Skip to main content

Preventing money laundering and the financing of terrorism

Tipping off, or prejudicing an investigation

8.71 Under section 333A of POCA a person in the regulated sector commits an offence if:

  • the person discloses that they or another person has made a disclosure under Part 7 of POCA to a constable, an officer of Revenue or Customs, a nominated officer or a member of staff of the NCA of information that came to that person in the course of a business in the regulated sector
  • the disclosure is likely to prejudice any investigation that might be conducted following the disclosure referred to above
  • the information on which the disclosure is based came to the person in the course of a business in the regulated sector.

A person also commits an offence under section 333A if:

  • the person discloses that an investigation into allegations that an offence under Part 7 of POCA has been committed, is being contemplated or is being carried out
  • the disclosure is likely to prejudice the investigation
  • the information on which the disclosure is based came to the person in the course of a business in the regulated sector.

8.72 Under section 342 of POCA a person also commits an offence if the person:

  • knows or suspects that an appropriate officer or, in Scotland, a proper person is acting (or proposing to act) in connection with a confiscation investigation, a civil recovery investigation, a detained cash investigation or a money laundering investigation which is being or is about to be conducted
  • makes a disclosure which is likely to prejudice the investigation
  • falsifies, conceals, destroys or otherwise disposes of, or causes or permits the falsification, concealment, destruction or disposal of, documents which are relevant to the investigation.

8.73 Under POCA, a person does not falsify, conceal, destroy or otherwise dispose of, or cause or permit the falsification, concealment, destruction or disposal of, documents which are relevant to the investigation if the person:

  • does not know or suspect that the documents are relevant to the investigation
  • does not intend to conceal any facts disclosed by the documents from any appropriate officer or (in Scotland) proper person carrying out the investigation (section 342(6) of POCA). 

8.74 POCA therefore, in this regard, contains separate offences of tipping off and prejudicing an investigation. These offences are similar and overlapping, but there are also significant differences between them. It is important for those working in the regulated sector to be aware of the conditions for each offence. Each offence relates to situations where theinformation on which the disclosure was based came to the person making the disclosurein the course of a business in the regulated sector. The Terrorism Act contains similar offences (sections 21D and 39 of the Terrorism Act.) There are a number of disclosures which are permitted and that do not giverise to these offences (permitted disclosures) – see paragraphs 8.65 to 8.67.

8.75 Once an internal or external report of suspicious activity has been made, it is a criminal offence for anyone to release information that is likely to prejudice an investigation thatmight be conducted following that disclosure. An offence is not committed if the persondoes not know or suspect that the disclosure is likely to prejudice an investigation, or if thedisclosure is permitted under POCA or the Terrorism Act (section 342(3) of POCA and section 20 of the Terrorism Act.) Reasonable enquiries of a customer, conducted in a tactful manner, regarding the background to a transaction oractivity that is inconsistent with the normal pattern of activity is prudent practice, forms an integral part of CDD measures and should not give rise to tipping off.

8.76 Where a confiscation investigation, a civil recovery investigation, a detained cash investigation or a money laundering investigation is being, or is about to be, conducted, it is a criminal offence for anyone to disclose this fact if that disclosure is likely to prejudice the investigation. It is also a criminal offence to falsify, conceal, destroy or otherwise dispose of documents which are relevant to the investigation (or to cause or permit these offences). It is, however, a defence if the person does not know or suspect that disclosure is likely to prejudice the investigation, or if the disclosure is permitted under POCA or the Terrorism Act (see paragraphs 8.77 to 8.79).

8.77 An offence is not committed under POCA or the Terrorism Act if the disclosure is made to the relevant supervisory authority (the Commission) for the purpose of:

  • the detection, investigation or prosecution of a criminal offence in the UK or elsewhere
  • an investigation under POCA
  • the enforcement of any order of a court under POCA (section 333D of POCA and section 21G of the Terrorism Act.)

8.78 An employee, officer or partner of a casino operator does not commit an offence under POCA or the Terrorism Act if the disclosure is to an employee, officer or partner of the casino operator (section 333B of POCA and section 21E of the Terrorism Act). 

8.79 A person does not commit an offence under POCA or the Terrorism Act if the person does not know or suspect that the disclosure is likely to prejudice:

  • any investigation that might be conducted following a disclosure
  • an investigation into allegations that an offence under Part 7 of POCA or Part III of the Terrorism Act has been committed, is being contemplated or is being carried out (section 333D of POCA and section 21G of the Terrorism Act).

8.80 The fact that a transaction is notified to the NCA before the event, and the NCA does not refuse a request for a defence (consent) within seven working days following the day after disclosure is made, or a restraint order is not obtained within the moratorium period, does not alter the position so far as ‘tipping off’ is concerned.

8.81 This means that a casino operator:

  • cannot, at the time, tell a customer that a transaction is being delayed because a report is awaiting a defence (consent) from the NCA
  • cannot, later, tell a customer that a transaction or activity was delayed because a report had been made under POCA or the Terrorism Act, unless law enforcement or the NCA agrees, or a court order is obtained permitting disclosure
  • cannot tell the customer that law enforcement is conducting an investigation.

8.82 The judgement in K v Natwest [2006] EWCA Civ 1039 confirmed the application of these provisions. The judgement in this case also dealt with the issue of suspicion stating that the ‘The existence of suspicion is a subjective fact. There is no legal requirement that there should be reasonable grounds for the suspicion. The relevant bank employee either suspects or he does not. If he does suspect, he must (either himself or through the Bank’s nominated officer) inform the authorities.’ It was further observed that the ‘truth is that Parliament has struck a precise and workable balance of conflicting interests in the 2002 Act’. The Court appears to have approved of the seven and 31 day scheme and said that in relation to the limited interference with private rights that this scheme entails ‘many people would think that a reasonable balance has been struck’. A copy of the judgement is available on the NCA website (www.nationalcrimeagency.gov.uk).

8.83 The existence of a SAR cannot be revealed to any customer of the casino at any time, whether or not a defence (consent) has been requested. However, there is nothing in POCA which prevents casino operators from making normal enquiries about customer transactions in order to help remove any concerns about the transaction and enable the operator to decide whether to proceed with the transaction. These enquiries will only constitute tipping off if the operator discloses that a SAR has been made to the NCA or a nominated officer, or that a money laundering investigation is being carried out or is being contemplated. 

8.84 The combined effect of these two offences is that one or other of them can be committed before or after a disclosure has been made.

8.85 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. A person does not commit an offence where it is known or believed on reasonable grounds that the conduct occurred outside the UK; and the conduct was not criminal in the country where it took place. However, if the criminal activity would constitute an offence in the UK if committed here and would be punishable by imprisonment for a maximum term in excess of twelve months then the defence does not apply except if the offence is an offence under section 23 or 25 of the Financial Services and Markets Act 2000. 

8.86 There is also a specific offence of failure to disclose terrorist financing which was added to the Terrorism Act through the Anti-terrorism Crime and Security Act 2001. This offence is limited to the regulated sector, which includes casinos. The offence can be committed if a person forms knowledge or suspicion of terrorist financing or reasonable grounds for suspecting terrorist financing, during the course of working for a casino, but does not make a report. Guidance issued by the Commission and approved by HM Treasury must be taken into consideration by any court considering whether this offence has been committed (sections 330 and 331 of POCA and Regulation 86(2)). 

Interaction with customers 

8.87 Normal customer enquiries will not, in the Commission’s view, amount to tipping off or prejudicing an investigation under POCA, unless you know or suspect that a SAR has already been submitted and that an investigation is current or impending and make the enquiries of the customer in a way that it discloses those facts. Indeed, such customer enquiries are likely to be necessary not only in relation to money laundering but also in connection with social responsibility duties (for example, problem gambling). In regard to this offence, counter or frontline staff may not be aware that the nominated officer has submitted a SAR to the NCA. Reasonable and tactful enquiries regarding the background to a transaction or activity that is inconsistent with the customer’s normal pattern of activity is good practice, forms an integral part of CDD measures (and may be driven by social responsibility concerns) and should not give rise to tipping off or the prejudicing of an investigation. 

8.88 If patterns of gambling lead to an increasing level of suspicion of money laundering, or even to actual knowledge of money laundering, casino operators should seriously consider whether they wish to allow the customer to continue using their gaming facilities. If a casino operator wishes to terminate a customer relationship, and provided this is handled sensitively, there will be low risk of tipping off or prejudicing an investigation. However, if the decision has been made to terminate the relationship and there is a remaining suspicion of money laundering with funds to repatriate, consideration should be given to asking for a defence (appropriate consent).

8.89 In circumstances where a law enforcement agency requests a casino operator to continue trading with a customer as they conduct further investigations, the operator is advised to record the factors considered when agreeing or declining to do so (for example, the risks of participating in such activity, assurances provided by law enforcement, possible money laundering offences, relevant timescales provided, the gravity of the offences being investigated and the purpose of the request), and how this may change the management of risks to the licensing objectives. Given the casino operator’s heightened exposure to risk, it is advisable for the operator to ask for confirmation in writing of such requests from law enforcement. The operator should also continue to submit SARs and/or seek a defence (consent) from the NCA if they decide to persist with a business relationship with such customers.

Next chapter: Figure 1-Risk-based approach