Money Laundering: a critical change to prosecuting guidance
On 2nd June 2021, the Criminal Prosecution Service (“CPS”) updated its prosecuting guidance in respect of section 330 of the Proceeds of Crime Act 2002 (“POCA”).
Section 330 of POCA concerns the offence of ‘failure to disclose’ by those within the regulated sector. An individual will be guilty of an offence under this section where they:
- Receive information in the course of a business in the regulated sector; and
- As a result of that receipt, knows or suspects or has reasonable grounds for knowing or suspecting that another individual is engaged in money laundering; and
- Is able to identify that other individual or the location of any of the laundered property or believes, or it is reasonable to believe, that the information will or could assist in identifying that other individual or location of any of the laundered property; and
- Fails to disclose to a nominated officer or an authorised person the information underlying the knowledge or suspicion of money laundering as soon as is practicable after the information has been received.
As a result of the CPS’ update to its prosecuting guidance, offences under section 330 of POCA are capable of being prosecuted as ‘stand-alone’ offences. This means that, even if a prosecution is not brought and / or is not successful in respect of money laundering, a prosecution can be brought against a person suspected of having failed to disclose. A conviction under section 330 of POCA carries with it a maximum sentence of 5 years’ imprisonment.
This change in guidance does not act retrospectively. Accordingly, stand-alone prosecutions under section 330 of POCA will only be pursued where the alleged failure to disclose has taken place after 2 June 2021.
By way of example, ABC Sales and Lettings Limited (“ABC”) are contacted by Mr X on behalf of a new client, Mrs Y, who wishes to purchase a residential property that ABC has listed for sale. Miss D, who is employed by ABC, requests ‘Know Your Client’ information from Mr X, including identification documents for Mrs Y and information regarding the source of funds for the property purchase. Mr X provides a photocopy of a passport for Mrs Y, who it transpires is a resident of a high-risk country for money laundering. Mr X also provides a bank statement showing a balance for the deposit, yet this account is in the name of Mr Z. Upon further questioning as to the source of funds and Mr Z’s identity, Mr X advises Miss D that Mr Z is Mrs Y’s husband and he will be providing her with the money to purchase the property. Having conducted an internet search, Miss D finds that Mr Z is a politician in the high-risk country and has recently been in the news amid allegations of corruption. Miss D is concerned by the information she receives and presses Mr X for further information.
However, Mr X fails to respond and the sale does not progress. Miss D thinks no more of the matter and does not make any report to ABC’s Money Laundering Reporting Officer (“MLRO”). Under the new guidance, although no transaction has taken place, Miss D has nonetheless potentially committed an offence under section 330 of POCA, which may render her liable for prosecution, even if Mr X, Mrs Y and / or Mr Z are not prosecuted or their prosecution is unsuccessful.
Accordingly, this is an opportune time for those within the regulated sector to ensure that they have robust Anti-Money Laundering (“AML”) policies and procedures in place, including appropriate training of employees, to be able to identify indicators of money laundering. Failure to have adequate AML practices will severely hinder any defence offered to a prosecution under section 330.
If you have any questions in relation to section 330 of POCA and / or AML in general, please do not hesitate to get in touch with Simon Ellis.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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