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Guidance

Duties and responsibilities under the Proceeds of Crime Act 2002

This advice explains how operators can make sure they and their employees comply with their obligations under The Proceeds of Crime Act 2002 (POCA).

  1. Contents
  2. Part 2 - The advice
  3. 3 - Offences under the Proceeds of Crime Act 2002

3 - Offences under the Proceeds of Crime Act 2002

The criminal offences of money laundering were first introduced in the United Kingdom in the Criminal Justice Act 1988 (opens in a new tab) and the Drug Trafficking Offences Act 1986 (opens in a new tab). 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.

POCA applies to everyone, although certain offences relating to the failure to report (except in relation to a nominated officer) and 'tipping off' only apply to those operating in the regulated sector. The businesses that fall within the regulated sector are specified in Schedule 9 of POCA (opens in a new tab), and include credit institutions, financial institutions, auditors, insolvency practitioners, external accountants, tax advisers, independent legal professionals, trust or company service providers, estate agents, high value dealers and casino operators.

POCA creates several principal offences that apply to everyone and criminalise any involvement in the proceeds of any crime if the person knows or suspects that the property is criminal property (Sections 327 (opens in a new tab), 328 (opens in a new tab) and 329 (opens in a new tab) 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.

Section 327 (opens in a new tab) of POCA provides that a person commits an offence if they:

  • conceal criminal property (for example, by depositing funds obtained through criminal activity into a gambling account)
  • disguise criminal property (for example, by placing funds obtained through criminal activity into a gambling account and then withdrawing them at a later date)
  • convert criminal property (for example, by placing bets in a gambling establishment and then cashing in the winnings)
  • transfer criminal property (for example, by transferring property to another person or to a gambling operator)
  • remove criminal property from the United Kingdom (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 place bets.

Section 328 (opens in a new tab) 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 an operator knowingly to accept stakes that are the proceeds of criminal activity.

Section 329(1) (opens in a new tab) of POCA provides that a person commits an offence if they:

  • acquire criminal property
  • use criminal property
  • have possession of criminal property (for example, via stakes).

Acquisition, use and possession under section 329(1) (opens in a new tab) 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 acquire or use or have possession of the property for adequate consideration.

The principal money laundering offences are wide and can be committed by anyone, including, for example, an employee of an operator, who has knowledge or suspicion that a customer is using the proceeds of crime, or has possession of the proceeds of criminal activity.

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 United Kingdom. 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 (Section 327(2A) (opens in a new tab) of POCA).

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 [2008] 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).

While POCA places responsibilities on operators, the legislation also gives them protection if they report suspicious activity. Operators will have a defence to the principal money laundering offences in sections 327 (opens in a new tab), 328 (opens in a new tab) or 329 (opens in a new tab) of POCA if they:

  • make an authorised disclosure under section 338 (opens in a new tab) of POCA prior to the offence being committed and obtain a defence (appropriate consent) under section 335 (opens in a new tab) of POCA (the consent defence)
  • intended to make an authorised disclosure but had a reasonable excuse for not doing so (the reasonable excuse defence).

Authorised disclosures and requesting a defence (appropriate consent) are discussed in Duties under the Proceeds of Crime Act 2002 of this advice.

Warning The penalty for conviction on indictment for an offence under sections 327 (opens in a new tab), 328 (opens in a new tab) or 329 (opens in a new tab) of POCA is imprisonment for a term not exceeding 14 years, a fine, or both (Section 334 (opens in a new tab) of POCA).

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 (opens in a new tab) of POCA).

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The Proceeds of Crime Act 2002
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