The proceeds of crime could be laundered through a pension scheme.
At worst, this could leave the trustees open to criminal charges under anti-money laundering legislation. This is likely to be rare but trustees should be alert to the possibility.
They are not alone in this. To varying degrees, individuals and businesses receiving money from others are open to the same risk.
Trustees' best defence is to look out for unusual behaviour.
For example, a DC member might signal unexplained wealth by asking them to accept unusually large AVCs. Shortly afterwards the member might apply to transfer their entire pot to another scheme (be it genuine or a potential liberation vehicle). Or the member might want to draw it all as a lump sum.
Briefly the main offences are:
- disguising or transferring the proceeds of crime (concealing an offence)
- entering into an arrangement knowing or suspecting it involves the proceeds of crime (aiding and abetting)
- using or possessing the proceeds of crime (handling stolen goods).
Note, however, that a person only commits one of these offences if they knew money was being laundered, or suspected it.
For this purpose, you "know" only if you have actual knowledge the money originated in crime.
You do not "suspect" if it is fanciful to imagine criminal origins. But you can "suspect" without being able to point to specific facts evidencing criminal behaviour.
If trustees do come to know of, or suspect, money laundering and the business is in the regulated sector (e.g. financial and other professional services), they should follow the firm's internal procedures. In other cases, trustees should take legal advice.