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Legislation

Proceeds of Crime Act 2002

The Proceeds of Crime Act is UK primary legislation. Part 7 of the Act outlines the money laundering offences; what constitutes criminal property; sets out the legal requirement to make a disclosure or Suspicious Activity Report (SAR) and the offences of failing to disclose; and details a requirement to obtain consent to carry out a prohibited act, placing time restrictions on NCA and Law Enforcement to issue consent.
 
The three main money laundering offences are:
  • concealing, disguising, converting, transferring, or removing criminal property (s327)
  • arranging or facilitating criminal property (s328)
  • acquiring, using or possessing criminal property (s329)
Under primary legislation, a conviction for one of the three money laundering offences can incur a 14-year sentence and an unlimited fine.
 
It also requires any individual or company in the regulated sector who either:
 
a) knows or suspects or
b) 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 NCA.
 
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.
 
The UKFIU acts as the 'constable' 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.
 
Under primary legislation, a conviction for failing to disclose suspicion of criminal property/money laundering can incur a 5 year sentence and an unlimited fine.
 

Consent / deadlines

Consent

The legislation requires institutions or individuals to ask for permission to carry out a prohibited act if a suspicion has been raised prior to the activity, that there is a suggestion of criminal property in whole or in part attached to the business. The legislation also stipulates the type of permission required which is either 'nominated officer' consent, whereby NCA will issue consent to the nominated officer only; or 'appropriate consent' where a nominated officer, NCA, a constable or a customs officer, may issue consent to carry out the prohibited act.
 
To assist the reporters in obtaining a decision from the UKFIU in respect of the activity undertaken on behalf of your client/customer, the Proceeds of Crime Act imposes time limits for giving or withholding consent.
 
NB: Activity does not have to be the physical movement of money or 'transactions'. The activity you are undertaking must fall within s327-329, which can involve concealing, converting, facilitating, arranging, acquiring etc.
 
Deadlines

There are 7 working days from the day after the report was made in which to give or withhold consent and on the 8th day consent is assumed.
 
If consent is withheld, law enforcement has a further 31 calendar days in which to obtain a restraint order and on the 32nd day consent is assumed. The 31 days starts as soon as consent is withheld during the initial moratorium period eg: the total timescale may be 3 + 31 days or 7 + 31 days.
 

Information required

To enable law enforcement to make full use of your suspicious activity report and/or grant consent, there must be some identifying information included in the report, as below. The only exception to this would be if suspicion had been aroused because of an aborted attempt by the client/customer to commence business and full details were not obtained.
 
  • Consent required?
- enables consent requests to be identified quickly
  • Subject name
- including Date of Birth
  • Subject address and/or purchasing address
- including postcodes to enable geographical identification
  • Subject account number / policy reference number
- if appropriate
  • Recipient name & address
- if appropriate
  • Recipient a/c number/reference number
- if appropriate
  • Transaction amount & date
- if appropriate
  • Transaction type
- if appropriate
  • Reason for suspicion
- 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 can be included, but is not at present mandatory, can include:
 
  • Details of identification documents (passport, driving licence)
  • Details of previous transactions
  • Company details
  • Further information about a/c relationship
  • Details of secondary individuals associated with the transaction
NB: Please remember that the more identification details included in your report, the better law enforcement will be able to match the subject to existing intelligence.

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