|Proceeds of Crime Act 2002
The Proceeds of Crime Act 2002 (POCA) criminalises all forms of
money laundering and creates offences concerning failure to report a suspicion
of money laundering. It specifies what constitutes criminal property and
enables the recovery of criminal assets through civil means. The Act sets out
the legal requirement to make a disclosure or Suspicious Activity Report (SAR)
and details the requirement to obtain a defence (previously known as consent)
to carry out the ‘prohibited act’.
The three main money laundering offences (or prohibited acts) under Part 7 of POCA are:
concealing, disguising, converting, transferring, or removing criminal property
arranging or facilitating criminal property (s328)
acquiring, using or possessing criminal property (s329)
A conviction for any of the three money laundering offences can incur a custodial sentence of up to fourteen years and an unlimited fine.
POCA requires any individual or company in the regulated sector
knows or suspects, or
has reasonable grounds to know or suspect, that another person may be
engaged in money laundering, or that any or all of the property they are
dealing with may be criminal property,
to report their suspicion of money laundering to a constable, a customs officer
or nominated officer (MLRO or
equivalent) and is made in the form and manner (if any) prescribed for the
purposes. The nominated officer must report their suspicion to the
The UKFIU acts as the ‘constable’ (as defined in Section 2B of POCA) and is the central receiving point for SARs within the UK. The legislation protects firms and individuals from legal action resulting from their breach of customer confidentiality.
For those firms or individuals outside the regulated sector, the
legislation only requires the nominated officer to make the disclosure
if they know or suspect that another is engaged in money laundering or
criminal property; the ‘reasonable grounds’ condition does not apply.
A conviction for failing to disclose suspicion of criminal property or money laundering
can incur a custodial sentence of up to five years and an unlimited fine.
Terrorism Act 2000
The Terrorism Act 2000 (TACT) criminalises fund-raising and other kinds of financial support
for terrorism, and gives the courts the power to order forfeiture of any money
or other property.
As with POCA,
TACT places reporting obligations on individuals and institutions where they
know or suspect terrorist acts may be planned or intended. There are provisions
for financial institutions to seek a defence where they suspect transactions
will finance terrorism.
Under Part 3 of TACT, a reporter can
seek a defence to the offences in ss. 15-18 where they make a disclosure to the
NCA before becoming involved in a transaction or arrangement, and a defence has
been granted by the NCA.
Freedom of Information Act 2000 (FOIA)
The NCA is not a public authority as
defined in Schedule 1 of this Act. The NCA will not disclose any information in
response to a FOIA request.
SEEKING A DEFENCE / DEADLINES
Seeking a Defence
of Crime Act (POCA) and Terrorism Act (TACT) provide reporters with an
opportunity to avail themselves of a defence to carry out a ‘prohibited act’,
if a suspicion of money laundering or terrorist financing has been raised prior
to the activity being carried out, and if there is criminal or terrorist
property in whole or in part involved in that activity.
A ‘prohibited act’ is a money laundering offence under s327-329 of POCA and a terrorist
financing offence under s15-18 of TACT.
Please note: the activity does not have to be the physical movement of money; it can
be any activity that involves criminal or terrorist property. A defence
under POCA or TACT cannot be granted retrospectively and all requests submitted
must be for a specified future activity.
reporters in obtaining a decision from the NCA in respect of the activity to be
undertaken on behalf of the client/customer, POCA and TACT impose time limits
for providing a decision called the ‘notice period’, POCA imposes further time
limits when a case is refused, called the ‘moratorium period’, during which
time (in the majority of cases) law enforcement must take positive action
against the funds. TACT has no moratorium period attached to it, and any
refusal is absolute until explicitly informed otherwise by the NCA.
POCA and TACT
allow seven working days (‘the notice period’) from the day after receipt
for the NCA to respond to the reporter with a decision as to whether or not a
defence will be refused. On the eighth day, if there has been no decision
provided, the reporter can assume a defence.
defence is granted within the notice period, the reporter may proceed
with the activity and will have a defence to any potential money laundering or
terrorist financing offences relating to that specified activity only.
defence is refused under POCA, the activity must not proceed for a
further 31 calendar days (‘the moratorium period’) which enables
positive action to be taken, such as an Account Freezing Order, a cash seizure,
restraint or confiscation.
POCA, the moratorium period can be extended on application to the Court after
the initial 31-day period, for six further 31-day periods (in single
applications) up to a maximum of 186 days. The Court may decide to extend for
less than 31 days at a time, which means there may be more than six
applications in total, but it cannot extend for longer on each application. Note:
tipping off provisions are not applied during the extended moratorium periods.
All POCA and
TACT defence requests are kept under review throughout their lifespan by the
NCA, or on request by reporters, the subject, or their legal representatives.
Although TACT refusals are absolute and require a reporter to cease the
activity from the day of refusal, the NCA do review these cases regularly to
ensure proportionality of the decision.
To enable law enforcement to make full use of your SAR and make an
informed decision as to whether or not consent should be granted, there must be
some identifying information included in the report, as below. An exception is
if suspicion has been aroused due to an aborted attempt by the client or customer
to commence business, and full details have not been obtained.
A Defence Against Money Laundering / A Defence Against Terrorist Financing required?
|- enables consent requests to be identified quickly
||- including Date of Birth
Subject address and/or purchasing address
|- including postcodes to enable geographical identification
Subject account number / policy reference number
|- if appropriate
||- if appropriate
Recipient a/c number/reference number
|- if appropriate
Transaction amount & date
|- if appropriate
||- if appropriate
||- this is extremely important and should include a basic outline of
the relationship (including explanation of any technical terms) and full
reasons for your suspicion, not just a list of actions taken by your company in
respect of the client.
Additional data, which is useful but not mandatory, can include:
Details of identification documents (passport, driving licence)
Details of previous transactions
Further information about a/c relationship
Details of secondary individuals associated with the transaction
Please note: the more identification details included in your
report, the better law enforcement will be able to match the subject to