Proceeds of Crime Act 2002 Flashcards
Give an overview of the s328 ‘arranging’ offence
Offence if a solicitor ‘enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person’
Encompasses any act which assists ML by another, so most mainstream solicitor work would be an ‘arrangement’ (transferring a house from a client to their relative)
Maximum sentence of 14 years’ imprisonment
What does the ‘know or suspect’ element of s328 mean?
Threshold is suspicion for the mental element of the offence to be satisfied
- Subjective test with a low bar
Suspicion means ‘a possibility, which is more than fanciful’
- Doesn’t have to be firmly grounded on specific facts
What does the ‘criminal property’ element of s328 mean?
Defined as a person’s direct or indirect benefit from criminal conduct
- Could be stolen property or profits from original crime
D must know or suspect that the property constitutes a benefit from criminal conduct
Criminal conduct is any offence in the UK or abroad (if the conduct would have been criminal in the UK)
- So can rob a bank abroad and this counts as criminal property for the offence
Do litigation proceedings count as ‘arranging?’
Taking steps in litigation (including pre-action steps) is not included in definition for arranging
- The exclusion still applies if there is sham litigation for purposes of ML
Dividing assets in accordance with a court order is also not arranging
Give an overview of the s338 ‘authorised disclosure’ defence
Defence to s327, s328 and s329
Disclosure must be made by the person who would otherwise be the defendant
Disclosure is usually made to the firm’s Money Laundering Reporting Officer (the nominated officer)
- They report concerns re ML to the National Crime Agency via a suspicious activity report (SAR)
- They aren’t obliged to make a report, but might commit an offence if they don’t where there are reasonable grounds to suspect ML
How does disclosure prior to the prohibited act work?
No offence (complete defence) if the solicitor makes authorised disclosure ASAP prior to transaction and the consent of the nominated officer or NCA is obtained
‘Consent’ = defence against a ML offence; does not mean that the solicitor can necessarily proceed with the transaction
If the MLRO does not make a report, this has no bearing on whether the solicitor themselves is liable or not
After the nominated officer makes a SAR, they cannot give consent until one of 3 conditions is met. What are these conditions?
(a) the nominated officer, having made a disclosure to the NCA, receives the consent of the NCA;
(b) the nominated officer, having made a disclosure to the NCA, hears nothing for seven working days (starting with the first working day after the disclosure is made);
(c) where consent is refused by the NCA, the nominated officer may not give consent unless consent is subsequently granted within 31 days starting on the day refusal is given, or a period of 31 days has expired from the date of refusal
- This 31-day period gives the authorities time to take action to seize assets or take other action with respect to the money laundering
- The 31-day period can be extended in certain circumstances.
How does disclosure during the prohibited act work?
Requirements:
- (a) the disclosure is made whilst the prohibited act is ongoing; and
- (b) when the solicitor began to do the act, the solicitor did not know or suspect that the property constituted or represented a person’s benefit from criminal conduct; and
- (c) the disclosure is made ASAP after the solicitor first knows or suspects that the property constitutes or represents a person’s benefit from criminal conduct, and the disclosure is made on the solicitor’s own initiative
How does disclosure after the prohibited act work?
Solicitor must have a good reason for failure to disclose prior to completing the act
Disclosure must be made ASAP and on solicitor’s own initiative
Is there anyway for a solicitor to escape liability if they don’t make an authorised disclosure?
Solicitor may have a defence where they intended to make an authorised disclosure but have a reasonable excuse for failing to do so
Narrowly defined and solicitors should document their reasons for non-disclosure
How does the ‘overseas defence’ work in relation to the s328 offence?
Defence to s328 where D knew or believed that the ‘criminal conduct’ occurred abroad and was lawful in that country – SoS can override this provision
Give an overview of the s329 ‘acquisition, use or possession’ offence
1) Offence to acquire, use or have possession of criminal property
- Criminal property means same as under s328
- Relevant where solicitor receives money for costs and the money is criminal property
2) Authorised disclosure and overseas defences apply
3) Adequate consideration defence
- No offence if there was adequate consideration for acquiring, using and possessing the criminal property, unless the individual knew or suspected that those goods or services might help to carry out criminal conduct
- Defence applies where solicitors, receive money for or on account of costs, including disbursements
- The fees charged must be reasonable and the defence is not available if the value of the work is significantly less than the money received
4) Maximum sentence of 14 years’ imprisonment
Give an overview of the s327 ‘concealing’ offence
Offence to conceal, disguise, convert or transfer criminal property or remove it from E+W
- Criminal property means same as under s328
Solicitors often convert (money into property) or transfer (money or ownership between parties)
Authorised disclosure and overseas defences apply
Give an overview of the s330 ‘failure to disclose’ offence
Person commits an offence if:
- (a) he knows or suspects, or has reasonable grounds to know or suspect, that a person is engaged in money laundering;
- (b) the information comes to him 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; and
- (d) he does not make a disclosure ASAP
No actual ML required for offence
Maximum sentence of 5 years’ imprisonment
How does the ‘reasonable grounds’ element of the s330 offence work?
The addition of ‘reasonable grounds to know or suspect’ means a solicitor will commit an offence even if they genuinely did not know or suspect a person was engaged in ML
Court focuses on what solicitor should have known or suspected, so solicitors must be vigilant
What is meant by ‘regulated sector?’
Legal services provided by most firms of solicitors come within this
How does ‘the information’ element of the s330 offence work?
Information obtained by solicitor must be of some use to authorities. This means the solicitor must be able to identify or believe the information may assist in identifying:
- The money launderer; or
- Location of laundered property
No breach if the solicitor is genuinely unable to provide this information
Court will consider if it would have been reasonable to expect the solicitor to believe that the information would assist the authorities in either of the two ways above
What is meant by the ‘disclosure’ element of the s330 offence?
Disclosure should be made ASAP to MLRO or NCA
Disclosure should comprise reasons of solicitor’s knowledge or suspicions and identity of money launderer and whereabouts of laundered property (as far as possible)
- No offence if disclosure made, or if they intended to but had a reasonable excuse (no definition of ‘reasonable excuse’ but narrowly construed)
What is the ‘training defence’ to the s330 offence?
No offence committed if the solicitor does not know/suspect ML, but there were reasonable grounds to suspect, yet solicitor has not received proper training on AML
- Law firms are obliged to provide AML training to employees
What is the ‘legal professional privilege defence’ to the s330 offence?
Communications are protected from disclosure if they fall within ‘advice privilege’ or ‘litigation privilege’
- Advice privilege – confidential and for main purpose of requesting/giving legal advice
- Litigation privilege – confidential and for sole or dominant purpose of litigation, where it has started or is reasonably in prospect
Cannot rely on this where the communication is made with the purpose of carrying out an offence
What is the ‘overseas defence’ to the s330 offence?
No breach of s330 if solicitor believes ML took place outside UK and ML is not unlawful in that country – SoS can override this defence
Give an overview of the s331 ‘failure to disclose (nominated officers)’ offence
Nominated officer commits an offence if they know or suspect, or have reasonable grounds to know or suspect, ML, as a consequence of their role as MLRO + they fail to make the necessary disclosure to NCA ASAP
Defence if they have a reasonable excuse for not disclosing the information
Give an overview of the s333A ‘tipping off’ offences
‘Tipping off’ means altering someone suspected of ML to the fact that an investigation has started or is anticipated – offences intended to prevent information leaking to ML before investigation has taken place to see if enforcement action is needed
- Two offences and for both, there is no requirement to show tipping off was intended to alert ML or prejudice any investigation
- Furthermore, there is no way to authorise tipping off
Both offences carry a maximum penalty of an unlimited fine and/or a maximum prison sentence of 2 years
What is the ‘disclosing a disclosure’ tipping off offence?
Offence to disclose to any person that a relevant disclosure on ML has been made, if this is likely to prejudice any investigation that follows the first disclosure
- Would apply if a solicitor informed the client that an authorised disclosure has taken place
The information on which the disclosure is made must have come to the person in the course of a business in the regulated sector
What is the ‘disclosing an investigation’ tipping off offence?
Offence where disclosure is made to any person that an investigation into allegations that an offence under POCA has been carried out, or is being contemplated, and that disclosure is likely to prejudice the ML investigation
The information on which the disclosure is made must have come to the person in the course of a business in the regulated sector
What defences are there for ‘tipping off?’
1) Defence if the person making the disclosure did not know or suspect that this would prejudice an investigation into ML
2) Defence for an adviser to disclose to client, for the purposes of dissuading the client from engaging in the alleged ML – treat this with caution
Give an overview of the s342 ‘prejudicing an investigation’ offence
Offence if someone knows or suspects that a ML investigation has commenced or is about to and they make a material disclosure to anyone which is likely to prejudice the investigation
- Applies to non-regulated individuals
How do authorised disclosures interact with a solicitor’s duty of confidentiality?
Making an authorised disclosure under s338 does not breach the duty of confidentiality that a solicitor owes to a client
How will the SRA be involved if a solicitor commits an offence under POCA?
Solicitors with a direct involvement with ML will breach SRA Principle 4 (act with honesty) and probably Principle 1 (uphold the law), so they will face disciplinary proceedings and sanctions from SRA
What types of warning signs might a solicitor see that indicate ML is occurring?
- The client – if they are secretive, evasive or refuse to give information
- Funding – unusual sources of funding like large cash payments, use of multiple accounts or foreign accounts
- Transaction – if the transaction is loss making, has an unexplained urgency or there is no obvious commercial purpose
- Unusual instructions – instructions outside the firm’s expertise, no clear explanation as to why this firm was chosen or client is willing to pay high fees or seems unconcerned about the transaction
- Geographical concerns – unexplained movement of monies between other jurisdictions or connections with suspect jurisdictions
