Money Laundering Flashcards
Stages of Money Laundering
(1) PLACEMENT of criminally-acquired cash in financial system
(2) LAYERING (Obscuring) the source of the money by passing it through complex transactions
(3) INTEGRATION: Providing legitimacy to the funds (e.g., by buying properties and claiming any further money to be rental income)
What are the principal money laundering offences under POCA
Concealing
Arranging
Acquiring/Using/Possessing
What is the “predicate offense” in a money laundering charge?
A ML offense assumes that a criminal offense has occurred in order to generate the criminal property being laundered.
No conviction for the predicate offense is necessary for someone to be prosecuted for money laundering.
Which crimes constitute predicate offenses
ANY CRIMES. Laundering the proceeds of any crime is an offense
What is the maximum punishment for a money laundering offense?
14 years in prison, unlimited fine.
Concealing under POCA
Offense to conceal, disguise, convert, or transfer criminal property, or remove criminal property from the UK.
Required mental state for CONCEALING under POCA
The offender must subjectively KNOW or SUSPECT that the property is criminal.
Defenses to Arranging and Concealing under POCA
Authorized disclosure to the relevant authority
Legal Professional Privilege
When is an authorized disclosure to the relevant authorities a defense to concealing?
(1) If made before any prohibited acts
(2) If made during a prohibited act, only if:
- the person had no knowledge or suspicion of the concealment when the act started
- disclosure was made as soon as was practicable
- disclosure was made on the person’s own initiative
(3) If made after the prohibited act, must have a good reason.
Arranging under POCA
Prohibits arrangements that the defendant KNEW or SUSPECTED were facilitating the acquisition, retention, use, or control of criminal property.
Required mental state for ARRANGING under POCA
(1) The offender intentionally or recklessly entered an arrangement that facilitated the acquisition of criminal property, and
(2) The offender knew or suspected that the arrangement would have that effect.
Acquisition, Use, or Possession under POCA
It is an offense if a person acquires, uses, or possesses criminal property
Mental state for Acquisition, Use, or Possession under POCA
Known or suspected
Defenses to Acquisition, Use, or Possession
Authorized disclosure to the relevant authority
Legal Professional Privilege
Adequate consideration is paid, without knowledge or suspicion
How do you report suspicions of money laundering
By submitting a Suspicious Activity Report. Failure to do so is an offense
Mental state required for failure to report
Objective test: Offense if the person SHOULD HAVE KNOWN OR BEEN SUSPICIOUS of the activity
Defenses to failure to report
Privilege
Lack of training (not for terrorism funding though)
What are Tipping Off offenses under POCA
Disclosing to a third person that a SAR has been made, if that disclosure might prejudice any investigations.
Disclosing an investigation to a third person
NOTE: Can only be done by someone in a regulated sector (solicitors, accountant, bankers etc.)
When must you report knowledge or suspicion of money laundering to the authorities?
As soon as is practicable, but a delay may be acceptable if the solicitor is taking prompt legal advice
Exceptions to the Tipping Off offense
Normal inquiries from solicitor about instructions/retainer
Including standard terms/language about AML laws
Defenses to Tipping Off
Disclosing to someone within the same company who is involved in the same undertaking
Disclosure between legal professionals who are involved in different undertakings, so long as those undertakings share common ownership, and are done in the UK, EEA, or country with equivalent AML
Disclosure between legal professionals about a current or former client for the purposes of preventing ML. Both parties must be from UK, EEA, or similar AML jxd, and have equivalent confidentiality obligations
Elements of Prejudicing an Investigation
(1) Person knows or suspects that a ML investigation has begun (or is about to begin)
(2) Tells any other person that is likely to prejudice the investigation
(3) Tampers with documents relevant to the investigation, or causes that to happen
Compare Tipping Off to Prejudicing an Investigation
Similar: Person making the disclosure does not need to intend to do either for the offense to apply
Different: Prejudicing an investigation can apply to those outside a regulated sector
Defenses to Prejudicing an Investigation
Person making the disclosure didn’t know or suspect that it would be prejudicial
Disclosures made to a client in connection with giving legal advice (so long as not furthering criminal purpose)
Disclosures made to any person in connection with legal proceedings (so long as not furthering criminal purpose)
