POCA in Detail

The explanatory notes to the Proceeds of Crime Act 2002 define "money laundering" as "the process by which the proceeds of crime are converted into assets which appear to have a legitimate origin, so that they can be retained permanently or recycled into further criminal enterprises".

The legislation designed to prosecute money laundering can be divided into three parts.

1. The three principal money laundering offences in sections 327 to 329 of the 2002 Act criminalise money laundering and provide for sentences of up to 14 years' imprisonment.
2. There are provisions that are intended to encourage reporting of known or suspected money laundering and to discourage "tipping off" (principallyss.330-332 and 333A of the 2002 Act).
3. The Money Laundering Regulations 2007 require the financial, accountancy, legal and other sectors to put in place systems to prevent the use of their services for money laundering or terrorist financing.

The Financial Services Authority ("FSA") also produces a handbook of rules and guidance for the financial services sector (www.fsa.gov.uk). The FSA requires that all regulated firms must appoint a money laundering reporting officer ("MLRO").

Definition of Criminal Conduct

Criminal conduct is conduct which -

(a) constitutes an offence in any part of the United Kingdom, or
(b) would constitute an offence in any part of the United Kingdom if it occurred there.

Criminal property is property which -

(a) is made up of a person's benefit from criminal conduct or it represents such a benefit of all or part of it whether directly or indirectly, and
(b) the alleged offender knows or suspects that the property is part of such a benefit.

It does not matter - who carried out the criminal conduct or who benefited from it. A person benefits from conduct if he obtains property as a result of or in connection with the conduct.

Property is all property wherever situated and includes -

(a) money;
(b) all forms of property, land or personal, or moveable;
(c) and rights in all types of property (e.g. shares in Company)

In R. v. Gabriel (Janis)[2007] it was held that where a person in receipt of state benefits failed to declare income from legitimate trade in goods to the Revenue and Customs and the Department of Work and Pensions, his profits from the trade itself could not be said to constitute criminal property so as to make him guilty of possessing criminal property the failure to declare profits for the purposes of income tax may give rise to an offence, but that did not make the legitimate trading in goods an offence in itself (although state benefits obtained on the basis of a false declaration or a failure to disclose a change in circumstances may amount to obtaining a pecuniary advantage). The court advised that where the prosecution allege that property is criminal property, set out.

R. v. K[2007], in which it was held that where a person cheats the revenue by under-declaring the takings of a legitimate trade, he obtains a pecuniary advantage in the form of the tax avoided, and, the Proceeds of Crime Act 2002 sees him as having obtained, as a result of or in connection with his offence, a sum of money equal to the value of the pecuniary advantage; and that he "benefited" from his conduct, and the value of his benefit was the value of the sum of money he was treated as having obtained. The court added that where a person with a legitimate business had engaged in such a cheat of the revenue and was found in possession of a large quantity of cash, it would have been open to the jury to infer that the cash represented the undeclared takings and represented the offender's "benefit" in part; and, if it did so, it would then be "criminal property", and thus could itself be the subject of one of the money laundering offences.

Proceeds of Crime Act 2002, s.327

S 327. Concealing etc

(1) A person commits an offence if he -

(a) conceals
(b) disguises
(c) converts
(d) transfers
(e) removes criminal property from UK .

except if

(a) he makes a report to the authorities (an authorised disclosure).
(b) he intended to make such a report, but had a reasonable excuse for not doing so;

Nor does a person commit an offence under subsection (1) if - (a) he knows, or believes on reasonable grounds, that the relevant criminal conduct occurred in a particular country or territory outside the United Kingdom,

"Criminal conduct" is defined in section 340(2) Proceeds of Crime Act 2002 as "conduct which

(a) constitutes an offence in any part of the United Kingdom, or
(b) would constitute an offence in any part of the United Kingdom if it occurred there".

The prosecution may prove that property is "criminal property" ,

(a) by showing that it derived from conduct of a specific kind or kinds and that conduct of that kind was unlawful, or
(b) by evidence that the circumstances in which the property was handled were such as to give rise to an irresistible inference that it could only have been derived from crime: R. v. Anwoir[2008.

Section 328 Proceeds of Crime Act 2002

Section 328. Arrangements

(1) A person commits an offence if he enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person.

(5) A deposit-taking body that does an act mentioned in subsection (1) does not commit an offence under that subsection if -

(a) it does the act in operating an account maintained with it, and
(b) the arrangement facilitates the acquisition, retention, use or control of criminal property of a value that is less than the threshold amount determined under section 339A for the act.

An offence under section 328 is only committed where the arrangement into which the defendant enters, or in which he becomes involved, facilitates the acquisition, retention, use or control by another of property which has already become criminal property; that requirement is not satisfied if the only arrangement into which he enters is one by which the property in question first acquires its criminal character.

Once a bank suspected that a customer's account contained criminal property, it was obliged to report the matter to the relevant authority and not to carry out any transactions in relation to the account; if it did so, and the account held criminal property, it would commit an offence under section 328(1); that remained the position unless and until consent was given or the relevant time limit had expired and if the bank told the customer why it had blocked the account it would breach the anti tip-off provisions the purpose of section 328(1) was to put pressure on institutions, such as banks, to provide information to the relevant authorities to enable the latter to obtain information about possible criminal activity.

Since section 328 makes it an offence for a banker, who knows or suspects that money in a customer's account is criminal property, to proceed to process the customer's cheque into the account of another person without having made an authorised disclosure under section 338 and without having obtained appropriate consent under section 335 , and since it would be no defence to criminal proceedings that the bank was contractually obliged to obey its customer's instructions, there would be no basis upon which an injunction could be granted by a court during the periods prescribed by section 335 requiring the bank to act for the customer, unless it was shown that there was no basis upon which criminal liability would arise because there was no "suspicion" on the part of the bank

Proceeds of Crime Act 2002, s.329

Section 329. Acquisition, use and possession

(1) A person commits an offence if he -

(a) acquires criminal property;
(b) uses criminal property;
(c) has possession of criminal property.

Summary

It is an offence to acquire use, possess, conceal, disguises, converts , transfers, removes from UK, make any arrangement about

criminal property
criminal property is property which comes from someone�s criminal conduct

where accused can be proved to knows or suspect that property is criminal property

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