BLP

Question 1

What are the three ‘direct involvment’ or principle offences under money launderdering PoCA 2002?

Answer 1

Section 327: concealing, disguising, converting or transferring criminal property or removing criminal property from the UK.
Section 328: entering into or becoming concerned in an arrangement which you know or suspect facilitates (by whatever means) the acquisition, retention, use of control of criminal property by or on behalf of another person.
Section 329: acquiring, using or possessing criminal property.

offence can point to more than one

Question 2

What is an authorised disclosure?

Answer 2

An ‘authorised disclosure’, is where a number of defences are involved, which is defined in s.338 PoCA.
‘a disclosure to a constable, customs officer or a nominated officer by the alleged offender that property is a criminal property.’
An authorised disclosure can be made before, during or after solicitor carries out prohibited act.

one of ss338(2), (2A) or (3) has to be satisfied for defence to apply

Defence applies to both direct and non-direct disclosures

Question 3

What does section 338(2) say?

Answer 3

Requires disclosure to be made before alleged officer does prohibited act (commits offence under 327-29).
E.g., before solicitor accepts money.

Question 4

Sectionn 338 (2A)?

Answer 4

Requires disclosure to be made while alleged offender is doing prohibited act AND that they began the act at a time when they did not know or suspect that the property constituted or represented a person’s benefit from criminal conduct so the act was not a prohibited act AND the disclosure is made on their own initiative and as soon as it is practicable for them to do so.

E.g., being instructed by client to put moeny into firm’s client account in which solicitor suspects moeny to be a proceed of a crime but is called for an urgent meeting with a client so does not report it to money laundering reporting officer until they get back to office later that day.

Question 5

Section 338(3)?

Answer 5

Requires disclosure to be made after alleged offender does the prohibited act AND there is a good reason for solicitor’s failure to make disclosure before they did the act **AND **disclosure is made on their own initative and as soon as practicatable to make.

E.g., solicitor is threatened with physical harm unless deposit is made.

Question 6

Which section highlights the disclosure to a nominated officer and what does it say?

Answer 6

Section 338(5), stating that a disclosure is made to
a) a person nominated by the alleged offender’s employer to recieive authorised disclosures.
b) in the course of alleged offender’s employement.

In law firms, nominated offender is MLRO (money laundering reporting..)

Question 7

What is the golden rule?

Answer 7

If you suspect a person you are dealing with is planning to transfer criminal property to your firm’s or employer’s bank account, you MUST report concern to your MLRO or other nominated official.

Question 8

What other defences are there?

Answer 8

Direct involvement defences under ss327(2)-29, there are all the same and involve:
* making a s.338 disclosure and if s.338 disclosure is made before prohibited act, having the appropriate consent or
* not making a s.338 disclosure but having a reasonable excuse for not doing so or
* the prohibited act is in carrying out a function the individual has relating to the enforcement of any provision of PoCA 2002 or any other enforcement relating to or benefitting from criminal conduct (done as part of law enforcement duties).

Under ss.327(2A)/328(3)/329(2A), there is no offences if criminal conduct which makes property a criminal property took place outside tyhe UK and was not unlawful in territory it took place (not subject to order made by Secretary of State).

Question 9

What is a regulated sector?

Answer 9

Defined in Schedule 9 PoCA 2002. Includes insurance companies, investment services, accountancy services, insolvency practioners and providing tax advice.
It also includes **‘participating in financial and real property transactions’. **

Question 10

What section governs the failure to disclose in non-direct involvement offenes?

Answer 10

Section 330 which states it is an offence to fail to make a discloure to firm’s MLRO or National Crime Agency (NCA) - body authorised to receive money laundering reports under PoCA.

Question 11

How is particpating in financial and real property transaction defined?

Answer 11

• buying and selling of real property and business entities.
• managing client money, securities or other asset.
• opening or management of bank, svaings or securities accounts.
• organisation of contributions necessary for the creation,opening and mangement of companies.
• creation, operation or management of trusts, companies or similar structures by a firm or sole practitioner who by way of business provides legal or notartial services to other persons’

Question 12

What does s.330 PoCA highlight?

Answer 12

Non-direct involvement offences:
a) know and suspect, or have reasonable grounds to know or suspect, that someone is laundering the proceeds of any criminal conduct.
b) recieve information in the cource of business in the regulated sector
c) can identify the person who is laundering the proceeds of criminal conduct or the whereabouts of the laundered property or the information referred to in (b) will or may assist in indentifying the person referred to at (a).

If you’re in the regulated sector and, through your work, you know or suspect money laundering, and you have enough information to identify the launderer or the property (or at least could help with identification), you must make a disclosure. Otherwise, you risk committing the failure to disclose offence under s.330 PoCA.

Question 13

What must disclosure contain for non-direct involvement and which section stipulates this?

Answer 13

Section 330(5) details this.
a) identity of the person who you know/suspect is laundering the proceeds of criminal conduct
b) whereabout of the laundered property if you know it and
c) information on which your knowledge/suspicion is based.

Question 14

What happens once solicitor has made a disclosure to MLRO/NCA?

Answer 14

If MLRO decides to make disclosure by way of suspious activity report (SAR) to NCA under s.336, neither MLRO nor fee earner should authorise or undertake prohibited act unless:
* authorised to do so by NCA
* 7 working days (notice period) has passed during which NCA has not refused authority to proceed,
* NCA refused consent during notice period, and the moratorium period (31 days starting from the day firm received notice that consent was refused) has expired.

S.331-similair obligation ins.330 are placed on MLRO in regulated sector

After making an SAR, you can’t touch the suspicious money unless the NCA says “yes,” or they stay silent for 7 days, or (if they say “no”) the 31-day moratorium runs out.

Question 15

What is ‘tipping off’?

Answer 15

Non-direct involvment: under s.333A, it is an offence to tip off clients about any report made of information that came to you in the cource of business in the regulated sector.

Also am offence under s.333A(3) to disclose that an investigation is beign contemplated oor carried out if the disclosure is likely to prejudice the investigation.

Question 16

What happens if you are not working in the regulated sector?

Answer 16

Some type of legal work (advising on a litiagtion matter) do not strictly fall within definition of ‘regulated sector’ but most firms have policies requiring their staff to report their suspicions to MLRO and not tip off clients, regardless of if work falls under ‘regulated sector’ or not.

Question 17

What are the penalties for these offences.

Answer 17

Whether direct or not it is imprisonment or a fine or both. Maximum penalties are set out in s.334.

Question 18

What are the penalties if you are gulity of a direct involvement offence (s.327-29)?

Answer 18

Under s.334:
a) on a summary conviction, to imprisonment for a term not exceeding 6 months or to a fine not exceeding the statutory maximum or both or
b) on conviction on indictment, to imprisonment for a term not exceeding 14 years or to a fine or to both.

Question 19

What are the penalties if you are gulity of a non-direct involvement offence (s.330-32)?

Answer 19

Under s.334:
a) on a summary conviction, to imprisonment for a term not exceeding 6 months or to a fine not exceeding the statutory maximum or both or
b) on conviction on indictment, to imprisonment for a term not exceeding 5 years or to a fine or to both.