- Key principles
In England and Wales, any individual or corporate that deals in criminal property may be liable under the Proceeds of Crime Act 2002 (POCA) for one of the three primary money laundering offences: concealing, disguising, converting or transferring the proceeds of crime (section 327); assisting or abetting such conduct (section 328); or handling the proceeds of crime (section 329).
The National Crime Agency (NCA) can provide a defence to any offence of money laundering. Any entity that is likely to deal with the proceeds of criminal activity should disclose the relevant transaction to the NCA. After disclosure, the NCA has a seven working day period in which to consider the activity and provide or refuse a “Defence Against Money Laundering” (DAML). Previously known as “consent”, the NCA changed its terminology to DAML following concerns that reporters of Suspicious Activity Reports (SARs) were seeking consent without fully understanding the money laundering provisions.
Firms conducting business in the regulated sector (typically financial and credit institutions, accountants, tax advisers and other professionals) are also obliged to disclose their knowledge or suspicion, or reasonable grounds for such, that another person is engaged in money laundering to the NCA. Disclosure is made in the form of a SAR. The obligation arises only if the information on which knowledge or suspicion is based came to the firm in the course of its business in the regulated sector. Failure to disclose such knowledge or suspicion constitutes an offence under section 330 POCA.
It is an offence for a person to disclose to another that an investigation into money laundering allegations is taking place, or, in the regulated sector, to “tip off” a person that a SAR has been submitted, where that disclosure is likely to prejudice the investigation (sections 333A and 342 POCA).
- Recent developments
- Practical tips in an investigation
- If an investigation uncovers suspected criminal activity, it is important to consider the related money flows and potential POCA liability: Which individuals or entities have received or might be receiving proceeds of crime? Who might possess criminal proceeds, and who might want to deal with such proceeds in future?
- Only regulated firms are under an obligation to disclose suspected money laundering - and in specific circumstances where they suspect money laundering by another person because of information received as part of their regulated business. In all other circumstances, disclosure is voluntary and will only be necessary if consent is needed in advance to deal in criminal proceeds.
- The submission of a SAR requires careful consideration of the consequences, including the possibility that the NCA will share the information with other law enforcement agencies in the UK or overseas for further investigation. If an entity is obliged to submit a SAR, or believes that a third party (such as an auditor) may be required to submit a SAR as a result of information unearthed during an investigation, careful thought should also be given to proactive self-reporting to other authorities.
- International perspective
Whilst the anti-money laundering laws and regulations of many business and financial centres share similar features, the laws of some jurisdictions differ on what relevant authorities consider to be a proceed of crime. For example, in jurisdictions that do not have an income tax regime, and therefore no laws against tax evasion, local legal advice might be required to determine whether suspicions about a person evading tax from another jurisdiction (where tax evasion is a crime) gives rise to an obligation to report to the relevant anti-money laundering authorities.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.