UNITED KINGDOM: ANTI-MONEY LAUNDERING RULES

What is the key legislation?

Parts 7 and 8 of the Proceeds of Crime Act 2002: “POCA” (for money laundered after 24 February 2003)

Money Laundering Regulations 2007 (SI 2007/2157) “MLRs” (for the regulatory requirements relating to firms within the regulated sector)

The Terrorism Act 2000 and Proceeds of Crime Act 2002 (Amendment) Regulations 2007

What are the offences?

Handling the proceeds of crime

Three money laundering offences relate to the direct handling of the proceeds of crime.  These are to:

  • Conceal, disguise, convert or transfer the proceeds of crime, or to remove the proceeds of crime from the jurisdiction of England and Wales: the simple money laundering offence (section 327 POCA).
  • Enter into, or become concerned in an arrangement, in which a person knows or suspects the retention, use or control of the proceeds of crime: the “aiding and abetting” offence (section 328 POCA).
  • Acquire, use or possess the proceeds of crime: the “handling stolen goods” offence (section 329 POCA).

Each of these requires the offender to know or suspect that money laundering is taking place.  Suspicion does not have to be clear or firmly grounded and based on specific facts, but the suspicion must be more than “merely fanciful” (R v Da Silva [2006] EWCA Crim 1654).  That knowledge or suspicion applies both to the criminal him (or her) self and those who facilitate the crime (including professionals) and family members living off the proceeds of the crime.

Criminal property is broadly defined to include any benefit from criminal conduct, including any gains on the original criminal property and any indirect benefits an individual receives from it.

If the benefit was generated from criminal activity abroad, it will be considered criminal conduct in the UK if the conduct was:

  • criminal in the relevant country at the relevant time; and
  • criminal if it had occurred in the UK and would be punishable by more than a year in prison.

Failure to Report Possible Money-Laundering

It is also an offence for those in the regulated sector (for example, but not limited to, law firms and banks) to fail to report money laundering.  Each business in the regulated sector must appoint a Money Laundering Reporting Officer (“MLRO”) to whom any suspicions of money laundering must be reported.  The MLRO is then obliged to disclose suspected money laundering to the authorities.  It is also an offence to prejudice or “tip off” any individual who might prejudice the authorities’ investigation.  Three offences are aimed at enforcing this behaviour by individuals working in the regulated sector (“Regulated Individuals”).

  • Failure to disclose: where a Regulated Individual knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in an offence listed above but fails to disclose that knowledge or suspicion to the MLRO (section 330 POCA).
  • Failure to disclose (MLRO): where the MLRO knows or suspects, or has reasonable grounds to know or suspect, money laundering, having been provided with the information under section 330 and fails to make the necessary disclosure to the authorities as soon as practical after the information comes to him (or her). The MLRO will have a defence if he has a reasonable excuse for not disclosing the information (section 331 POCA, section 332 POCA creates a similar offence in relation to non-regulated businesses that decide, on a risk-based approach, to set up an MLRO system).
  • Tipping off: where a Regulated Individual knows or suspects that a person’s suspected involvement with money laundering is under investigation or in contemplation of investigation, and discloses information potentially prejudicial to that investigation to any person likely to prejudice any investigation (section 333A POCA).

Any individual (whether a Regulated Individual or not) can commit the following offence:

  • Prejudicing the investigation: where any individual knows or suspects that a money laundering investigation has commenced or is about to be commenced relating to another person and the individual discloses material information to any third party which:
  • is likely to prejudice the investigation; or
  • interferes with relevant material (section 342 POCA).

What are the Sanctions?

Penalties for the various offences will vary depending on a range of factors.  However, the maximum penalties available to prosecutors are:

  • Sections 327, 328 or 329 POCA: 14 years imprisonment or a fine or both;
  • Sections 330, 331 or 332 POCA: 5 years imprisonment or a fine or both;
  • Section 333A POCA: 2 years imprisonment or a fine or both;
  • Section 342 POCA: 5 years in prison or a fine or both.
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