Duties and responsibilities under the Proceeds of Crime Act 2002
6 - Duties under the Proceeds of Crime Act 2002
POCA imposes duties on all operators to:
- disclose instances where operators know or suspect that another person is engaged in money laundering
- and make disclosures in the prescribed form and manner
- and obtain a defence (appropriate consent) to do a prohibited act, where appropriate.
If a person carries out any action contemplated under the principal offences discussed in Offences under the Proceeds of Crime Act 2002, the person can potentially commit one or more of the principal offences, except if an authorised disclosure is made prior to carrying out the action. The principal offences can be committed by any employee of the operator, except if a report is made to the NCA and, where applicable, a defence (appropriate consent) is obtained from the NCA (Sections 327 (2) (opens in a new tab), 328 (2) (opens in a new tab) and 329 (2) (opens in a new tab) of POCA). These authorised disclosures or reports are referred to as SARs. A SAR is submitted where someone has knowledge, suspicion or belief that another person is laundering money.
The SAR regime for money laundering is administered by the UKFIU, which is part of the NCA. The UKFIU works with UK law enforcement, government agencies, supervisors and other international financial intelligence units to prevent and disrupt money laundering. SARs submitted to the UKFIU are processed, analysed and disseminated to UK law enforcement and other government bodies, and via the international network of financial intelligence units.
In all instances where customers’ funds are known or suspected to have criminal origins, a SAR must be submitted to the NCA at the earliest opportunity using the methods set out on the NCA's website.
Operators should have a system clearly setting out the requirements for submitting SARs to the NCA. This system should include:
- the circumstances in which a disclosure (SAR) is likely to be required
- how and when information is to be provided to the person responsible for making reports to the NCA
- resources which can be used to resolve difficult issues regarding a disclosure (SAR)
- how and when a SAR is to be submitted to the NCA
- how employees can manage a customer when a SAR has been submitted and a defence (appropriate consent) is awaited
- the need to be alert to circumstances which could lead to offences of prejudicing an investigation.
Appointment of nominated officer
Whilst it is only incumbent upon those companies in the regulated sector (which, in the gambling industry, at the time of writing, includes non-remote and remote casinos) to appoint nominated officers, the Commission recommends that operators in the non-regulated sector also consider appointing a nominated officer, as this will help them meet their obligations under POCA more effectively. This can particularly assist in the reporting of suspicious activity to the NCA, as it is the nominated officer who will have this duty. The nominated officer can also give 'appropriate consent' to a transaction going ahead (this is discussed in more detail in the section Requesting a defence). Employees will also have protection from prosecution because, so long as they report any known or suspected money laundering activity to the nominated officer (this is called 'internal disclosure'), they will have a defence to the principal money laundering offences under POCA, as the decision whether to report or not to report to the NCA and request a defence (appropriate consent) is the sole responsibility of the nominated officer.
In determining the status of the nominated officer and identifying the appropriate position for this officer within the overall organisational structure, operators need to ensure their independence within the business and that they have access to all relevant information to enable them to discharge their duties. Responsibilities will include objectively reviewing decisions and, on occasions, making recommendations that may conflict with, for instance, short term operational goals.
It is important to note, however, that the position of a nominated officer brings with it responsibilities and associated offences, if the nominated officer fails to take the required action, even though the operator may be outside the regulated sector. The responsibilities of the nominated officer and the associated offences are discussed below. Further details can be found in Part 7 (opens in a new tab) of POCA.
Where operators do not formally appoint a nominated officer, it is still advisable for an appropriately senior manager to take particular responsibility for complying with the operator’s obligations under POCA. The appointment of an individual responsible for and well versed in identifying, assessing, monitoring and effectively managing money laundering risk in a comprehensive manner (proportionate to the scale and nature of the operator’s activities), who can be held to account both within the operator and by external agencies, is a practical and transparent solution.
The Commission recognises that some operators (particularly small scale operators) may have a structure in which the nominated officer will hold other roles and responsibilities. The Commission is content, for example, that the nominated officer may take on other compliance roles and responsibilities. However, this is subject to the key principles set out here, including the ability to report directly to the board (or the head of the organisation) and the NCA, and the ability to make AML decisions independently of operational concerns.
Role of nominated officer
The role of the nominated officer is to apply the same rigour in their approach to managing money laundering risk as the operator does in managing its commercial systems. The nominated officer should report to the board internally (or to the chief executive for small organisations), and direct to the NCA in relation to known or suspected money laundering activity (including criminal spend) and/or to request a defence (appropriate consent).
Where a nominated officer is appointed, he will normally be responsible for ensuring that, when appropriate, information or any other matter leading to knowledge or suspicion of money laundering is properly reported to the NCA. The decision to report or not to report suspicious activity is the personal responsibility of the nominated officer. The nominated officer must also liaise with the NCA or law enforcement agencies on the issue of whether to proceed with a transaction or what information may be disclosed to customers or third parties.
Where one has been appointed by an operator, the nominated officer will:
- receive internal disclosures (internal reports) under Part 7 (opens in a new tab) of POCA
- decide whether these should be reported to the NCA
- if appropriate, make such external reports to the NCA
- ensure that a defence (appropriate consent) is requested, as necessary.
The nominated officer should record all decisions made in this regard.
The nominated officer should be able to monitor the day-to-day operation of the operator’s AML policies, and respond promptly to any reasonable request for information made by the Commission or law enforcement bodies. The Commission expects the nominated officer to take ultimate managerial responsibility for AML issues, but this does not diminish senior management responsibility for AML.
Where an operator’s nominated officer delegates to another employee, the nominated officer remains responsible for AML issues and is likely to remain liable for the commission of any criminal offences relating to POCA. The Commission strongly recommends that, in such circumstances:
- the fact, date and time of such delegation be entered immediately in a written record
- the delegate should counter-sign by way of acceptance of responsibility
- all employees who need to be aware of the delegation should be notified immediately.
Suspicious activities and reporting
All operators are required to make a report to the NCA in respect of information that comes to them within the course of their business:
- where they know
- or where they suspect
that a person is engaged in money laundering (including criminal spend) or attempting to launder money, if they want to avoid committing one or more of the principal offences.
Operators will only need to consider making a report if they have actual knowledge or subjective suspicion of money laundering.
In order to provide a framework within which SARs may be raised and considered:
- each operator should ensure that employees make reports to the operator’s nominated officer (where one has been appointed) or an employee in a managerial capacity, where they know or suspect that a person or customer is engaged in money laundering
- the nominated officer, or the responsible manager, should consider each report, and determine whether it warrants the submission of a SAR to the NCA
- operators should ensure that employees are appropriately trained in their obligations, and the requirements for making reports to their nominated officer or the responsible manager.
If the nominated officer or responsible manager determines that a report warrants the submission of a SAR, he must report the matter to the NCA. Under POCA, the nominated officer or responsible manager is required to make a report to the NCA as soon as is practicable if he has grounds for suspicion that another person, whether or not that person is a customer, is engaged in money laundering.
What is meant by knowledge and suspicion?
In the context of POCA, knowledge means actual knowledge. Having knowledge means actually knowing something to be true. In a criminal court, it must be proved that the individual in fact knew that a person was engaged in money laundering. Knowledge can be inferred from the surrounding circumstances, so, for example, a failure to ask obvious questions may be relied upon by a court to infer knowledge (refer to Baden v Societe Generale pour Favouriser le Developpement du Commerce et de l'Industrie en France  BCLC 325 and  1 WLR 509). Whether knowledge is proved to the criminal standard will depend upon the exact circumstances of the case. The knowledge must, however, have come to the operator (or to an employee) in the course of business or (in the case of a nominated officer) as a consequence of a disclosure by another employee. Information that comes to the operator or employee in other circumstances does not come within the scope of the obligation to make a report.This does not preclude a report being made should the operator choose to do so. Employees may also be obliged to make a report by other parts of POCA. Further information can be found in Part 7 (opens in a new tab) of POCA.
In the case of Da Silva  EWCA Crim 1654, the Court of Appeal stated the following in relation to suspicion:
"It seems to us that the essential element in the word ‘suspect’ and its affiliates, in this context, is that the defendant must think that there is a possibility, which is more than fanciful, that the relevant facts exist. A vague feeling of unease would not suffice."
There is thus no requirement for the suspicion to be clear or firmly based on specific facts, but there must be a degree of satisfaction, not necessarily amounting to belief, but at least extending beyond mere speculation, that an event has occurred or not.
Whether a person holds suspicion or not is a subjective test. If a person thinks a transaction is suspicious, they are not required to know the exact nature of the criminal offence or that particular funds are definitely those arising from the crime. The person may have noticed something unusual or unexpected and, after making enquiries, the facts do not seem normal or make commercial sense. It is not necessary to have evidence that money laundering is taking place to have suspicion. Whether a person has a suspicion is a matter for their own judgement. If they have not yet formed a suspicion but simply have cause for concern, they may choose to ask the customer or others more questions. This choice will depend on what is known about the customer and how easy it is to make enquiries.
A transaction that appears to be unusual is not necessarily suspicious. Many customers will, for perfectly legitimate reasons, have an erratic pattern of gambling transactions or account activity. Even customers with a steady and predictable gambling profile will have periodic transactions that are unusual for them. So an unusual transaction may only be the basis for further enquiry, which may in turn require judgement as to whether the transaction or activity is suspicious. A transaction or activity may not be suspicious at the time, but if suspicions are raised later, an obligation to report the activity then arises. Likewise, if concern escalates following further enquiries, it is reasonable to conclude that the transaction is suspicious and will need to be reported to the NCA.
Unusual patterns of gambling, including the spending of unusually large amounts of money in relation to the premises or customer's profile, should receive attention, but unusual behaviour should not necessarily lead to grounds for knowledge or suspicion of money laundering, or the making of a report to the NCA. The nominated officer or the manager assigned AML duties should assess all of the circumstances and, in some cases, it may be helpful to ask the customer or others more questions. The choice depends on what is already known about the customer and the transaction, and how easy it is to make enquiries.
In order for a SAR to be made, it is not necessary to know or to establish the exact nature of any underlying criminal offence, or that the particular funds or property were definitely those arising from a crime. Furthermore, it is not necessary to await conviction of a customer for money laundering or other criminal offences in order to have suspicion that money laundering has taken place.
What constitutes suspicious activity?
There are numerous things that can make someone either know or suspect that they are dealing with the proceeds of crime. Some examples of how suspicions may be raised are listed below, although this is not an exhaustive list and there may be other circumstances which raise suspicion.
A man convicted of dealing in drugs is released from prison and immediately starts gambling large amounts of money. He is known to be out of work and other customers inform employees that he is supplying drugs again. This will give rise to the suspicion that he is spending the proceeds of his criminal activity.
Stakes wagered by a customer become unusually high or out of the ordinary and the customer is believed to be spending beyond his or her known means. This requires some knowledge of the customer but, nevertheless, there may be circumstances that appear very unusual and raise the suspicion that they are using money obtained unlawfully. It may be that the customer lives in low cost accommodation with no known source of income but nonetheless is spending money well above their apparent means. There is no set amount which dictates when a SAR should be made and much will depend on what is known, or suspected, about the customer.
A customer exhibits unusual gambling patterns with an almost guaranteed return or very little financial risk, including betting where the customer places bets on all possible outcomes of an event (sometimes across multiple operators). It is accepted that some customers prefer to gamble in this way but, in some instances, the actions may raise suspicion because they are different from the customer’s normal gambling practices.
Money is deposited by a customer or held over a period and withdrawn by the customer without being used for gambling. For instance, suspicions should be raised by any large amounts deposited in gaming machines or gambling accounts that are then cashed or withdrawn after very little game play or gambling.
A customer regularly gambles large amounts of money and appears to find a level of losses acceptable. In this instance, the customer may be spending the proceeds of crime and sees the losses as an acceptable consequence of the process of laundering those proceeds.
A customer’s spend increases over a period of time, thereby masking high spend and potential money laundering.
A customer spends little, but often, and their annual aggregate spend is high and out of kilter with his expected spend. This could indicate potential money laundering.
It is important to note that, once knowledge or suspicion of criminal spend is linked to a customer in one area of the business (for example, over the counter bets), it is good practice to monitor the customer’s activity in other areas of the business (for example, gaming machine play).
Suspicious activity reports (SARs)
The operator or operator’s nominated officer (where one has been appointed) must report to the NCA any transaction or activity that, after evaluation, it is known or suspected it may be linked to money laundering. A disclosure to the NCA is made by submitting a SAR to the UKFIU. Such reports must be made as soon as is practicable after the information comes to the operator, nominated officer or responsible manager.
The NCA accepts the submission of SARs in three main ways:
A secure web-based reporting system for small or medium sized reporting entities with access to the internet, which allows SARs to be submitted electronically through NCA SAR Online System (opens in a new tab).
It is the NCA’s preferred method of reporting. Reporters must register themselves as a source (reporting entity) on the system once, and then submit SARs by completing linked electronic screens that reflect the fields included in the paper based reports.
Requests for a defence (consent) can be submitted using SAR Online, and as long as the box for consent is checked at the start of the process, the system alerts the Consent Team automatically, ensuring swift identification and management of requests for a defence (appropriate consent). It is not necessary to send the request by fax as well as submission online.
SAR online is the NCA’s preferred method for small and medium sized reporters to submit SARs. The benefit to the reporter is 24/7 reporting, an automatic acknowledgment of receipt with the ELMER reference number, an initial feedback report on the quality of the SARs submitted after six months, and investigators are able to access the information more rapidly.
Use the standard NCA Suspicious Activity Report Form. The NCA prefers submissions to be typed to enable them to be scanned and prevent errors in data entry. The form and guidance on using the form is available from the NCA website. Completed forms should be posted to:UKFIU
PO Box 8000
If using the form to request a defence (appropriate consent), it should be faxed immediately to 0207 238 8286, but it is not necessary to post and fax a consent request.
The paper based reporting system will not elicit an acknowledgment of receipt or an ELMER reference number for your records, and the SAR will take some time to reach investigators.
Encrypted bulk data exchange
Used by high volume reporters, namely reporters with more than 10,000 reports a month. If an operator believes this would be the most appropriate method of reporting for their group, they should contact the UKFIU on 0207 238 8282 to discuss the matter.
Operators should include in each SAR as much relevant information about the customer, transaction or activity that it has in its records. The NCA has published a glossary of terms (opens in a new tab) which they prefer operators to use when completing SARs. This will assist in consideration of the report by the NCA.
Operators should ensure that they check all the facts they have about the customer and include all relevant information when submitting a SAR, which may include the following:
- Do the staff at the local outlet know the customer’s identity?
- Is a physical description of the customer available?
- Has the customer provided any records that will assist in identifying him, for example credit or debit card details?
- Has the customer ever self-excluded?
- What are the customer’s product preferences and does he hold other gambling accounts (for example, prefers over the counter betting, but also uses telephone and online gambling facilities)?
In order that an informed overview of the situation may be maintained, all contact between the operator and law enforcement agencies should be controlled through, or reported back to, the nominated officer or a deputy acting in the absence of the nominated officer, or the responsible manager. The NCA may apply to the magistrates' court (or, in Scotland, the sheriff) for an order (a further information order), following the submission of a SAR, requiring the nominated officer (or reporter) to provide more information in respect of the SAR (Section 339ZH (opens in a new tab) of POCA). Law enforcement agencies may also apply for a disclosure order requiring any person considered to have information relevant to an investigation to answer questions, provide information or to produce documents (Sections 357 (opens in a new tab), 358 (opens in a new tab), 391 (opens in a new tab) and 392 (opens in a new tab)of POCA).
Requesting a defence
If operators handle any proceeds of crime they may commit one of the principal money laundering offences in POCA. However, if the operator submits a SAR to the NCA, this can provide a defence. There is a statutory mechanism which allows the NCA either to grant or refuse the ‘prohibited act’ going ahead, or to prevent the suspected money laundering going ahead (Section 335 (opens in a new tab) of POCA). This statutory mechanism is called ‘appropriate consent’ and is referred to by the NCA as Requesting a defence from the NCA under POCA and TACT.
The decision whether or not to obtain a defence (appropriate consent) will arise in the following scenarios:
- concealing, disguising, converting, transferring or removing criminal property (Section 327 (opens in a new tab) of POCA)
- facilitating the acquisition, retention, use or control of criminal property by, or on behalf of, another person (Section 328 (opens in a new tab) of POCA)
- acquisition, use or possession of criminal property (Section 329 (opens in a new tab) of POCA).
These are referred to as 'prohibited acts'.
In any of these scenarios, operators will have two choices. They may choose not to go ahead with the activity in question, or they may choose to proceed. A decision to proceed will mean that the operator may be committing a money laundering offence. However, if they have made an authorised disclosure and have obtained a defence (appropriate consent), they will not be committing an offence.
Operators will need to consider how they will approach their reporting obligations and consider:
- the timing of the report(s) – particularly second or subsequent reports
- whether the operator wishes to continue to do business with the customer while awaiting a defence (appropriate consent).
A nominated officer (where one has been appointed by the operator), police constable, NCA employee or customs officer can give a person (which may include, for example, employees of the operator) actual ‘appropriate consent’ to a suspect transaction proceeding (Section 335(1) (opens in a new tab) of POCA). However, it should be noted that the NCA is the only body able to issue formal notification of a defence (consent) by means of an official NCA letter, which can then be retained by the operator for their records.
Alternatively, a person will be treated as having the appropriate consent if notice is given to a police constable or customs officer (but, note, not the nominated officer) and either:
- consent is not refused within seven working days (beginning with the day after the notice is given)
- if consent is refused and following such refusal, the 'moratorium period' (31 calendar days starting with the day on which the person receives notice that consent to the doing of the act is refused) has expired (Section 335(2) (opens in a new tab) of POCA).
Although notice can be given to a constable or customs officer, there is a need to ensure that the practices of all law enforcement agencies are consistent in this area. Therefore, the NCA operates as the national centre for all SARs and for the issue of decisions concerning the granting or refusal of a defence (appropriate consent). To avoid confusion requests for a defence (consent) should be routed through the NCA. See Applying for a defence for more detail.
Operators should be aware that the NCA and other authorities, such as the Financial Conduct Authority and Serious Fraud Office, can apply to the Crown Court (or, in Scotland, the sheriff) for an order to extend the moratorium period for a further 31 days. An order can be given on up to six occasions, which allows the moratorium period to be extended for a maximum period of 186 days in total.
To grant an order for an extension, in each case the Court must be satisfied that the NCA or other authority's investigation is being carried out "diligently and expeditiously", additional time is needed to complete the investigation and the extension would be reasonable in the circumstances (Section 336A (opens in a new tab) of POCA).
However, POCA provides that a nominated officer must not give the appropriate consent unless he has himself already made a disclosure to an authorised officer of the NCA and, either:
- the NCA employee has provided a defence (consented to the transaction)
- a defence (consent) is not refused within seven working days (beginning with the day after the notice is given)
- if a defence (consent) is refused and following such refusal, the 'moratorium period' (31 calendar days starting with the day on which the person receives notice that consent to the doing of the act is refused) has expired (but see Requesting a defence) (Section 336 (opens in a new tab) of POCA).
Reporting suspicious activity before or reporting after the event are not equal options which an operator can choose between, and retrospective reporting is unlikely to be seen in the same light as reporting prior to the event. A report made after money laundering has already taken place will only be a legal defence if there was a 'reasonable excuse' for failing to make the report before the money laundering took place (Section 327(2)(b) (opens in a new tab) of POCA). Where a customer request is received prior to a transaction or activity taking place, or arrangements being put in place (for example, where a customer requests the opening of a gambling account), and there is knowledge or suspicion that the transaction, arrangements, or the funds/property involved, may relate to money laundering, a SAR must be submitted to the NCA and a defence (consent) sought to proceed with that transaction or activity. In such circumstances, it is an offence for a nominated officer to agree to a transaction or activity going ahead within the seven working day notice period calculated from the working day following the date of disclosure, unless the NCA provides a defence (gives consent) (Section 336(3) (opens in a new tab) and (4) (opens in a new tab) of POCA).
The defence (consent provisions can only apply where there is prior notice to the NCA of the transaction or activity. The NCA cannot provide a defence (consent) after the transaction or activity has occurred. A defence (consent) request which is received after the transaction or activity has taken place will therefore be dealt with as an ordinary SAR.
In the gambling industry, business is often conducted out of normal office hours. In addition, gambling transactions may sometimes be more 'immediate' than, for example, depositing funds into a bank account where the funds may be withdrawn at a later date. In these circumstances it may sometimes not be feasible or practical to obtain a defence (appropriate consent) prior to or during a transaction. Knowledge or suspicion of money laundering may be triggered after a customer has completed all the stages of a gambling transaction. Under those circumstances, it may be reasonable to report after the transaction. However, the defence of 'reasonable excuse' when reporting after the transaction is untested by case law and should be considered on a case-by-case basis (Section 327(2)(b) (opens in a new tab) of POCA). Where the relationship with the customer is expected to have an element of duration and involve numerous transactions, it is advisable to seek a defence (consent) prior to transacting with the customer.
If knowledge or suspicion of money laundering is present, particularly if this occurs out of normal office hours, there must be a mechanism for involvement of the senior manager on duty and contact with the nominated officer (where one has been appointed) as soon as is practicable. In circumstances where this is not possible, it is advisable to report the matter to the NCA directly, where feasible.
Operators or nominated officers will need to think very carefully about whether or not to continue to do business with a customer suspected of money laundering. Relevant considerations should be the potential for criminal offences under POCA, as well as potential damage to business reputation and other commercial factors.
Operators should also note that the reporting defence is not intended to be used repeatedly in relation to the same customer. In the case of repeated SAR submissions on the same customer, it is the Commission’s view that this is not a route by which operators can guarantee a reporting defence retrospectively. If patterns of gambling lead to an increasing level of suspicion of money laundering, or to actual knowledge of money laundering, operators must seriously consider whether they wish to allow the customer to continue using their gambling facilities. Operators are, of course, free to terminate their business relationships if they wish, and provided this is handled appropriately there should be no risk of prejudicing an investigation. However, operators should think about liaising with the law enforcement investigating officer to consider whether it is likely that termination of the business relationship would alert the customer or prejudice an investigation in any other way.
How customers suspected of money laundering will be dealt with is an important area of risk management for all operators. They should deal with the issue in their policies, procedures and controls. As all gambling operators are at risk of committing the principal offences, it is advisable to consider these issues carefully before they arise in practice.
For example, the operator may consider one transaction to be suspicious and reports it to the NCA as such, but the operator may be less concerned that all of an individual’s future transactions are suspicious. In these circumstances, each transaction should be considered on a case-by-case basis and reports made accordingly, and a defence (appropriate consent) sought where necessary. Where subsequent reports are also made after actual or suspected money laundering has taken place or appears to have taken place, operators are encouraged to keep records about why reporting was delayed, and about why a defence (appropriate consent) was not requested before the suspected money laundering took place.
Applying for a defence
Where SAR Online is used and a defence (appropriate consent) is needed, this can be done by ticking the 'consent requested' box. Alternatively, requests can be faxed to the NCA UKFIU Consent Desk (see the NCA (opens in a new tab) for more information). You are advised to make it explicit in your report that you are seeking a defence (consent) from the NCA.
Requests must be for a specified activity (or specified series of activities) and should not be open-ended, such as seeking a defence (consent) to 'handle all business dealings or transactions' relating to the subject of the request or the relevant account.
The SAR requesting a defence (appropriate consent) should set out concisely:
- who is involved
- what and where the criminal property is and its value
- when and how the circumstances arose and are planned to happen
- why you have knowledge or are suspicious.
The UKFIU Consent Desk applies the criteria set out in the Home Office Circular 029/2008 Proceeds of Crime Act 2002: Obligations to report money laundering – the consent regime to each request for a defence (consent), carry out the necessary internal enquiries, and will contact the appropriate law enforcement agency, where necessary, for a consent recommendation. Once the NCA’s decision has been reached, the disclosing operator will be informed of the decision by telephone, and be given a consent number, which should be recorded. A formal letter from the NCA will follow.
Home Office Circular 029/2008 contains guidance on the operation of the consent regime in POCA. It was issued to ensure consistency of practice on the part of law enforcement in considering requests for consent under Part 7 (opens in a new tab) of POCA. This was in response to concerns from the financial services industry and other sectors and professions that decisions should be taken in an effective and proportionate way, with due engagement with all participants. The circular was formulated in agreement with key partner agencies and sets out the high-level principles by which the law enforcement agencies should make decisions on consent, and how these principles should be applied.
Although POCA provides that consent can be granted by a constable (which includes authorised NCA officers) or a customs officer, there is a need to ensure that the practices of all law enforcement agencies are consistent in this area. Therefore, as a result of the circular, the NCA operates as the national centre for all authorised disclosures and also for the issue of decisions concerning the granting or refusal of a defence (consent). To avoid confusion those making requests for a defence (consent) should route requests through the NCA. The decision making process will consist of a collaborative effort between the NCA and the other law enforcement agencies, with the latter providing a recommendation to the NCA. While the final decision will be taken by the NCA, in most cases it is likely to be based largely on the recommendation provided by the interested law enforcement agency.
All requests for a defence (consent) are dealt with by the NCA on a case-by-case basis. It may take the maximum of seven working days to deal with a defence (consent) request, however, in most cases the NCA is able to respond to requests for a defence (consent) within three days (NCA Annual Report). Operators should take this into account when deciding whether it is practical and reasonable to request a defence (consent) prior to the transaction or activity rather than making a report after the transaction or activity.
In the event that the NCA does not refuse a request for a defence (consent) within seven working days (the notice period) following the working day after the report is made, the operator may continue to transact with the customer. However, if the request for a defence (consent) is refused within that period, the NCA can prevent the transaction or activity for a further 31 calendar days (the moratorium period) from the day the request for a defence (consent) is refused.
Once a matter has been appropriately reported to the NCA, the decision to proceed or not to proceed with a transaction or arrangement remains with the operator. Even if a defence (consent) is obtained from the NCA, the operator is not obliged to proceed with the transaction or arrangement.
Operators should note that a defence (consent) only applies in relation to individual prohibited acts, and cannot provide cover to deal with a particular customer. Any subsequent activity will require separate consideration and, if necessary, separate requests for a defence from the NCA. Where a single money laundering offence consists of a course of conduct, the NCA may give consent for a series of similar transactions over a specified period. In cases where there is a range of different money laundering offences that may be committed, such as acquiring (section 329(1)(a) of POCA) and transferring (section 327(1)(d) (opens in a new tab) of POCA) criminal property, the NCA may give a single consent to that person being concerned in an arrangement to facilitate acquisition and use under section 328(1) (opens in a new tab) of POCA.
The NCA’s ability to grant a defence (consent) in such circumstances will depend on having sufficient detail about the future course of activity or repeated transactions in order to make an informed decision. This is considered on a case-by-case basis. It is not possible for the NCA to give 'blanket' consent for a reporter to carry out all activity and transactions on a suspicious account, individual or arrangement.
The NCA cannot give advice to operators in relation to the specific circumstances where SARs should be submitted or the terms for requesting a defence (appropriate consent). Comprehensive guidance on requesting a defence is available on the NCA’s website. Attention is drawn, in particular, to the following NCA publication: Requesting a defence from the NCA under POCA and TACT (opens in a new tab).
Suspicious activity reporting requirements for remote operators
For the purposes of this section, 'British customer' is inferred to mean a customer who is physically located in Great Britain when they use gambling facilities provided in reliance on a remote operating licence issued by the Commission, regardless of their usual residential address.
'Non-British customer' on the other hand means a customer who is not physically located in Great Britain when they use gambling facilities provided in reliance on a remote operating licence issued by the Commission, regardless of their usual residential address.
The Commission is aware that some remote operators not physically located in Great Britain may be required by local law to report instances of known or suspected money laundering activity by British customers to the FIU of the jurisdiction in which the operator is situated, rather than the NCA.
The Commission is of the view that remote operators should report suspicious activity to the authorities in the area where the remote gambling equipment used in the specific suspicious transaction is located. However, in relation to transactions concerning British customers, it is the Commission's view that such reports should also be received by the authorities in this jurisdiction.
Suspicious activity reporting
Where any of the remote gambling equipment used in a transaction which is known or suspected to involve money laundering is located in Great Britain (as well as equipment located in Northern Ireland), the known or suspected money laundering activity must be reported to the NCA. Operators must provide the Commission with the unique reference numbers allocated by the UKFIU of the NCA, for reports submitted by them, as soon as reasonably practicable and in any event within five working days of receipt thereof, in accordance with licence condition 15.2.1.
Where the remote gambling equipment used in a transaction which is known or suspected to involve money laundering is located outside Great Britain, but involves a British customer, and the jurisdiction in which the equipment is located is not a member of the Egmont Group (or the jurisdiction does not include gambling businesses under AML or CTF legislation, or prohibits online gambling), the known or suspected money laundering activity must be reported to the NCA. Operators must provide the Commission with the unique reference numbers allocated by the UKFIU of the NCA, for reports submitted by them, as soon as reasonably practicable and in any event within five working days of receipt thereof, in accordance with licence condition 15.2.1.
In all other cases, the known or suspected money laundering activity must be reported to the FIU of the jurisdiction in which the remote gambling equipment used in a transaction, which is known or suspected to involve money laundering, is located. The relevant report will then be shared with the NCA through the Egmont Group, where appropriate (note that in the case of operators where the remote gambling equipment used in a transaction which is known or suspected to involve money laundering is located in Gibraltar and involves a British customer, known or suspected money laundering activity must be reported to the Gibraltar FIU and the UKFIU). Where circumstances permit, operators should provide the Commission with the unique reference numbers allocated by the applicable FIU, for reports concerning British customers, within five days of receipt thereof.
These reporting requirements are summarised in the table below:
|Customer||Location of remote gambling equipment||Member of Egmont Group?||Report suspicious activity to||Unique reference numbers (URNs)|
|British or Non-British customer*||Britain** or Northern Ireland||Yes||NCA||Operators should provide the Commission with the URNs allocated by the NCA within five working days|
|British customer*||Outside Britain**||No
Yes, but domestic FIU does not receive gambling SARs
Country prohibits online gambling
|NCA||Operators should provide the Commission with the URNs allocated by the NCA within five working days|
|British or Non-British customer*||Outside Britain**||Yes||Domestic FIU***||Where circumstances permit, operators should provide the Commission with the URNs allocated by the FIU, for reports concerning British customers, within five working days|
- See paragraphs 20.61 and 20.62
- Britain means England, Scotland and Wales
- ** In the case of operators where the remote gambling equipment used in a transaction which is known or suspected to involve money laundering is located in Gibraltar and involves a British customer, known or suspected money laundering activity must be reported to the Gibraltar FIU and the UKFIU.
Applying for a defence
Where remote operators wish to make use of the defences provided by sections 327(2)(a) (opens in a new tab), 328(2)(a) (opens in a new tab) and 329(2)(a) (opens in a new tab) of POCA where they believe that, by proceeding with a transaction with a British customer, they will be committing a prohibited act, they should apply for a defence (appropriate consent), in accordance with section 335 (opens in a new tab) of POCA, from the NCA.Previous section
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Failing to report (nominated officer)