include splitting transactions, disguising common ownership across purchases, accommodating unusual invoicing or shipping requests, facilitating “gift” narratives, or otherwise helping a customer structure a transaction in a way that supports the underlying tax evasion.

What other financial crime issues arise in this context?

Daigou schemes are not the only type of activity that can create money laundering or failure to prevent risks for UK businesses. Any crime can create proceeds that a customer might seek to move, disguise, or legitimise through your services. This can include suspected sanctions evasion or suspected fraud, for example. Remember, liability can arise where you suspected (or, for the s330 offence, ought reasonably to have suspected) that your customer is involved in money laundering or your staff might be helping someone to commit crime. For money laundering, you do not need to have evidence that proves guilt, you simply need to be on notice of relevant facts that lead to a suspicion.

How can UK businesses mitigate their risk of liability?

To mitigate the risk of liability, UK businesses should ensure they have done the following:

• Perform a risk assessment to identify where and how your business might be exposed to suspected financial crime. This should include assessing how bad actors might seek to use your business to launder the proceeds of crime, and the opportunities and motivations your employees might have to help them do this.
• Adequately resource your compliance team to build, manage, and monitor financial crime compliance controls. This team should be the focal point for your anti-financial crime activity. The team should understand how to investigate internal reports and alerts about potential financial crime, identify when the threshold for suspicion has been met, and make any necessary reports to the relevant authorities.
• Develop policies, procedures and controls your employees must comply with. These should be mapped to the risks identified in your risk assessment, and clearly state your expectations that employees detect, report, and deter financial crime.
• Consider how technology can help you to detect, report and deter financial crime.
• Train your staff. Not just on your policies and procedures, but also on current and emerging typologies so they can successfully detect and report potential financial crime.
• Communicate a clear ‘tone from the top' about your expectations for financial crime compliance and how these align with your corporate values.
• Ensure there is a clear escalation and decision-making process for suspected financial crime. Employees should know when and how to raise concerns, who is responsible for assessing whether the threshold for suspicion has been met, and when legal, compliance or external reporting obligations need to be considered.
• Monitor staff compliance with your policies and procedures.
• Establish communication (whistleblowing) channels through which staff or customers can raise concerns without fear of retribution.
• Review your HR processes and controls to minimise your risk through pre-employment and continuing checks for higher risk employees. Set clear processes through which any issues identified through compliance monitoring or whistleblowing can be investigated and any appropriate action taken.
• Review your behaviours framework to ensure it aligns with a clear message that delivering work targets is not more important than how that work is delivered. Foster a healthy compliance culture by visibly rewarding staff that are living your corporate values and sanctioning staff that persistently fail to meet your expectations for financial crime compliance.
• Keep your controls under regular review and test whether they work in practice. Policies and procedures should be updated in light of new typologies, internal reports, whistleblowing concerns, control failures and lessons learned, so that your framework remains effective as risks evolve.

How can Hogan Lovells help?

We work seamlessly with our clients in-house legal and compliance teams to support them with regulatory, governance, risk and control requirements and interpreting them into considered and practical solutions. Supporting clients with developing pragmatic solutions that align with both applicable legal and regulatory standards and with their business operations.

The combination of our market-leading legal practice with our in-house consulting team allows us to deliver full-service financial crime compliance and risk solutions. Our consulting team brings decades of experience gained in-house leading legal, compliance and operational risk functions. Our clients benefit from a single interpretation of regulatory requirements and a seamless process provided by one firm. 

If you would like to discuss anything raised in this article or need help with building or reviewing your compliance controls, please reach out to any of the people listed in this article or your usual Hogan Lovells contact.