FLK1 · Legal Services

Money laundering & proceeds of crime

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

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.)

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Two individuals run a graphic-design business as a partnership. There is no written partnership agreement. One partner contributed £80,000 of the start-up capital and the other contributed £20,000. Over the first year one partner worked full time on the business while the other worked only occasionally, and the full-time partner now argues she should receive a salary for her extra work and a larger share of the £50,000 profit to reflect her capital and effort. The other partner disagrees. The partners cannot resolve the dispute and ask how the default rules of partnership law apply. Which of the following best describes the position under the default rules?

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