Money Laundering and Terrorist Financing Flashcards
What is Money Laundering?
For the purposes of English law, MONEY LAUNDERING (ML) is any activity in relation to the proceeds of crime, even passive activity such as mere possession.
What is Terrorist Financing (TF)?
TERRORIST FINANCING (TF) is the raising, moving, storing and using of financial resources for the purposes of terrorism.
What does the Money Launder and TF law impose?
The law imposes specific requirements on barristers not to become involved in money laundering or terrorist financing arrangements,
and further imposes duties on barrister to report clients to the National Crime Agency if they suspect that money laundering or terrorist financing is occurring.
However the duty to report is limited to certain types of work that barristers may become involved in.
What are the duties imposed on ALL barristers?
(a) It is the duty of EVERY BARRISTER to understand the principles of ML and TF and how to recognise them.
(b) Every barrister owes a duty NOT to become involved in conduct that involves ML or TF.
(c) The ORDINARY CONDUCT OF LITIGATION has been held not to constitute conduct that involves ML or TF. This means that MOST of the things that barristers do will NOT trigger anti ML or counter TF obligations. However, there are circumstances which may take litigation out of the “ordinary”. Further, the “ordinary conduct of litigation” exception does not apply to activities performed outside a litigation or arbitration context.
(d) Barristers must know how to address the risks of becoming involved in conduct that involves ML or TF and how and when to take the correct and necessary action when such risks arise.
(e) Barristers MUST COMPLY with the anti-ML and counter-TF requirements of the BSB and the BSB Handbook
(i) These requirements are not part of the Ethics syllabus.
(f) The law in this area is broadly drafted and the consequences of failing to comply are potentially severe (including criminal penalties of up to 14 years’ imprisonment).
How do the provisions of POCA and Terrorism Act work with Legal Professional Privilege?
(a) The provisions of POCA and the Terrorism Act do NOT override a client’s legal professional privilege. Barristers MUST NOT make any form of disclosure to the authorities of information that is covered by privilege.
(b) Legal Professional Privilege does NOT protect communications made in furtherance of a crime. Therefore, a letter from a client asking his lawyers to conceal criminal property is not covered by the privilege.
What are the enhanced duties when carrying out Transactional or Tax work?
(a) Money Laundering Regulations cover two situations in which barristers might be involved. REMEMBER that the ordinary conduct of litigation is not caught by any of these provisions. The two situations are providing transactional legal services and tax advice.
(b) If you are instructed:
(i) As an independent legal professional when participating in financial or real property transactions; and
(ii) The transactions concern:
(1) Buying and selling real property or business entities;
(2) Organising contributions necessary for the creation, operation or management of companies;
(3) The creation, operation or management of trusts, companies or similar structures; and
(iii) You are participating in the transaction by:
(1) Assisting in the planning or execution of the transaction; or
(2) Otherwise acting for or on behalf of a client in the transaction,
YOU ARE WITHIN THE SCOPE OF THE REGULATIONS.
(c) If you are acting as a TAX ADVISOR in relation to the provision of tax advice then YOU ARE WITHIN THE SCOPE OF THE REGULATIONS.
(d) If you are within the scope of the regulations then you MUST:
(i) UNDERTAKE Customer Due Diligence;
(ii) KEEP A RECORD of the Customer Due Diligence that you carry out;
(iii) MONITOR your relationship with the customer.
(e) You must take a RISK BASED approach to these obligations, i.e. the greater the risk posed by the client the more stringently the obligations must be adhered to.
(g) Where you act upon instructions from a solicitor you may be able to rely on their Customer Due Diligence. HOWEVER, you remain legally and PEROSNALLY responsible for those checks and, by extension, for any failings in them.
What are the potential indicators or RISK for those within scope of tax work?
Potential indicators of risk include:
(i) The lay client being based in a high risk country or region;
(ii) The nature of the business operated by the client;
(iii) The source of the funds involved in the transaction;
(iv) The personal circumstance of the client or someone involved in your instructions.
What offences can Barristers commits within this area?
When you are undertaking work that falls within the scope of the Regulations you may commit a criminal offence if:
(i) You suspect that ML or TF is taking place and you fail to make the required disclosure to the authorities; or
(ii) You make an unauthorised disclosure of your suspicion of ML or TF or of your knowledge of a ML investigation to another person (this offences is commonly known as “tipping off”).
When and how do you make a disclosure of ML or TF?
When you are required to make a disclosure of suspected ML or TF this must be done by making a report to the National Crime Agency.
What should you do if you are unclear about your obligations?
If you are unclear as to your obligations you must take independent legal advice.
