The Proceeds of Crime Act 2002 (POCA) is one of the key pieces of legislation that governs money laundering and related criminal offences in the UK. The act defines several types of financial and economic crime and gives law enforcement agencies specific powers to tackle them. This includes not only powers to enable further investigation when someone is suspected of a criminal offence, but broader powers to freeze and recover funds that are connected to criminal activity.

Authorities like the police, the National Crime Agency, the Serious Fraud Office and others are empowered by the Proceeds of Crime Act and can use its provisions to take action against financial crimes, including money laundering. This is the process of making illegally obtained money appear legal and is often used by criminal enterprises to conceal their funds. The legislation describes three principal money laundering offences that are designed to prevent, detect, and prosecute money laundering.

Here, the leading business crime and criminal defence solicitors at JMW explain the three main money laundering offences as defined by the Proceeds of Crime Act and the options that defendants have when facing a money laundering charge or any related offence.

Money Laundering Offences under the Proceeds of Crime Act

The three types of money laundering offences are designed to give authorities comprehensive powers to tackle the mechanisms behind criminal finances. As such, they are not just limited to those who directly engage in money laundering - they also apply to anyone who assists or encourages another person to launder money or who provides services that enable or facilitate it. The legislation imposes a rigorous regime on financial (and certain non-financial) businesses to prevent money laundering, including the requirement to know their customers, monitor transactions, and report suspicious activity.

To that end, the three principal money laundering offences under the Proceeds of Crime Act are:

Concealing, Disguising, Converting, Transferring, or Removing Criminal Property

This offence involves taking any action that conceals or disguises the true nature, source, location, disposition, movement, or ownership of money or assets that are derived from criminal activity. This is what first comes to mind for many people when they think about money laundering - the effort to disguise the proceeds of criminal activity as legitimate income.

The intent of those committing this offence is to make it difficult to trace the origin of the money or assets in question, thereby allowing criminals to enjoy these proceeds without drawing attention from law enforcement or tax authorities. There are many types of activities that are used to hide the criminal origin of certain funds, all of which are made illegal under this regulation.

Disguising or concealing criminal property involves hiding the true nature, source, location, or ownership of funds or assets derived from criminal conduct. Concealment might involve placing money in offshore accounts, or disguising property through a complex web of transactions. Disguising can also involve changing the form of the proceeds, such as by converting cash into assets.

Converting refers to activities that change the form of criminal property. An example would be using cash obtained from drug trafficking to buy luxury assets like cars or property, effectively converting the form of the proceeds from cash to assets. Purchasing cryptoassets is a common manner of converting criminal property, and can also be used to hide it. Transactions using cryptocurrencies are unregulated and criminals can carry out many transactions in a short space of time, creating complex audit trails for investigators to follow to track the true origins of the money involved.

Transferring involves moving criminal property from one person or location to another. This might include transferring money between accounts or across borders to make it harder to trace the original source of the funds.

Finally, removing refers to taking the criminal property out of a jurisdiction, typically by moving it to another country with laxer laws or less stringent enforcement, to avoid detection, seizure, or legal repercussions.

Arrangements

This offence involves entering into or becoming involved in arrangements that you know or suspect facilitate (by whatever means) the acquisition, retention, use, or control of criminal property by or on behalf of another person.

An 'arrangements' offence involves entering into or becoming concerned in an arrangement that you know or suspect facilitates the acquisition, retention, use, or control of criminal property by or on behalf of another person. This offence targets the facilitation aspect of money laundering and is designed to cover a wide range of activities that enable or assist in the laundering of the proceeds of crime.

The term "arrangement" is broad and can include any agreement, understanding, or plan, whether formal or informal, and whether legally enforceable or not. This can involve complex business arrangements, individual financial transactions or simpler, more direct agreements, with the end goal of obscuring the origin of criminally obtained assets. As such, the arrangement must facilitate some aspect of handling criminal property. This could involve making it easier for another person to control or use the proceeds of crime, hiding the true nature or source of the funds, or helping to invest or move the money in a way that makes it appear legitimate.

It is not just those who create or initiate such arrangements who can be charged with an offence, but also those who, knowing or suspecting the arrangement to be related to criminal property, choose to become involved or continue their involvement. This means that professionals and businesses can be held liable if they ignore or fail to act upon suspicions that their services are being used to launder money.

This knowledge is a key aspect of the offence although, as with other types of money laundering crime, it is not necessary for the person to have complete certainty - some degree of awareness or suspicion about the nature of the funds or assets involved is sometimes enough to achieve a conviction for this offence.

Acquisition, use, and possession of criminal property

A person commits this offence by acquiring, using, or possessing criminal property, while knowing or suspecting that it represents the proceeds of crime. This covers directly handling or benefitting from money or assets known or suspected to be derived from criminal activities. Having prior knowledge or suspicion that assets or property were related to criminal activity when you received them is a vital element of this offence, but it can also be sufficient for authorities to demonstrate that you should have known or had reasonable suspicion.

Other regulations on money laundering

Beyond the primary offences described above, the Proceeds of Crime Act also imposes obligations on certain businesses and financial institutions to report suspicions of money laundering - sometimes known as 'tipping off' and 'failure to disclose' offences. UK regulations also impose obligations on financial institutions, professionals, and certain businesses to conduct due diligence, monitor transactions, and report suspicious activities. Financial professionals, such as bankers, accountants, and lawyers, are required to report any suspicious financial activity that could indicate money laundering. In this way, these professionals play a critical role in the detection and prevention of financial crime. The objective is to create a hostile environment for money laundering, and make it harder for criminals to benefit from and further their illegal activities.

What can I do if I am accused of a money laundering offence?

If you are suspected, accused of or charged with a money laundering offence, your first step should be to speak to a solicitor. The team at JMW has a wealth of experience in defending people who have been accused of committing any and all of the principal money laundering offences. We understand how investigations tend to unfold, which means that we can prepare you for interviews with the relevant authorities, help you to comply, guide you on when you are compelled to answer questions and explain what types of privileged information you do not need to provide.

Investigations can be carried out by various authorities in the UK and, as such, they can proceed in different ways. This is just one reason why instructing a solicitor with a breadth of relevant experience is vital. Each organisation that is empowered to investigate when it suspects money laundering has different powers at its disposal. For example, you will often face an account freezing order, restraint order or other court order that restricts your access to a bank account or other assets while the investigation is carried out. These can leave you without access to the funds you need for your daily living expenses, or to operate your business. It can take a long time to prove money laundering is taking place, and this means that restrictions on your accounts may remain in place for some time. Thankfully, there is often scope to have these orders discharged or varied, and a solicitor can help you to regain access to your funds in many cases.

The team at JMW has enjoyed many successes in this area, and in defending clients who are accused of money laundering. We understand the powers that authorities can use to investigate money laundering, and this means we can ensure your rights are upheld at all stages of this type of investigation. We can help you to avoid answering irrelevant questions or divulging privileged information and ensure you comply at all times with the authorities in question. No matter how things unfold, it is crucial that you be treated fairly at all stages and that you have an opportunity to mount a suitable defence.