In our August 2001 briefing we outlined the important changes to the law of money laundering proposed in the Proceeds of Crime Bill ("Bill"). This Bill received Royal Assent on 24 July 2002 and became the Proceeds of Crime Act ("Act"). The Act will have a significant effect on businesses, necessitating stricter reporting policies and more thorough staff training in light of new and extended money laundering offences.
The Act coincides with a number of recent measures aimed at combating terrorism and tightening financial regulation to which businesses will need to have regard, such as the Anti-Terrorism, Crime and Security Act 2001, the Money Laundering Regulations 2001 and the FSA's Rules on money laundering.
In this briefing we focus on the Act's money laundering provisions, which are scheduled for early implementation in December 2002. The remaining provisions of the Act will follow early in 2003.
The Act's main provisions
The Act is substantially similar to the Bill, as described in our previous briefing. It contains provisions to:
establish an Assets Recovery Agency to investigate and recover wealth which has been obtained through criminal conduct;
create a right of civil recovery which enables the Agency to recover property which was obtained through criminal conduct, including the right to recover property from third parties. The Agency need only prove its case on a civil standard of proof, and can apply to the High Court for an interim order freezing suspect property which will then be managed by an independent receiver;
enable the Agency to exercise the functions of the Inland Revenue and tax the suspected proceeds of crime without identifying a source of income;
create new investigative powers, including customer information orders (requiring banks and other financial institutions to identify accounts held by persons connected to an investigation), account monitoring orders, compulsory disclosure orders and production orders. A Code of Practice will be drawn up to provide guidance on the exercise of these functions. Civilian staff of law enforcement agencies will be able to exercise some of these powers if they are accredited as financial investigators; and
unify and expand existing money laundering offences and create new obligations to report when there are reasonable grounds to know or suspect that a person is engaged in money laundering.
The money laundering offences
The major extension of the scope of the money laundering offences arises because they will apply to the proceeds of any criminal conduct, not just "serious" crime. There is no de minimis limit and there is no need for the conduct to have any connection to this jurisdiction.
It is also worth noting that the offence of acquisition, use and possession of the proceeds of crime (s.333) draws no distinction between the original criminal and a later recipient of the proceeds of a crime. Therefore the commission of the initial crime will simultaneously give rise to a money laundering offence. Effectively this means in practice that an obligation to report money laundering should be read as an obligation to report any criminal activity whatsoever and wheresoever in the world if it would constitute an offence under English law.
Otherwise the "assisting" and "concealing" offences have, subject to the comments set out below, not altered...