Money Laundering Guidance and Model Policy - Fee Payments by Cash

Sep 1, 2026

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Guidance outlines how money laundering offences operate and why they matter for schools, particularly in cash fee payments alongside donations and other unusual transactions involving complex banking or transfer arrangements. It explains laundering as disguising the origin and destination of criminal proceeds, notes major UK risks and consequences, and emphasizes reasonable steps consistent with legislation. It sets expectations for vigilance, due diligence, and alignment with “know your customer” approaches to protect institutions from reputational and legal harm.

LanguageEnglish

CategoryLetters

FormatDOCX

Pages9

Reading Time3 min

AccessFree to download

Introduction

Background and Definitions

The Law

Offences under Money Laundering Legislation

Typical Scenarios in the Independent School Sector

Charity Commission Advice

Fee Payments by Cash and Money Laundering Introduction This note provides a high-level overview of money laundering offences and how these potentially impact schools. Money laundering is the process by which the proceeds of criminal or illegally obtained money are processed or ‘layered’ to mask their true origin and to create the appearance that they have come from a legal source. Whilst the note focuses on fee payments in cash, schools should also be vigilant in relation to other cash payments, for example donations, or other unusual payments, particularly where these involve complex banking and transfer arrangements. The purpose of this guidance is to clearly demonstrate that the Independent Schools Council and its affiliated associations embrace the underlying principles of money laundering legislation and are taking reasonable steps to minimise the likelihood of such activities within the sector. Background and Definitions Money laundering is a term designed to cover several offences. These offences relate to the improper handling of funds that are the proceeds of criminal acts, or terrorist acts, so that they appear to come from a legitimate source. It relates to both the activities of organised crime but also to those who benefit financially from dishonest activities such as receiving stolen goods. Money Laundering is described as: “a scheme in which criminals try to disguise the identity, original ownership, and destination of money that they have obtained through criminal conduct. The laundering is done with the intention of making it seem that the proceeds have come from a legitimate source”. While money laundering isn't always obvious, the consequences are severe. The National Crime Agency's National Strategic Assessment of Serious and Organised Crime 2018 states that there is a realistic possibility that the scale of money laundering impacting the UK annually is in the hundreds of billions of pounds. Money laundering is not only a crime itself, but also a key enabler of other serious crimes such as modern slavery, drugs trafficking, fraud, corruption, and terrorism. When exercising vigilance in the area the banks’ view is paraphrased as: “We don’t have set limits on cash deposits, but for large or unusual transactions we may ask customers for information on how the cash was obtained and seek proof of this. The Financial Conduct Authority (FCA) requires banks to have "adequate policies and procedures sufficient to counter the risk that they might be used to further financial crime". In addition to being alert to unusual or suspicious transactions, banks must "identify and monitor customer relationships". In effect, this is a requirement for banks to "know their customers" and be confident they are not using accounts to receive the proceeds of crime. Schools are encouraged to take a similar approach. The UK is an attractive destination for Politically Exposed Persons (PEPs – they are defined broadly as any individual who is entrusted with prominent public functions. The full definition can be found in Regulation 35 (12) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017) seeking to launder the proceeds of corruption. This poses a significant reputational risk to the UK and organisations within the UK. Corrupt PEPs continue to travel to the UK to evade law enforcement attention in their home country. The UK is appealing to PEPs due to the rule of law, judicial processes and adherence to human rights legislation. The Law The Proceeds of Crime Act 2002 (POCA), as amended, creates a range of criminal offences arising from dealing with proceeds of crime. The four main offences that may be committed under money laundering legislation are: concealing, disguising, converting, transferring, or removing criminal property from anywhere within the UK; entering into or becoming concerned in an arrangement which a person knows or suspects facilitates the acquisition, re

FAQs

How does the guidance define money laundering and why is it relevant to schools?

Money laundering is the process of processing or “layering” criminally obtained money so its true origin is masked and it appears to come from a legal source. The guidance links this risk to school fee payments in cash and other unusual cash-related transactions such as donations.

What are the main money laundering offences described in the guidance?

The guidance lists offences including concealing/disguising/converting/transferring/removing criminal property, entering into or becoming concerned in arrangements that facilitate acquisition/retention/use/control of criminal property, acquiring/using/possessing criminal property, and actions that might prejudice an investigation such as falsifying or destroying documents.

What kind of vigilance should schools apply for cash and unusual transactions?

Schools should be alert to large or unusual cash payments and arrangements, seek information and evidence about how funds were obtained, and adopt a similar approach to banks’ “know your customers” practice to avoid using school accounts to handle proceeds of crime.

Sep 1, 2026

Upload by Sage