The prevention of money laundering and combating the financing of terrorism
The Proceeds of Crime Act
1.15 Criminal offences of money laundering were first introduced in the United Kingdom (the UK) in the Criminal Justice Act 1988 and the Drug Trafficking Offences Act 1986. POCA consolidated, updated and reformed the criminal law relating to money laundering to include any dealing in 'criminal property', which is defined widely as the proceeds of any type of crime, however small the amount.
1.16 POCA establishes several money laundering offences including:
- the principal money laundering offences
- offences of failing to report suspected money laundering
- offences of tipping off about a money laundering disclosure, tipping off about a money laundering investigation and prejudicing money laundering investigations.
1.17 The principal offences criminalise any involvement in the proceeds of any crime if the person knows or suspects that the property is criminal property (Sections 327, 328 and 329 of POCA.) These offences relate to the concealing, disguising, converting, transferring, acquisition, use and possession of criminal property, as well as an arrangement which facilitates the acquisition, retention, use or control of criminal property. For example, in the gambling industry, this may involve the taking of cash, cheque, or card payments, based on funds which are the proceeds of crime, in the form of a bet or wager, or holding money on account for a customer for the purposes of gambling.
1.18 Section 327 of POCA provides that a person commits an offence if he:
- conceals criminal property (for example, by depositing funds obtained through criminal activity into a gambling account)
- disguises criminal property (for example, by placing funds obtained through criminal activity into a gambling account and then withdrawing later)
- converts criminal property (for example, by placing bets in a gambling establishment and then cashing in the winnings)
- transfers criminal property (for example, by transferring property to another person or to a casino operator)
- removes criminal property from the UK (for example, by taking their winnings overseas).
Concealing or disguising property includes concealing or disguising its nature, source, location, disposition, movement or ownership, or any rights with respect to it. Whilst 'converting' criminal property is not defined in POCA, it is suggested that this be given its conventional legal meaning, that is that the 'converter' has dealt with the property in a manner inconsistent with the rights of the true owner of the property. For example, a criminal steals cash in a bank robbery and then uses that cash to open a gambling account and gamble.
1.19 Section 328 of POCA provides that a person commits an offence if they enter into or become concerned in an arrangement which they know or suspect facilitates, by whatever means, the acquisition, retention, use or control of criminal property by or on behalf of another person. An example of this in the gambling industry would be for a casino operator knowingly to accept stakes that are the proceeds of criminal activity.
1.20 Section 329(1) of POCA provides that a person commits an offence if they:
- acquires criminal property
- uses criminal property
- has possession of criminal property (for example, via stakes).
Acquisition, use and possession under section 329(1) includes, for example, when a person carries, holds or looks after criminal property or acquires criminal property for 'inadequate consideration'. This means when a person buys or exchanges something which is significantly below market value (inadequate consideration). However, a person does not commit such an offence if they acquired or used or had possession of the property for adequate consideration (Section 329(2)(c) of POCA.)
1.21 The principal money laundering offences are wide and can be committed by any person, including, for example, a casino employee, who has knowledge or suspicion that a customer is using the proceeds of crime, or has possession of the proceeds of criminal activity.
1.22 The offence of money laundering and the duty to report under POCA apply in relation to the proceeds of any criminal activity, wherever conducted, including abroad, that would constitute an offence if it took place in the UK. However, a person does not commit an offence of money laundering where it is known or believed, on reasonable grounds, that the relevant criminal conduct occurred outside the United Kingdom and the relevant conduct was not criminal in the country where it took place and is not of a description prescribed by an order made by the Secretary of State (Sections 327(2A), 328(3) and 329(2A) of POCA.)
1.23 The money laundering offences assume that a criminal offence has occurred in order to generate the criminal property which is now being laundered. This is often known as a predicate offence. No conviction for the predicate offence is necessary for a person to be prosecuted for a money laundering offence. (Note that, following the decision in relation to R v Anwoir  2 Cr. App. R. 36, the Prosecution does not need to prove a specific criminal offence, but can instead show that it derived from conduct of a specific kind or kinds and that conduct of that kind or those kinds was unlawful, and by evidence of the circumstances in which the property had been handled, which were such as to give rise to the irresistible inference that it could only have been derived from crime.)
1.24 The penalty for conviction on indictment for an offence under sections 327, 328 or 329 of POCA is imprisonment for a term not exceeding 14 years, a fine, or both8. In addition, POCA contains provisions for the recovery of the proceeds of crime and forfeiture can be granted, regardless of whether a conviction for any offence has been obtained or is intended to be obtained. Under certain circumstances, criminal property can be recoverable even if it is disposed of to another person (Section 304 of POCA.)
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