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What cash says about you

he old slogan was that a credit card 'says more about you than cash ever can'. Of course, this didn't mean that cash transactions are harder to trace, but it's certainly true - 'I want the money in small used banknotes' is the kidnapper's demand, and a cheque simply won't do.

For a number of years, there have been rules about 'money laundering', which is the movement of illegal cash through the financial system so that it ends up appearing to be legitimate. Since September 11 2001, these rules have been strengthened in an attempt to stifle international terrorism. Some new rules are just now taking effect which could have an effect on you, and will certainly have an effect on accountancy practices.

The new rules require any business which sells goods and accepts cash of more than ECU 15,000 (it's a European rule - that converts at the moment to about £10,500) for a single sale to register with Customs and Excise. Affected businesses will have to identify customers, retain evidence of customer identity checks, report suspicious transactions and train staff to recognise money laundering. This won't affect you if you only ever make small cash sales, or deal entirely in cheques and credit card payments.

The new rules also require accountants to substantiate the source of new money introduced into a business. It is no longer enough that we have a long-standing professional relationship with our clients. We are required by the law to ask for hard evidence of the source of the cash. We are not acting on our own suspicions, but we will have to ask more detailed questions than we once would have done. In the end, it is for the safety of everyone, but it involves all the honest people in a great deal of paperwork!