Money laundering & proceeds of crime

LSV.03 — Money Laundering & Proceeds of Crime

Two regimes operate together: the Proceeds of Crime Act 2002 (POCA) creates the criminal offences (applies to everyone); the Money Laundering Regulations 2017 (MLR 2017) impose preventive duties on the regulated sector (which includes most solicitors' firms).

Principal POCA offences (ss.327–329)

• s.327 — concealing, disguising, converting, transferring or removing criminal property from the jurisdiction.
• s.328 — entering into/becoming concerned in an arrangement you know or suspect facilitates another's acquisition/retention/use/control of criminal property.
• s.329 — acquiring, using or possessing criminal property.

Criminal property (s.340): property that is, or represents, a person's benefit from criminal conduct, and the defendant knows or suspects this. There is no de minimis — any amount counts. The predicate offence can be committed anywhere (subject to limited dual-criminality exceptions).

The disclosure regime — the practitioner's escape route

Making an authorised disclosure (s.338) to the firm's MLRO, who reports a Suspicious Activity Report (SAR) to the NCA, plus obtaining appropriate consent (a DAML — defrauded/defence against money laundering), is a defence to ss.327–329.

• Notice period: 7 working days for the NCA to refuse; if no refusal, deemed consent.
• Moratorium period: 31 calendar days if refused (extendable by court up to 186 days total).

Failure-to-disclose & tipping off (regulated sector)

• s.330 — failure to disclose where you know, suspect, or have reasonable grounds to suspect (an objective test in the regulated sector — note this is stricter than the subjective knowledge/suspicion in ss.327–329).
• s.333A — tipping off: disclosing that a SAR has been made, or that an investigation is contemplated, likely to prejudice it. Regulated sector only.

MLR 2017 preventive duties

Customer due diligence (CDD), enhanced DD for higher-risk/PEPs, ongoing monitoring, record-keeping, and a firm-wide risk assessment. Supervisor for legal firms is the SRA.

Leading cases & traps

• R v Geary / R v GH — on what constitutes an "arrangement" (property must be criminal at the time the arrangement operates).
• Privilege trap: legal professional privilege is a defence to s.330 (the "privileged circumstances" exception) — but not the crime/fraud exception (advice to further crime is never privileged).
• Common confusions: ss.327–329 use knowledge or suspicion (subjective); s.330 adds an objective "reasonable grounds" limb. Suspicion is a low bar — more than fanciful, less than reasonable belief (R v Da Silva). (K Ltd v NatWest separately confirms suspicion is subjective — no need for reasonable grounds — and that a bank may delay acting pending consent.)