Proceeds of crime act 2002

Question 1

What does Section 328 of the Proceeds of Crime Act 2002 state

Answer 1

A person commits an offence if they enter into or become concerned in an arrangement they know or suspect facilitates the acquisition, retention, use, or control of criminal property by or on behalf of another person.

Question 2

What is the mental element required for an offence under Section 328 (arranging)?

Answer 2

The person must “know or suspect” that the arrangement facilitates an act regarding the proceeds of crime. The threshold for suspicion is subjective - Suspicion involves thinking there is a possibility, more than fanciful

Question 3

What is the definition of ‘criminal property’ under Section 340 of POCA 2002?

Answer 3

Criminal property is any person’s direct or indirect benefit from criminal conduct, including stolen property and profits from the crime - the person must know or suspect that the property constitutes or represents a benefit from criminal conduct.

Question 4

What is a defence to the offence under section 328 (arranging) of the Proceeds of Crime Act

Answer 4

The making of an authorised disclosure is available as a defence to the offence under section 328.

Question 5

Under s.338, who must make the disclosure to avoid committing an offence?

Answer 5

The disclosure must be made by the person who, but for the disclosure, would be committing an offence.

Question 6

What must a disclosure under section 338 relate to in order to be authorised?

Answer 6

The disclosure must relate to criminal property and satisfy specific requirements regarding timing and the person to whom it must be made.

Question 7

Who can a disclosure under section 338 be made to?

Answer 7

disclosure can be made to a constable, an officer of His Majesty’s Revenue and Customs, or a nominated officer. for sols it will be the nominated officer.

Question 8

What is the responsibility of the nominated officer regarding money laundering?

Answer 8

The nominated officer must report concerns about money laundering to the National Crime Agency (NCA).

Question 9

What is a Suspicious Activity Report (SAR)?

Answer 9

A SAR is a report filed by the nominated officer to the NCA when there is suspicion of money laundering or other suspicious financial activity

Question 10

Is the nominated officer obligated to file a SAR if concerns are raised by others in the firm?

Answer 10

No, the nominated officer must exercise their own judgement to determine if the concerns warrant reporting to the NCA.

Question 11

What risk does the nominated officer face if they fail to report reasonable suspicions of money laundering?

Answer 11

The nominated officer risks committing a criminal offence if they fail to file a report when there are reasonable grounds to suspect money laundering.

Question 12

Under what condition does a solicitor avoid committing an offence under s 328?

Answer 12

If the solicitor makes an authorised disclosure to the firm’s nominated officer as soon as is practically possible prior to the transaction taking place and obtains consent from NCA.

Question 13

What prevents a nominated officer from giving consent after making a SAR to the NCA?

Answer 13

The nominated officer cannot give consent until specific conditions set by the NCA are met

Question 14

What is the first condition under which a nominated officer can give consent after making a SAR

Answer 14

If the NCA explicitly grants consent.

Question 15

What is the second condition allowing a nominated officer to give consent after a SAR?

Answer 15

If the NCA does not respond within seven working days, starting from the first working day after the disclosure.

Question 16

What happens if the NCA refuses consent?

Answer 16

The nominated officer cannot give consent unless:

1. The NCA subsequently grants consent within 31 days of refusal, or
2. 31 days have passed since the date of refusal without further action.

Question 17

When can a solicitor make an authorised disclosure DURING a prohibited act under s 338?

Answer 17

If the disclosure is made while the act is ongoing, the solicitor did not initially know or suspect the property was criminal, and the disclosure is made promptly upon suspicion.
=> disclosure MUST be made on sols own initiative.

Question 18

When can a solicitor make an authorised disclosure AFTER completing a prohibited act?

Answer 18

If the solicitor has a good reason for not disclosing beforehand and makes the disclosure as soon as practicable on their own initiative.

Question 19

What is the overseas defence to s 328 (arranging)?

Answer 19

Where the individual knew or believed that the ‘criminal conduct’
occurred abroad and the conduct in question was lawful in the country where it took place.
=> secretary of state can override this provision.

Question 20

When does a person commit an offence under s.329 - Acquisition, use or possession

Answer 20

When they acquire, use, or have possession of criminal property.

Question 21

Who is typically prosecuted under s 329 (acquisition, use or possession)?

Answer 21

Those who had no involvement in the original crime but have benefited from it, such as family members who lived off the proceeds of crime.

Question 22

How might s 329 (acquisition, use or possession) be relevant to solicitors?

Answer 22

It may apply if a solicitor receives money for costs where there is a possibility that the money is criminal property, such as from a client charged with a criminal offence

Question 23

What defences are available under s 329 (acquisition, use or possession)?

Answer 23

1.Authorised disclosure defence
2 .Overseas defence
3. Adequate consideration defence

Question 24

What is the adequate consideration defence under s 329 (acquisition, use or possession)?

Answer 24

An offence is not committed if adequate consideration was given for acquiring, using, or possessing criminal property unless the individual knew or suspected the goods or services might help carry out criminal conduct.

Question 25

How does the CPS guidance apply to the adequate consideration defence for solicitors?

Answer 25

It states that the defence applies when professional advisers receive money for legitimate costs, including disbursements, as long as the fees charged are reasonable.

Question 26

What is the offence under s 327 (Concealing)

Answer 26

It is an offence to conceal, disguise, convert, transfer criminal property, or remove it from England, Wales, Scotland, or Northern Ireland

Question 27

What is the purpose behind the offence under s 330 (failure to disclose)?

Answer 27

The purpose is to ensure that information about suspected money laundering is passed to the authorities promptly so that a proper investigation can be carried out.

Question 28

What are the conditions for committing an offence under s 330 (failure to disclose)?

Answer 28

A person commits an offence if:

(a) They know or suspect, or have reasonable grounds to know or suspect, that a person is engaged in money laundering.
(b) The information comes to them in the course of a business in the regulated sector.
(c) The information may assist in identifying the money launderer or the location of any laundered property.
(d) They do not make a disclosure as soon as practicable.

Question 29

Is it necessary for money laundering to have actually occurred for an offence to be committed under s 330 (failure to disclose)?

Answer 29

No, it is not necessary for money laundering to have occurred. A prosecution can still be pursued even if there is insufficient evidence to prove that money laundering was planned or took place.

Question 30

What is the key addition to the ‘know or suspect’ test in s 330 (failure to disclose)

Answer 30

The addition is “or has reasonable grounds to know or suspect,” which means a solicitor can commit an offence even if they genuinely did not know or suspect money laundering.

Question 31

How does the court determine if a solicitor should have known or suspected money laundering under s 330 (failure to disclose)?

Answer 31

The court will assess, based on the information available to the solicitor at the time, whether the solicitor should have known or at least suspected that money laundering was occurring => OBJECTIVE TEST - sol expected to maintain greater vigilance.

Question 32

What must the information obtained by the solicitor be able to identify under s 330 (failure to disclose)

Answer 32

Information obtained by sol MUST be of some USE to authorities.
The information must help identify either:
(a) the money launderer, or
(b) the location of the laundered property.

Question 33

What happens if a solicitor is genuinely unable to provide useful information to the authorities under s 330 (failure to disclose)?

Answer 33

If the solicitor cannot provide useful information, they will not breach s 330.

Question 34

Can a solicitor assume that the information they have is of no use to the authorities under s 330 (failure to disclose)?

Answer 34

No, the solicitor cannot blindly assume the information is of no use.

Question 35

What is the training defence under s 330 (failure to disclose)

Answer 35

If an employee of a firm undertaking ‘relevant business’ has not received proper anti-money laundering training, and they do not know or suspect money laundering but there were reasonable grounds to suspect it, they will not commit the offence under s 330.

Question 36

Can legal professional privilege be used as a defence under s.330 (failure to disclose)?

Answer 36

Yes, a solicitor is not required to disclose privileged information under s 330 POCA 2002 when it concerns seeking or giving legal advice or relates to legal proceedings, unless the communication is intended to further a criminal purpose.

Question 37

What is the defence for ‘tipping off’ for making a disclosure?

Answer 37

The person who made the disclosure did not know or suspect that it would prejudice an investigation into money laundering

Question 38

what is the other defence for ‘tipping off’ for making disclosure of investigation?

Answer 38

if the solicitor intends to dissuade the client from engaging in the alleged money laundering, though this exception should be used with caution.

Question 39

What SRA Principle is breached if a solicitor is directly involved in money laundering?

Answer 39

A solicitor who is directly involved in money laundering will be in breach of SRA Principle 4, which requires solicitors to act with honesty.