United Kingdom

1. Does United Kingdom have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Yes. The primary legislation in the UK is as follows:

• the Proceeds of Crime Act 2002 (‘POCA’); and,
• the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘MLR 2017’) as amended.

POCA is only applicable to proceeds of crime laundered after 24 February 2003. Before that date, the applicable previous legislation must be used (e.g. Criminal Justice Act 2003).

2. To whom does the legislation apply?

Money laundering offences can be committed by individuals or by corporates (subject to the ‘identification principle’).

At present, there is no strict liability corporate criminal offence for a corporate ‘failing to prevent money laundering’ (compare this with the position regarding bribery where there is a UK offence for failure to prevent bribery under the Bribery Act 2010).

3. What does the legislation prohibit?

The three ‘primary’ money laundering offences are contained in POCA and relate to the handling of proceeds of crime. The offences are:

• concealing, disguising, converting or transferring the proceeds, or removing the proceeds from England and Wales (s327);
• entering into, or become concerned with an arrangement in which the person knows or suspects the retention, use of control of proceeds of crime (s328); and
• acquiring, using or possessing proceeds of crime (s329).

4. How is money laundering defined? Does underlying criminal activity have to be proven?

Money laundering is defined as the process by which the proceeds of crime are converted into assets which appear to have a legitimate origin, so that they can be retained permanently or recycled into further criminal enterprises.

The underlying criminal activity does not need to have been prosecuted and convicted in criminal court. However, the prosecution need to prove that the property is ‘criminal property’ (as defined in s340). Property is criminal property if it constitutes or represents – directly or indirectly, in whole or in part – the benefit from criminal conduct. and the offender knows or suspects that it constitutes such a benefit.

Property is widely defined in POCA and can include (but is not limited to) money, property and intangible property. POCA does not draw any distinction between proceeds from the defendant’s own crimes and those of others.

5. What level of intent or knowledge is required to establish a violation?

All three primary offences require either knowledge or suspicion of money laundering. In relation to ‘knowledge’, this is a subjective test and the burden is on the prosecution to prove that the suspect knew that the money/property originated from proceeds of crime. In relation to ‘suspicion’, the test is whether it is ‘more than fanciful’ – it does not need to be clear or firmly grounded (R v Da Silva (2006)).

6. What are the potential penalties for infringing the legislation?

The maximum sentence (on indictment) for the primary offences of POCA (ss327-329) is 14 years’ imprisonment and/or an unlimited fine (s334). If the offence is dealt with as a summary offence, the maximum sentence is six months’ imprisonment and/or a fine.

If a corporate is convicted, it is punishable only by way of a fine, and potentially a deferred prosecution agreement (‘DPA’) may be agreed in place of prosecution, although there are no examples of this disposal being used in the UK to date in relation to the offence of money laundering.

7. Does the legislation have extra-territorial reach?

Yes, to some extent. Any benefits derived from criminal conduct overseas are deemed to be criminal property under POCA where:

• the conduct overseas was a criminal offence in that relevant country at the relevant time; and
• the conduct would be criminal if it had occurred in the UK, and if it was punishable by more than 12 months’ imprisonment.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

POCA – Regulated Persons

POCA contains four offences for persons in the regulated sector (see below), upon discovering money laundering (in summary):

• Failure to disclose offence – where a person knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in an offence under ss327-329 but fails to disclose to a relevant officer or the National Crime Agency (‘NCA’) (s330);
• Failure to disclose offence by nominated officer – where a person nominated to receive disclosures under s 330 (MLRO) knows or suspects, or has reasonable grounds to know or suspect due to their role as a person receiving disclosures under s330, and fails to make a necessary disclosure to the NCA (known as a suspicious activity report (‘SAR’)) as soon as practicable after the information or grounds for belief came to them (ss331). It is a defence for a nominated officer/MLRO to have a reasonable excuse for not disclosing the information (s331), or if the suspicions of money laundering are covered by legal professional privilege (other suspicions arising during the course of legal matters, such as on non-contentious transactions, need to be reported).
• Tipping off offence – where a SAR has been made, and the fact of the SAR is disclosed and that disclosure is likely to prejudice any investigation that might be conducted following that disclosure (s333A).
• Prejudicing the investigation offence – a person knows or suspects that a money laundering investigation has or is about to commence and makes a disclosure to any other person to which is likely to prejudice the investigation, or interferes with relevant material (s324). This offence can be committed by regulated or non-regulated persons.

In 2015, s338 of POCA was amended to include subsection 4(A) to confirm that, where an authorised disclosure is made by a regulated person and it is made in ‘good faith’, that no civil liability arises.

MLR 2017 – AML Compliance Regime and Criminal Offences

The MLR 2017 sets out the wide reaching anti money laundering compliance requirements which all regulated sector businesses are expected to implement. These requirements are comprehensive and include risk assessments, client due diligence, policies and procedures; all with a focus on using a risk based approach.

The regulated sector includes: credit institutions, financial institutions, auditors, insolvency practitioners, external accountants and tax advisors, independent legal professionals, estate agents and letting agents, high value dealers, casinos, art market participants, cryptoasset exchange providers, and custodian wallet providers.

The criminal offences created by the MLR 2017 include the offences of contravening a relevant requirement (reg 86), prejudicing an investigation (reg 87) and providing false or misleading information (reg 88).

9. What are the potential penalties for failing to comply with these obligations?

The offences of failure to disclose, tipping off and prejudicing an investigation each have a maximum sentence of five years’ imprisonment, an unlimited fine, or both.

The MLR offences are also triable either way (summarily or on indictment) and the maximum sentences include imprisonment/fines and vary for each offence.

In relation to a breach of the Regulations, the relevant regulator may also sanction the regulated person in accordance with its own regulatory regime, for example, by way of a financial penalty or public censure/statement.

An overarching body, the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), came into force on 18 January 2018. OPBAS is responsible for supervising all the sector relevant regulatory bodies who are designated supervisors under the MLR 2017 (e.g. the Solicitors’ Regulation Authority which oversees solicitors in England and Wales).

10. Who are the relevant enforcement authorities in United Kingdom and what are their contact details?

The National Crime Agency (‘NCA’) is the UK’s financial intelligence unit for collecting, analysing and disseminating information received from Suspicious Activity Reports (‘SARs’). SARs can be made online here: Welcome to the NCA SAR Online System (ukciu.gov.uk)

Proceedings for offences under regulations 86-88 of MLR 2017 can be brought by:

• The Director of Public Prosecutions (Money Laundering Offences | The Crown Prosecution Service (cps.gov.uk))
• HMRC
• A local weights and measures authority
• The Department for the Economy

11. Can you provide a brief factual summary of a representative case in your jurisdiction where someone has fallen foul of the money laundering legislation?