Proceeds of Crime Act 2002
Encyclopedia
The Proceeds of Crime Act 2002 (c.29) (POCA) is an Act
of the Parliament
of the United Kingdom
which provides for the confiscation or civil recovery
of the proceeds from crime and contains the principal money laundering
legislation in the UK.
The Act has been amended since 2002, most particularly by the Serious Organised Crime and Police Act 2005
and the Serious Crime Act 2007
.
The money laundering
provisions in Part 7 of the Act are supported by the UK Money Laundering Regulations 2007.
Amongst other things, the 2002 Act simplified the conviction of criminals suspected of money laundering because prior to it being enacted prosecutors had to work with two different statutory regimes: the Drug Trafficking Act 1994
for laundering of the proceeds of drug trafficking, and the Criminal Justice Act 1988 as amended by the Criminal Justice Act 1993
and the Proceeds of Crime Act 1995 for proceeds of other crimes. In essence prior to the implementation of the 2002 Act a prosecuting lawyer had to prove that the monies or assets were the proceeds of crime and also what 'type' of crime the proceeds came from (i.e. either drug crime or non-drug crime). The 2002 Act removed the need to make a distinction between these types as the source of the proceeds in relation to alleged money laundering in the UK commencing after 24 February 2003.
The Assets Recovery Agency
created by the 2002 Act has since March 2008 become part of the Serious Organised Crime Agency
. In turn SOCA is due to become part of a new National Crime Agency for the UK in 2012 under proposals announced by the Home Office of the UK government in July 2010.
The Act is split into 12 parts. Whilst some of these parts apply to the entire UK (such as Part 7 dealing with money laundering) other parts apply only to one jurisdiction within the UK (so Part 2 relates to confiscation in England & Wales, Part 3 relates to confiscation in Scotland, Part 4 relates to confiscation in Northern Ireland).
The first act of Parliament
for England and Wales
aimed at stripping criminals of illegally acquired gains was the Drug Trafficking Offences Act 1986
. Scotland
was provided with similar powers under the Criminal Justice (Scotland) Act 1987. These acts of Parliament were introduced following the House of Lords
ruling that under the law as it then was some £750,000 had to be returned to a gang of drug dealers. These proceeds had been traced to the defendants in a police operation codenamed “Operation Julie
” in 1978. Powers for the courts to confiscate proceeds of crime were extended under the Criminal Justice Act 1988 and the Criminal Justice (Scotland) Act 1995. These Acts provided the courts with powers to confiscate proceeds of crime where an offence had been committed other than drug trafficking offences, in specified circumstances. Powers for the courts in Northern Ireland
to confiscate proceeds in both drug trafficking and other offences was introduced by Criminal Justice (Confiscation) (Northern Ireland) Order 1990. These acts were amended by: Criminal Justice Act 1993
, the Drug Trafficking Act 1994
, the Proceeds of Crime Act 1995, the Proceeds of Crime (Scotland) Act 1995 and the Proceeds of Crime (Northern Ireland) Order 1996.
was introduced to the House of Commons by the Home Secretary
, David Blunkett
, on 18 October 2001. It was given Royal Assent
on 24 July 2002.
and for the Secretary of State
to appoint its Director. The section gives the Director power to employ staff and delegate his function to staff to carry out his role. The office of Director has legal personality
. The section makes it clear that Director must pay attention to guidance given by the Secretary of State
which is calculated to contribute to the reduction of crime. The Assets Recovery Agency
was provided with completely new powers by the Proceeds of Crime Act 2002. The new powers allow the Assets Recovery Agency
to use the civil court procedures to recover the proceeds of unlawful conduct by way of an action in the High Court
. Where there are reasonable grounds to suspect there is taxable income gain or profit the Agency also has the power to issue tax assessments.
The Assets Recovery Agency
created by the 2002 Act has since March 2008 become part of the Serious Organised Crime Agency
. In turn SOCA is due to become part of a new National Crime Agency for the UK in 2012 under proposals announced by the Home Office of the UK government in July 2010.
to the Crown Court
. Applications for Restraint Orders or Charging Orders are heard in the Crown Court. The Magistrates Court must commit confiscation cases to the Crown Court
. These changes apply to offences committed after the commencement of this part of the Act on 23 March 2003. Confiscation or restraint proceedings for offences committed before 23 March 2003 would be dealt with under the regimes outlined in either the Drug Trafficking Act 1994 or Criminal Justice Act 1988. For offences committed over a period of time, which is typically the case where an acquisitive fraud has been committed, then the relevant date is the start date of the offence. Legislation has now been passed by parliament which would allow the magistrates court to deal with confiscation cases which have a value of up to £10,000. However, this has yet to be implemented.
In essence a confiscation order is an order of the Crown Court requiring the convicted defendant to pay to the State a specified sum of money by a specified date (no later than 12 months after the date on which the order is made). The Crown Court is obliged to make a confiscation order if requested to do so by the prosecutor following the conviction of the defendant of an offence from which he has obtained a benefit.
The Crown Court must normally establish (i) the benefit obtained by the defendant and (ii) the defendant's available amount. The confiscation order must then be made in the recoverable amount which is the lesser of these two figures. The Act provides rules for the determination both of the benefit obtained and the defendant's available amount. In relation to benefit the court is obliged to apply the statutory assumptions set out in section 10 if the defendant has a criminal lifestyle. A defendant has a criminal lifestyle if, and only if, he meets the criteria of section 75. A criminal lifestyle may be established by the conviction of the defendant of a single offence.
The defendant's available amount is typically the market value of all his assets less the amount of any liabilities which are secured upon those assets. Unsecured liabilities are not deducted in arriving at the defendant's available amount.
If the court is unable to establish the defendant's available amount it must make a confiscation order in the amount of the benefit.
The burden falls broadly upon the prosecution to establish the defendant's benefit and upon the defendant to establish his available amount. In practice the prosecutor will in the first instance attempt to assist the court to establish both figures.
If the defendant fails to pay the sum ordered by the due date then payment may be enforced by various means and interest will commence to run on the amount unpaid. One of the means of enforcement is that an additional prison sentence (maximum 10 years) may be imposed for failure to pay on time.
Part 2 also includes provisions relating to the making of restraint orders and the appointment of enforcement receivers. Restraint orders are draconain in nature and the jurisdiction is unfamiliar to the Crown Court and to many criminal practitioners having previously been exercised by the High Court. However, such orders may be challenged to considerable effect as the case of Windsor v Crown Prosecution Service demonstrates.
Part 2 of the Act applies in England and Wales.
Parts 3 & 4 of the Act apply similar provisions to Scotland and Northern Ireland but in a modified form to suit the different legal traditions and structures in those jurisdictions.
However, although the statute law is very similar, the operation of confiscation in practice in Scotland in 'criminal lifestyle' cases - particularly in relation to the computation of the offender's 'benefit' for confiscation purposes - is very different from that in England and Wales.
It includes powers relating to the seizure, detention and forfeiture of cash sums in excess of the 'minimum amount' (currently £1,000). In this context cash is widely defined to include not only banknotes and coins of any currency but also checks, including travellers' checks and bank drafts. These proceedings are held in the Magistrates' Court or (in Scotland) before the Sheriff.
Part 5 applies throughout the UK.
Part 6 applies throughout the UK.
Money laundering is widely defined in the UK. In effect any handling or involvement with any proceeds of any crime (or monies or assets representing the proceeds of crime) can be a money laundering offence. An offender's possession of the proceeds of his own crime falls within the UK definition of money laundering. The definition also covers activities which would fall within the traditional definition of money laundering as a process by which proceeds of crime are concealed or disguised so that they may be made to appear to be of legitimate origin.
Unlike certain other jurisdictions (notably the USA and much of Europe), UK money laundering offences are not limited to the proceeds of serious crimes, nor are there any monetary limits, nor is there any necessity for there to be a money laundering design or purpose to an action for it to amount to a money laundering offence. A money laundering offence under UK legislation need not involve money, since the money laundering legislation covers assets of any description. Technically therefore an individual who steals even a paper clip in the UK commits a money laundering offence (possession of the stolen paper clip) in addition to the predicate offence (of theft of the paper clip).
In consequence any person who commits an acquisitive crime (i.e. one from which he obtains some benefit in the form of money or an asset of any description) in the UK will inevitably also commit a money laundering offence under UK legislation.
This applies also to a person who, by criminal conduct, evades a liability (such as a taxation liability) - referred to by lawyers as "obtaining a pecuniary advantage" - as he is deemed thereby to obtain a sum of money equal in value to the liability evaded.
The principal money laundering offences carry a maximum penalty of 14 years imprisonment.
One consequence of the Act is that banks, as well as professional firms such as solicitor
s, accountant
s, and insolvency practitioners, who suspect (as a consequence of information received in the course of their work) that their customers or clients (or others) have engaged in tax evasion or other criminal conduct from which a benefit has been obtained, are now required to report their suspicions to the authorities (since these entail suspicions of money laundering). In most circumstances it would be an offence, 'tipping-off', for the reporter to inform the subject of his report that a report has been made. These provisions do not however require disclosure to the authorities of information received by certain professionals in privileged circumstances or where the information is subject to legal professional privilege.
There is however, under UK legislation, no obligation upon banks or others to routinely report all deposits or transfers having a value greater than a specified amount even in the absence of any suspicion that money laundering may be involved (as there is in some other countries).
The reporting obligations in Part 7 include reporting suspicions relating to gains from conduct carried out abroad which would be criminal if it took place in the UK. Exceptions were later added to exempt certain activities which were legal in the location where they took place, such as bullfighting
in Spain.
There are more than 200,000 reports of suspected money laundering submitted annually to the authorities in the UK (there were 240,582 reports in the year ended 30 September 2010 - an increase from the 228,834 reports submitted in the previous year). Most of these reports are submitted by banks and similar financial institutions (there were 186,897 reports from the banking sector in the year ended 30 September 2010).
Although 5,108 different organisations submitted suspicious activity reports to SOCA in the year ended 30 September 2010 just four organisations submitted approximately half of all reports, and the top 20 reporting organisations accounted for three-quarters of all reports.
The offence of failing to report a suspicion of money laundering by another person carries a maximum penalty of 5 years imprisonment.
Part 7 applies throughout the UK.
Importantly it is a criminal offence to impede a money laundering investigation by the authorities by the concealing, destroying or falsifying of documents relevant to the investigation or by the making of a disclosure of information which prejudices the investigation. The offence carries a maximum punishment of 5 years imprisonment.
Acts of Parliament in the United Kingdom
An Act of Parliament in the United Kingdom is a type of legislation called primary legislation. These Acts are passed by the Parliament of the United Kingdom at Westminster, or by the Scottish Parliament at Edinburgh....
of the Parliament
Parliament
A parliament is a legislature, especially in those countries whose system of government is based on the Westminster system modeled after that of the United Kingdom. The name is derived from the French , the action of parler : a parlement is a discussion. The term came to mean a meeting at which...
of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
which provides for the confiscation or civil recovery
Civil recovery
-United Kingdom:In the legal systems of the constituent countries of the United Kingdom, civil recovery is claimed by retailers to enable the retailer's claims handling agent to recover, in civil proceedings before the High Court or Court of Session, property which is, or represents, property...
of the proceeds from crime and contains the principal money laundering
Money laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
legislation in the UK.
Background
The Proceeds of Crime Act 2002 was enacted following the publication on 14 June 2000 of new government policy as set out in the Performance and Innovation Unit's report "Recovering the Proceeds of Crime". It deals with a wide range of matters relevant to UK law on proceeds of crime issues. These include confiscation orders against convicted individuals (requiring payment to the State based upon the benefit obtained from their crimes), civil recovery of proceeds of crime from unconvicted individuals, taxation of profits generated from crime, UK anti-money laundering legislation, powers of investigation into suspected proceeds of crime offences, and international co-operation by UK law enforcement agencies against money laundering.The Act has been amended since 2002, most particularly by the Serious Organised Crime and Police Act 2005
Serious Organised Crime and Police Act 2005
The Serious Organized Crime and Police Act 2005 is an Act of the Parliament of the United Kingdom aimed primarily at creating the Serious Organised Crime Agency, it also significantly extended and simplified the powers of arrest of a constable and introduced restrictions on protests in the...
and the Serious Crime Act 2007
Serious Crime Act 2007
The Serious Crime Act 2007 is an Act of the Parliament of the United Kingdom that makes several radical changes to English criminal law. In particular, it creates a new scheme of serious crime prevention orders to frustrate crime in England and Wales and in Northern Ireland, replaces the common law...
.
The money laundering
Money laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
provisions in Part 7 of the Act are supported by the UK Money Laundering Regulations 2007.
Amongst other things, the 2002 Act simplified the conviction of criminals suspected of money laundering because prior to it being enacted prosecutors had to work with two different statutory regimes: the Drug Trafficking Act 1994
Drug Trafficking Act 1994
The Drug Trafficking Act 1994 is an Act of the Parliament of the United Kingdom. It largely replaced the Drug Trafficking Offences Act 1986....
for laundering of the proceeds of drug trafficking, and the Criminal Justice Act 1988 as amended by the Criminal Justice Act 1993
Criminal Justice Act 1993
The Criminal Justice Act 1993 is a United Kingdom Act of Parliament that set out new rules regarding drug trafficking, proceeds and profit of crime, financing of terrorism and insider dealing.-External links:**...
and the Proceeds of Crime Act 1995 for proceeds of other crimes. In essence prior to the implementation of the 2002 Act a prosecuting lawyer had to prove that the monies or assets were the proceeds of crime and also what 'type' of crime the proceeds came from (i.e. either drug crime or non-drug crime). The 2002 Act removed the need to make a distinction between these types as the source of the proceeds in relation to alleged money laundering in the UK commencing after 24 February 2003.
The Assets Recovery Agency
Assets Recovery Agency
The Assets Recovery Agency was a non-ministerial government department in the United Kingdom. It was established under the Proceeds of Crime Act 2002 to reduce crime by confiscating the proceeds of any crime...
created by the 2002 Act has since March 2008 become part of the Serious Organised Crime Agency
Serious Organised Crime Agency
The Serious Organised Crime Agency is a non-departmental public body of the Government of the United Kingdom under Home Office sponsorship...
. In turn SOCA is due to become part of a new National Crime Agency for the UK in 2012 under proposals announced by the Home Office of the UK government in July 2010.
The Act is split into 12 parts. Whilst some of these parts apply to the entire UK (such as Part 7 dealing with money laundering) other parts apply only to one jurisdiction within the UK (so Part 2 relates to confiscation in England & Wales, Part 3 relates to confiscation in Scotland, Part 4 relates to confiscation in Northern Ireland).
The first act of Parliament
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...
for England and Wales
England and Wales
England and Wales is a jurisdiction within the United Kingdom. It consists of England and Wales, two of the four countries of the United Kingdom...
aimed at stripping criminals of illegally acquired gains was the Drug Trafficking Offences Act 1986
Drug Trafficking Offences Act 1986
The Drug Trafficking Offences Act 1986 was the first act of the Parliament of the United Kingdom specifically dealing with laundering the proceeds of drug trafficking...
. Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
was provided with similar powers under the Criminal Justice (Scotland) Act 1987. These acts of Parliament were introduced following the House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
ruling that under the law as it then was some £750,000 had to be returned to a gang of drug dealers. These proceeds had been traced to the defendants in a police operation codenamed “Operation Julie
Operation Julie
Operation Julie was a UK police investigation into the production of LSD by two drug rings during the mid-1970s. The operation, involving 11 police forces over a two-and-a-half year period, resulted in the break-up of one of the largest LSD manufacturing operations in the world...
” in 1978. Powers for the courts to confiscate proceeds of crime were extended under the Criminal Justice Act 1988 and the Criminal Justice (Scotland) Act 1995. These Acts provided the courts with powers to confiscate proceeds of crime where an offence had been committed other than drug trafficking offences, in specified circumstances. Powers for the courts in Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
to confiscate proceeds in both drug trafficking and other offences was introduced by Criminal Justice (Confiscation) (Northern Ireland) Order 1990. These acts were amended by: Criminal Justice Act 1993
Criminal Justice Act 1993
The Criminal Justice Act 1993 is a United Kingdom Act of Parliament that set out new rules regarding drug trafficking, proceeds and profit of crime, financing of terrorism and insider dealing.-External links:**...
, the Drug Trafficking Act 1994
Drug Trafficking Act 1994
The Drug Trafficking Act 1994 is an Act of the Parliament of the United Kingdom. It largely replaced the Drug Trafficking Offences Act 1986....
, the Proceeds of Crime Act 1995, the Proceeds of Crime (Scotland) Act 1995 and the Proceeds of Crime (Northern Ireland) Order 1996.
Passage of the Bill
The Proceeds of Crime BillBill (proposed law)
A bill is a proposed law under consideration by a legislature. A bill does not become law until it is passed by the legislature and, in most cases, approved by the executive. Once a bill has been enacted into law, it is called an act or a statute....
was introduced to the House of Commons by the Home Secretary
Home Secretary
The Secretary of State for the Home Department, commonly known as the Home Secretary, is the minister in charge of the Home Office of the United Kingdom, and one of the country's four Great Offices of State...
, David Blunkett
David Blunkett
David Blunkett is a British Labour Party politician and the Member of Parliament for Sheffield Brightside and Hillsborough, having represented Sheffield Brightside from 1987 to 2010...
, on 18 October 2001. It was given Royal Assent
Royal Assent
The granting of royal assent refers to the method by which any constitutional monarch formally approves and promulgates an act of his or her nation's parliament, thus making it a law...
on 24 July 2002.
Part 1
Sections 1 - 5 of the Act provides for the establishment of the Assets Recovery AgencyAssets Recovery Agency
The Assets Recovery Agency was a non-ministerial government department in the United Kingdom. It was established under the Proceeds of Crime Act 2002 to reduce crime by confiscating the proceeds of any crime...
and for the Secretary of State
Secretary of State (United Kingdom)
In the United Kingdom, a Secretary of State is a Cabinet Minister in charge of a Government Department ....
to appoint its Director. The section gives the Director power to employ staff and delegate his function to staff to carry out his role. The office of Director has legal personality
Legal personality
Legal personality is the characteristic of a non-human entity regarded by law to have the status of a person....
. The section makes it clear that Director must pay attention to guidance given by the Secretary of State
Secretary of State
Secretary of State or State Secretary is a commonly used title for a senior or mid-level post in governments around the world. The role varies between countries, and in some cases there are multiple Secretaries of State in the Government....
which is calculated to contribute to the reduction of crime. The Assets Recovery Agency
Assets Recovery Agency
The Assets Recovery Agency was a non-ministerial government department in the United Kingdom. It was established under the Proceeds of Crime Act 2002 to reduce crime by confiscating the proceeds of any crime...
was provided with completely new powers by the Proceeds of Crime Act 2002. The new powers allow the Assets Recovery Agency
Assets Recovery Agency
The Assets Recovery Agency was a non-ministerial government department in the United Kingdom. It was established under the Proceeds of Crime Act 2002 to reduce crime by confiscating the proceeds of any crime...
to use the civil court procedures to recover the proceeds of unlawful conduct by way of an action in the High Court
High Court of Justice
The High Court of Justice is, together with the Court of Appeal and the Crown Court, one of the Senior Courts of England and Wales...
. Where there are reasonable grounds to suspect there is taxable income gain or profit the Agency also has the power to issue tax assessments.
The Assets Recovery Agency
Assets Recovery Agency
The Assets Recovery Agency was a non-ministerial government department in the United Kingdom. It was established under the Proceeds of Crime Act 2002 to reduce crime by confiscating the proceeds of any crime...
created by the 2002 Act has since March 2008 become part of the Serious Organised Crime Agency
Serious Organised Crime Agency
The Serious Organised Crime Agency is a non-departmental public body of the Government of the United Kingdom under Home Office sponsorship...
. In turn SOCA is due to become part of a new National Crime Agency for the UK in 2012 under proposals announced by the Home Office of the UK government in July 2010.
Parts 2, 3 & 4
Part 2, sections 6 - 91, deals with the transfer of power to make confiscation orders from the Magistrates Court and High CourtHigh Court of Justice
The High Court of Justice is, together with the Court of Appeal and the Crown Court, one of the Senior Courts of England and Wales...
to the Crown Court
Crown Court
The Crown Court of England and Wales is, together with the High Court of Justice and the Court of Appeal, one of the constituent parts of the Senior Courts of England and Wales...
. Applications for Restraint Orders or Charging Orders are heard in the Crown Court. The Magistrates Court must commit confiscation cases to the Crown Court
Crown Court
The Crown Court of England and Wales is, together with the High Court of Justice and the Court of Appeal, one of the constituent parts of the Senior Courts of England and Wales...
. These changes apply to offences committed after the commencement of this part of the Act on 23 March 2003. Confiscation or restraint proceedings for offences committed before 23 March 2003 would be dealt with under the regimes outlined in either the Drug Trafficking Act 1994 or Criminal Justice Act 1988. For offences committed over a period of time, which is typically the case where an acquisitive fraud has been committed, then the relevant date is the start date of the offence. Legislation has now been passed by parliament which would allow the magistrates court to deal with confiscation cases which have a value of up to £10,000. However, this has yet to be implemented.
In essence a confiscation order is an order of the Crown Court requiring the convicted defendant to pay to the State a specified sum of money by a specified date (no later than 12 months after the date on which the order is made). The Crown Court is obliged to make a confiscation order if requested to do so by the prosecutor following the conviction of the defendant of an offence from which he has obtained a benefit.
The Crown Court must normally establish (i) the benefit obtained by the defendant and (ii) the defendant's available amount. The confiscation order must then be made in the recoverable amount which is the lesser of these two figures. The Act provides rules for the determination both of the benefit obtained and the defendant's available amount. In relation to benefit the court is obliged to apply the statutory assumptions set out in section 10 if the defendant has a criminal lifestyle. A defendant has a criminal lifestyle if, and only if, he meets the criteria of section 75. A criminal lifestyle may be established by the conviction of the defendant of a single offence.
The defendant's available amount is typically the market value of all his assets less the amount of any liabilities which are secured upon those assets. Unsecured liabilities are not deducted in arriving at the defendant's available amount.
If the court is unable to establish the defendant's available amount it must make a confiscation order in the amount of the benefit.
The burden falls broadly upon the prosecution to establish the defendant's benefit and upon the defendant to establish his available amount. In practice the prosecutor will in the first instance attempt to assist the court to establish both figures.
If the defendant fails to pay the sum ordered by the due date then payment may be enforced by various means and interest will commence to run on the amount unpaid. One of the means of enforcement is that an additional prison sentence (maximum 10 years) may be imposed for failure to pay on time.
Part 2 also includes provisions relating to the making of restraint orders and the appointment of enforcement receivers. Restraint orders are draconain in nature and the jurisdiction is unfamiliar to the Crown Court and to many criminal practitioners having previously been exercised by the High Court. However, such orders may be challenged to considerable effect as the case of Windsor v Crown Prosecution Service demonstrates.
Part 2 of the Act applies in England and Wales.
Parts 3 & 4 of the Act apply similar provisions to Scotland and Northern Ireland but in a modified form to suit the different legal traditions and structures in those jurisdictions.
However, although the statute law is very similar, the operation of confiscation in practice in Scotland in 'criminal lifestyle' cases - particularly in relation to the computation of the offender's 'benefit' for confiscation purposes - is very different from that in England and Wales.
Part 5
Part 5 of the Act deals with the civil recovery of the proceeds of crime from unconvicted defendants through proceedings in the civil courts (the High Court or, in Scotland, Court of Session).It includes powers relating to the seizure, detention and forfeiture of cash sums in excess of the 'minimum amount' (currently £1,000). In this context cash is widely defined to include not only banknotes and coins of any currency but also checks, including travellers' checks and bank drafts. These proceedings are held in the Magistrates' Court or (in Scotland) before the Sheriff.
Part 5 applies throughout the UK.
Part 6
Part 6 relates to the taxation of profits and gains arising from criminal activities.Part 6 applies throughout the UK.
Part 7
Part 7 of the Act contains the primary UK anti-money laundering legislation, including provisions requiring businesses within the 'regulated sector' (banking, investment, money transmission, certain professions, etc) to report to the authorities suspicions of money laundering by customers or others.Money laundering is widely defined in the UK. In effect any handling or involvement with any proceeds of any crime (or monies or assets representing the proceeds of crime) can be a money laundering offence. An offender's possession of the proceeds of his own crime falls within the UK definition of money laundering. The definition also covers activities which would fall within the traditional definition of money laundering as a process by which proceeds of crime are concealed or disguised so that they may be made to appear to be of legitimate origin.
Unlike certain other jurisdictions (notably the USA and much of Europe), UK money laundering offences are not limited to the proceeds of serious crimes, nor are there any monetary limits, nor is there any necessity for there to be a money laundering design or purpose to an action for it to amount to a money laundering offence. A money laundering offence under UK legislation need not involve money, since the money laundering legislation covers assets of any description. Technically therefore an individual who steals even a paper clip in the UK commits a money laundering offence (possession of the stolen paper clip) in addition to the predicate offence (of theft of the paper clip).
In consequence any person who commits an acquisitive crime (i.e. one from which he obtains some benefit in the form of money or an asset of any description) in the UK will inevitably also commit a money laundering offence under UK legislation.
This applies also to a person who, by criminal conduct, evades a liability (such as a taxation liability) - referred to by lawyers as "obtaining a pecuniary advantage" - as he is deemed thereby to obtain a sum of money equal in value to the liability evaded.
The principal money laundering offences carry a maximum penalty of 14 years imprisonment.
One consequence of the Act is that banks, as well as professional firms such as solicitor
Solicitor
Solicitors are lawyers who traditionally deal with any legal matter including conducting proceedings in courts. In the United Kingdom, a few Australian states and the Republic of Ireland, the legal profession is split between solicitors and barristers , and a lawyer will usually only hold one title...
s, accountant
Accountant
An accountant is a practitioner of accountancy or accounting , which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources.The Big Four auditors are the largest...
s, and insolvency practitioners, who suspect (as a consequence of information received in the course of their work) that their customers or clients (or others) have engaged in tax evasion or other criminal conduct from which a benefit has been obtained, are now required to report their suspicions to the authorities (since these entail suspicions of money laundering). In most circumstances it would be an offence, 'tipping-off', for the reporter to inform the subject of his report that a report has been made. These provisions do not however require disclosure to the authorities of information received by certain professionals in privileged circumstances or where the information is subject to legal professional privilege.
There is however, under UK legislation, no obligation upon banks or others to routinely report all deposits or transfers having a value greater than a specified amount even in the absence of any suspicion that money laundering may be involved (as there is in some other countries).
The reporting obligations in Part 7 include reporting suspicions relating to gains from conduct carried out abroad which would be criminal if it took place in the UK. Exceptions were later added to exempt certain activities which were legal in the location where they took place, such as bullfighting
Bullfighting
Bullfighting is a traditional spectacle of Spain, Portugal, southern France and some Latin American countries , in which one or more bulls are baited in a bullring for sport and entertainment...
in Spain.
There are more than 200,000 reports of suspected money laundering submitted annually to the authorities in the UK (there were 240,582 reports in the year ended 30 September 2010 - an increase from the 228,834 reports submitted in the previous year). Most of these reports are submitted by banks and similar financial institutions (there were 186,897 reports from the banking sector in the year ended 30 September 2010).
Although 5,108 different organisations submitted suspicious activity reports to SOCA in the year ended 30 September 2010 just four organisations submitted approximately half of all reports, and the top 20 reporting organisations accounted for three-quarters of all reports.
The offence of failing to report a suspicion of money laundering by another person carries a maximum penalty of 5 years imprisonment.
Part 7 applies throughout the UK.
Parts 8 - 12
Parts 8 to 12 of the Act make further provisions with regard to investigation of suspected offences, international co-operation, etc.Importantly it is a criminal offence to impede a money laundering investigation by the authorities by the concealing, destroying or falsifying of documents relevant to the investigation or by the making of a disclosure of information which prejudices the investigation. The offence carries a maximum punishment of 5 years imprisonment.
External links
- Original text of the statute as published by the Office of Public Sector InformationOffice of Public Sector InformationThe Office of Public Sector Information is the body responsible for the operation of Her Majesty's Stationery Office and of other public information services of the United Kingdom...