The UK’s AML Legislation and System

Alhosani, Waleed

doi:10.1057/978-1-137-59455-6_7

The UK’s AML Legislation and System

Waleed Alhosani⁵

Chapter
First Online: 09 July 2016

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Part of the book series: Palgrave Studies in Risk, Crime and Society ((PSRCS))

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Notes

1.
Prior to this, a number of ML offences were contained in different statutes, for example in s.24 of the Drug Trafficking Offences Act 1986, the Criminal Justice Act 1988 and Drug Trafficking Act 1994. For detailed information on the history of the UK’s AML, see Robin Booth and others, Money Laundering Law and Regulation: A Practical Guide (First Published, Oxford University Press 2011), 14–16.
See also, Arun Srivastava, ‘UK Part II: UK law and practice’ in Mark Simpson, Nicole Smith and Arun Srivastava (eds), International Guide to Money Laundering Law and Practice (Third Edition, Bloomsbury Professional 2010), 27 at 29 & 30.
2.
Karen Harrison and Nicholas Ryder, The Law Relating to Financial Crime in the United Kingdom (Ashgate Publishing Limited 2013), 162.
3.
Janet Ulph and Michael Tugendhath, Commercial Fraud. Civil Liability, Human Rights and Money Laundering (First Edition, Oxford University Press 2006), 133.
4.
Directive 2005/06/EC of the European Parliament and of the Council of 26 October 2005. It should be noted that these requirements have been implemented in all EU Member States.
5.
MLR 2007, reg.2 (1).
6.
Alastair Hudson, The Law of Finance (Second Edition, Sweet & Maxwell 2013), 434.
7.
William Blair and Richard Brent, ‘Regulatory Responsibilities’ in William Blair and Richard Brent (eds), Banks and Financial Crime: The International Law of Tainted Money (Oxford University Press 2008), 241 at 244.
8.
MLR 2007, reg.3.
9.
MLR 2007, reg.3 (2).
10.
MLR 2007, reg.3 (3).
11.
MLR 2007, reg.3 (4).
12.
MLR 2007, reg.3 (6).
13.
MLR 2007, reg.3 (7).
14.
MLR 2007, reg.3 (8).
15.
MLR 2007, reg.3 (9).
16.
MLR 2007, reg.3 (10).
17.
MLR 2007, reg.3 (11-11A).
18.
MLR 2007, reg.3 (12).
19.
MLR 2007, reg.3 (13).
20.
Alastair Hudson (n 789) 435.
21.
“Nominated officer” means “a person who is nominated to receive disclosures under Part 7 of the Proceeds of Crime Act 2002 (money laundering) or Part 3 of the Terrorism Act 2000 (terrorist property),” MLR 2007, reg.2 (1).
22.
POCA 2002 uses the term “nominated officer” and the FCA uses the term “MLRO.” A nominated officer/MLRO is equal to a compliance officer in the UAE.
23.
MLR 2007, reg.20.
24.
There are detailed provisions in regulations 5 to 17 of MLR 2007 with regard to CDD procedures.
25.
For a comparative analysis, see Tang Jun and Lishan Ai, ‘The international standards of criminal due diligence and Chinese practice’ (2009) 12 (4) Journal of Money Laundering Control 406, 407.
26.
See Chap. 5.
27.
Reg.5 of MLR 2007 defines CDD procedures as follows:

(a) identifying the customer and verifying the customer’s identity on the basis of documents, data or information obtained from a reliable and independent source;

(b) identifying, where there is a beneficial owner who is not the customer, the beneficial owner and taking adequate measures, on a risk-sensitive basis, to verify his identity so that the relevant person is satisfied that he knows who the beneficial owner is, including, in the case of a legal person, trust or similar legal arrangement, measures to understand the ownership and control structure of the person, trust or arrangement; and

(c) obtaining information on the purpose and intended nature of the business relationship.

For the purposes of this section, the beneficial owner has different meanings according to the type of customer, reg.6 of MLR 2007.
28.
MLR 2007, reg.3 (n 791).
29.
“Occasional transaction” means “a transaction (carried out other than as part of a business relationship) amounting to 15,000 euro or more, whether the transaction is carried out in a single operation or several operations which appear to be linked.” MLR 2007, reg.2 (1).
30.
MLR 2007, reg.7(1–2).
31.
MLR 2007, reg.9 (2).
32.
MLR 2007, reg.9 (3).
In addition, reg.9 (4–5) of MLR 2007 states that:

(4) The verification of the identity of the beneficiary under a life insurance policy may take place after the business relationship has been established provided that it takes place at or before the time of payout or at or before the time the beneficiary exercises a right vested under the policy.

(5) The verification of the identity of a bank account holder may take place after the bank account has been opened provided that there are adequate safeguards in place to ensure that

(a) the account is not closed; and

(b) transactions are not carried out by or on behalf of the account holder (including any payment from the account to the account holder), before verification has been completed.
33.
Reg.5 of MLR 2007 (n 810).
34.
Firm means “any entity, whether or not a legal person, that is not an individual and includes a body corporate and a partnership or other unincorporated association”: MLR 2007, reg.2 (1).
35.
MLR 2007, reg.8.
36.
William Blair and Richard Brent (n 790) 249.
37.
Reg.11 of MLR 2007 states that:

(1) Where, in relation to any customer, a relevant person is unable to apply customer due diligence measures in accordance with the provisions of this Part, he

(a) must not carry out a transaction with or for the customer through a bank account;

(b) must not establish a business relationship or carry out an occasional transaction with the customer;

(c) must terminate any existing business relationship with the customer;

(d) must consider whether he is required to make a disclosure by Part 7 of the Proceeds of Crime Act 2002 or Part 3 of the Terrorism Act 2000.

(2) Paragraph (1) does not apply where a lawyer or other professional adviser is in the course of ascertaining the legal position for his client or performing his task of defending or representing that client in, or concerning, legal proceedings, including advice on the institution or avoidance of proceedings.

(3) In paragraph (2), ‘other professional adviser’ means an auditor, accountant or tax adviser who is a member of a professional body which is established for any such persons and which makes provision for

(a) testing the competence of those seeking admission to membership of such a body as a condition for such admission; and

(b) imposing and maintaining professional and ethical standards for its members, as well as imposing sanctions for non-compliance with those standards”

Moreover, bond trustees are exempted from adopting CDD procedures contained in reg.5 (b) of MLR 2007. MLR 2007, reg.12.
38.
Kathleen A Scott and Rebecca Stephenson, ‘Enhanced customer due diligence for banks in the UK and the US’ (2008) 23 (2) Journal of International Banking and Financial Law 89.
39.
MLR 2007, reg.13.
40.
MLR 2007, reg.8 (n 818).
41.
Arun Srivastava (n 784) 77.
42.
MLR 2007, reg.14 (2–4).
43.
Reg.14 (2) of MLR 2007 imposes the following procedures:
1. A.
  Obtaining additional information, data, or documents with the purpose of verifying the client’s identity.
2. B.
  Making use of confirmatory certification requirements from credit or financial institutions, which are subject to the EU Third Money Laundering Directive, or undertaking assistance procedures to verify or certify provided documents.
3. C.
  Verifying that the first payment is made via an account opened in the client’s name with a credit institution.
44.
A “non-EEA state” means a state that is not an EEA state. MLR 2007, reg.2 (1).
45.
MLR 2007, reg.3 (2) (n 792).
46.
Reg.14 (3) of MLR 2007 requires the following commitments:
1. A.
  Adequate information about the respondent must be collected in order to completely understand the nature of the respondent’s business.
2. B.
  Recognising the status of the respondent and the nature of its reputation and supervision. This can be done through publicly available information.
3. C.
  Evaluating the respondent’s controls in respect of AML.
4. D.
  An approval from senior management must be obtained. This should be done prior to establishing a new correspondent banking relationship.
5. E.
  Documenting the responsibilities of both respondent and correspondent.
6. F.
  Where the respondent’s customers have direct access to accounts of the correspondent, the relevant person has to be satisfied that the respondent:
  1. (i)
    has verified the identity of those customers and performs ongoing monitoring of them; and
  2. (ii)
    is able to supply to the correspondent, upon request, the documents, data or information obtained from the CDD checks and the ongoing monitoring.
47.
MLR 2007, reg.14 (5)(a).
48.
The following persons are considered PEPs:

“(i) heads of state, heads of government, ministers and deputy or assistant ministers;

(ii) members of parliaments;

(iii) members of supreme courts, of constitutional courts or of other high-level judicial bodies, whose decisions are not generally subject to further appeal, other than in exceptional circumstances;

(iv) members of courts of auditors or of the boards of central banks;

(v) ambassadors, chargés d’affaires and high-ranking officers in the armed forces; and

(vi) members of the administrative, management or supervisory bodies of state-owned enterprises.” MLR 2007, sch.2 para 4 (1)(a).
49.
MLR 2007, reg.14 (5)(b)(c).
“Immediate family members” comprise parents, one’s partner, spouse, children and their spouses or partners. MLR 2007, sch.2 para 4 (1)(c).
“Persons known to be close associates” encompass two cases:

“(i) any individual who is known to have joint beneficial ownership of a legal entity or a legal arrangement, or any other close business relations with a PEP; and

(ii) any individual who has sole beneficial ownership of a legal entity or legal arrangement, which is known to have been set up for the benefit of a PEP.” MLR 2007, sch.2 para 4 (1)(d).
50.
Reg.14 (4) of MLR 2007 states that a relevant person must:
1. A.
  obtain approval from suitable senior management in order to create the business relationship with a PEP;
2. B.
  take appropriate measures to determine the sources of wealth and funds, which are utilised in the proposed business relationship or occasional transaction,
3. C.
  perform enhanced ongoing monitoring of the relationship after the business relationship is entered into, and
4. D.
  conduct adequate risk-based measures in order to decide whether or not a client is a PEP.
See Kathleen A Scott and Rebecca Stephenson (n 821) 89.
51.
Which are (1) clients not physically present, (2) non-EEA clients and (3) PEPs. Reg.14 (2–4) of MLR 2007 (n 825).
52.
MLR 2007, reg.14 (1)(b).
53.
Kathleen A Scott and Rebecca Stephenson (n 821) 89.
54.
FATF Public Statement, ‘High-risk and non-cooperative jurisdictions’ published by the FATF on 19 October 2012, available online at: http://www.fatf-gafi.org/media/fatf/documents/FATF%20Public%20Statement%2019%20October%202012.pdf (accessed on 20th December 2014).
55.
For further details about the Advisory Notice, see ‘Advisory Notice on Money Laundering and Terrorist Financing controls in Overseas Jurisdictions’ issued by the HM Treasury, available online at: http://www.hm-treasury.gov.uk/d/advisory_notice_moneylaundering_nov2012.pdf (accessed on 20th December 2014).
56.
Christ Stott and Zai Ullah, ‘Money Laundering Regulations 2007: Part 1’ (2008) 23 (3) Journal of International Banking Law and Regulation 175, 177.
57.
MLR 2007, reg.14 (1)(b) (n 835).
58.
Christ Stott and Zai Ullah (n 839) 177.
59.
Which are (1) clients not physically present, (2) non-EEA clients and (3) PEPs. Reg.14 (2–4) of MLR 2007 (n 825).
60.
Christ Stott and Zai Ullah (n 839).
61.
Which are (1) clients not physically present, (2) non-EEA clients and (3) PEPs. Reg.14 (2–4) of MLR 2007 (n 825).
62.
In addition, relevant persons are under an obligation not to establish or carry on a correspondent banking relationship with a shell bank or a corresponding banking relationship with a bank, which is known to permit its accounts to be used by a shell bank. A “shell bank” means “a credit institution, or an institution engaged in equivalent activities, incorporated in a jurisdiction, which has no physical presence involving meaningful decision-making and management, and which is not part of a financial conglomerate or third-country financial conglomerate.” MLR 2007, reg.16 (5).
Moreover, reg.16 (1–3) of MLR 2007 states that setting up an unknown passbook or an anonymous account for any existing or new client by a credit or financial institution is prohibited. This is because these situations could be easily used for ML purposes and would render it difficult to identify the person(s) who is/are managing such kind of banks and unknown accounts. See Alastair Hudson (n 789) 436.
63.
Detailed provisions with regard to record keeping, procedures and training in regulations are contained in reg.19–21 of MLR 2007. Reg.19 (2) provides a definition for “records” for the purpose of this issue.
64.
Christ Stott and Zai Ullah (n 839) 178.
65.
MLR 2007, reg.19 (3).
66.
These policies encompass procedures:
(a) which provide for the identification and scrutiny of
1. (i)
  complex or unusually large transactions;
2. (ii)
  unusual patterns of transactions which have no apparent economic or visible lawful purpose; and
3. (iii)
  any other activity which the relevant person regards as particularly likely by its nature to be related to money laundering or terrorist financing;
(b) which specify the taking of additional measures, where appropriate, to prevent the use for money laundering or terrorist financing of products and transactions which might favour anonymity;

(c) to determine whether a customer is a politically exposed person;

(d) under which
1. (i)
  an individual in the relevant person’s organisation is a nominated officer under Part 7 of the Proceeds of Crime Act 2002 and Part 3 of the Terrorism Act 2000;
2. (ii)
  anyone in the organisation to whom information or other matter comes in the course of the business as a result of which he knows or suspects or has reasonable grounds for knowing or suspecting that a person is engaged in money laundering or terrorist financing is required to comply with Part 7 of the Proceeds of Crime Act 2002 or, as the case may be, Part 3 of the Terrorism Act 2000; and
3. (iii)
  where a disclosure is made to the nominated officer, he must consider it in the light of any relevant information which is available to the relevant person and determine whether it gives rise to knowledge or suspicion or reasonable grounds for knowledge or suspicion that a person is engaged in money laundering or terrorist financing. MLR 2007, reg.20 (2).
67.
MLR 2007, reg.20 (1).
68.
MLR 2007, reg.21.
69.
Ibid.
70.
There are detailed provisions with regard to supervision and registration set out in Part 4 of MLR 2007.
71.
Alastair Hudson (n 789) 436.
72.
MLR 2007, reg.24 (1–2).
73.
“Officer” means:

(a) an officer of the Authority, including a member of the Authority’s staff or an agent of the Authority;

(b) an officer of Revenue and Customs; or

(c) a relevant officer.

“Designated authority” means:

(a) the Authority; and

(b) the Commissioners. MLR 2007, reg.36.
74.
MLR 2007, reg.37–41. It should be noted that if the relevant person does not obey the officers of the designated authorities, civil or criminal sanctions can be imposed, reg.42 & 45 of MLR 2007.
75.
Part 1 of FSMA 2000 has been abolished by the Financial Services Act 2012.
76.
The FSA Handbook contained rules and guidance.
77.
For further information, see Andrew Campbell, ‘The Financial Services Authority and the Prevention of Money Laundering’ (2000) 4 (1) Journal of Money Laundering Control 7.
78.
For the investigative and enforcement powers of the FSA in detail, see Nicholas Ryder ‘The Financial Services Authority and money laundering: a game of cat and mouse’ (2008) 67 (3) Cambridge Law Journal 635, 646 & 647.
79.
Charles Proctor (n 924) 147.
In addition, s.1H (3) of FSMA 2000, as amended by the Financial Services Act 2012, defines the term “financial crime” to include any offence involving:

(a) fraud or dishonesty,

(b) misconduct in, or misuse of information relating to, a financial market,

(c) handling the proceeds of crime, or

(d) the financing of terrorism.
80.
Under MLR 2007, reg.42.
81.
Alpari is an online provider of foreign exchange services for speculative trading.
82.
Available online on FSA’s website at: http://www.fsa.gov.uk/pages/Library/Communication/PR/2010/077.shtml (accessed on 4th May 2015)
83.
Available online on FSA’s website at: http://www.fsa.gov.uk/static/pubs/final/turkish-bank.pdf (accessed on 13th May 2015).
84.
Under MLR 2007, reg.14 (1).
85.
Under MLR 2007, reg.14 (3) (n 829).
86.
S.1A of FSMA 2000 as amended by the Financial Services Act 2012.
87.
S.2A of FSMA 2000.
88.
S.1A of FSMA 2000.
89.
See http://www.bankofengland.co.uk/PRA/Pages/default.aspx (accessed on 26th May 2015).
90.
Sch.9 (2) para 4 of POCA 2002 defines the supervisory authorities as follows:

(1) The following bodies are supervisory authorities

(a) the Commissioners for Her Majesty’s Revenue and Customs;

(b) the Department of Enterprise, Trade and Investment in Northern Ireland;

(c) Financial Conduct Authority;

(d) the Gambling Commission;

(e) the Office of Fair Trading;

(ea) Prudential Regulation Authority;

(f) the Secretary of State; and

(g) the professional bodies listed in sub-paragraph (2).
91.
S.2B (2) of FSMA 2000.
For further information about the PRA, see Alastair Hudson (n 789) 220–222.
92.
S.19 of FSMA 2000.
93.
S.1 L of FSMA 2000.
94.
The FCA Handbook replaces the FSA Handbook. The FCA Handbook is available on the FCA’s website at: www.fca.org.uk (accessed on 24th October 2014).
95.
The term “UK financial system” means (a) financial markets and exchanges, (b) regulated activities and (c) other activities connected with financial markets and exchanges. S.1I of FSMA 2000.
96.
S.1D (2)(b) of FSMA 2000.
97.
SYSC is available on the FCA’s website at: www.fca.org.uk (accessed on 24 October 2014).
98.
SYSC 3.2.6I.
99.
SYSC 3.2.6G.
100.
Under MLR 2007, reg.42.
101.
Available on the FCA’s website at: http://www.fca.org.uk/your-fca/documents/final-notices/2013/guaranty-trust-bank-uk-limited (accessed on 29th October 2014).
102.
The JMLSGs members consists of 18 associations, for example the Association of British Insurers (ABI), Association of British Credit Unions Ltd (ABCUL) and Association of Financial Mutuals (AFM). See www.jmlsg.org.uk (accessed on 2nd December 2014).
103.
Karen Harrison and Nicholas Ryder (n 785) 28.
104.
The guidance was introduced in 1990 and has been subjected to a number of reviews, also to accommodate changes introduced by POCA 2002 and MLR 2007.
105.
Detailed information on the JMLSG and its guidance are available online on the JMLSG website at: www.jmlsg.org.uk (accessed on 2 December 2014).
106.
Nicholas Ryder, Money Laundering – An Endless Cycle? (First Published, Routledge Cavendish 2012), 84.
107.
Ibid.
108.
Christ Stott and Zai Ullah (n 839) 178.
109.
Reg.42 & 45 of MLR 2007 (n 857).
110.
Which are (1) clients not physically present, (2) non-EEA clients and (3) PEPs. Reg.14 (2–4) of MLR 2007.
111.
Kathleen A Scott and Rebecca Stephenson (n 821) 89.
112.
S.340 (11) of POCA 2002.
113.
MLR 2007, reg.2 (1) (n 788).
114.
John Wright, ‘Introduction to amended guideline 12 (the Proceeds of Crime Act) and new Guideline on the Formalities for Drafting an Award’ (2010) 76 (2) Arbitration 291, 294.
The term “regulated sector” will be explained in Chap. 8.
115.
Alastair Hudson (n 789) 414—415.
116.
Stephen Gentle, ‘Proceeds of Crime Act 2002: update’ (2008) 56 (May) Compliance Officer Bulletin 1, 14.
117.
Nicholas Ryder, Financial Crime in the 21st Century: Law and Policy (Edward Elgar Publishing Limited 2011), 35.
118.
S. 327(1) of POCA 2002 states that a person commits an offence if he or she:

(a) conceals criminal property;

(b) disguises criminal property;

(c) converts criminal property;

(d) transfers criminal property;

(e) removes criminal property from England and Wales or from Scotland or from Northern Ireland.
119.
POCA 2002, s.327 (3).
120.
Alastair Hudson (n 789) 416.
121.
R v Fazal (Mohammed Yassen), [2009] EWCA Crim 1697.
122.
Alastair Hudson (n 789) 416.
123.
[2009] HCJAC 60.
124.
Contrary to POCA 2002, s. 327(1)(d) and (e).
125.
Rudi Fortson, ‘Money Laundering Offences under POCA 2002’ in William Blair and Richard Brent (eds), Banks and Financial Crime: The International Law of Tainted Money (Oxford University Press 2008), 155 at 177.
126.
[2004] UKHL 50.
127.
Ibid para 23.
128.
Rudi Fortson (n 908) 177.
129.
Evan Bell, ‘Concealing and disguising the criminal property’ (2009) 12 (3) Journal of Money Laundering Control 268, 269.
130.
The authorised disclosure defence is also applied to all principal ML offences. S.327 (2) of POCA 2002 provides that a person will be exempt from the concealing offence if one of the following three circumstances is satisfied, namely if he (1) made an authorised disclosure under s.338 of POCA 2002 before he committed the prohibited act, namely any act listed in section 327 (1), 328 (1) or 329 (1) of POCA 2002, and he had the appropriate consent; (2) did not make authorised disclosure because of a reasonable excuse; or (3) did the act to enforce a statutory provision.
In order to avoid repetition, the authorised disclosure, along with the term “appropriate consent,” will be thoroughly analysed in the following chapter in relation to the types of ML disclosure. An example of defence (3) mentioned above is where the police are performing their official duties and deposit cash derived from criminal activity in a bank account in order to ensure that it is kept in a safe place. In such circumstances, the relevant bank can invoke the defence. See Doug Hopton, Money Laundering, A Concise Guide for All Business (Second Edition, Gower Publishing Limited 2009), 55.
131.
S.327 (2A)(a) of POCA 2002 provides that a person does not commit the offence if he had reasonable grounds to know or believe that the “relevant criminal conduct” occurred outside the UK. However, criminal conduct takes place when property is being removed from the UK to another jurisdiction, as it is taken across the border. See Alastair Hudson (n 908) 425.
S.327 (2B) of POCA 2002 states that the term “relevant criminal conduct” means “criminal conduct by reference to which the property concerned is criminal property.”
S.327 (2A)(b) of POCA 2002 imposes the following two requirements for the defence to be evoked:

(b) the relevant criminal conduct

(i) was not, at the time it occurred, unlawful under the criminal law then applying in that country or territory, and

(ii) is not of a description prescribed by an order made by the Secretary of State.
132.
“Deposit-taking body” means:

(a) a business which engages in the activity of accepting deposits, or

(b) the National Savings Bank’. POCA s.340 (14).

Deposit-taking banks are the most likely organisations to conduct transferring and converting criminal property and the defence relates to transferring and converting criminal property. Under s.327 (2c) of POCA 2002, these bodies will not commit the transferring and converting offences if (1) the body did the act to operate an account, which it maintained; and (2) the value of the relevant criminal property was less than £250. This threshold is spelled out in s.339A (2) of POCA 2002.
133.
POCA 2002, s.328 (1).
134.
Angela Leong, The Disruption of International Organised Crime: An Analysis of Legal and Non-Legal Strategies (Ashgate Publishing Limited 2007), 154.
135.
[2005] EWCA Civ 226.
136.
Ibid para 83.
137.
(N 918).
138.
Alastair Hudson (n 789) 427.
139.
Stephen Gentle (n 899) 15.
140.
‘Proceeds of Crime Act 2002 Part 7—Money Laundering Offences’ (updated 15 September 10), available online at: http://www.cps.gov.uk/legal/p_to_r/proceeds_of_crime_money_laundering/ (accessed on 31st January 2015).
141.
Charles Proctor, The Law and Practice of International Banking (Oxford University Press 2010), 157.
142.
Alastair Hudson (n 789) 426.
143.
Ibid.
144.
Ibid.
145.
John Wright (n 897) 294.
146.
Charles Proctor (n 924) 158.
147.
POCA 2002, s.328 (2)(3)(5).
148.
POCA 2002, s.329 (1).
149.
Rudi Fortson (n 908) 186.
150.
‘Proceeds Of Crime Act 2002 Part 7—Money Laundering Offences’ (n 923).
151.
[1969] 2A.C. 256.
152.
[2012] EWCA Crim 367.
153.
In addition, he pleaded guilty for possession of controlled drugs with intent to supply. Ibid.
154.
R v Griffiths (Philip), [2006] EWCA Crim 2155.
155.
POCA 2002, s.329 (2)(2A-2C).
156.
“Proceeds Of Crime Act 2002 Part 7—Money Laundering Offences” (n 923).
S.329 (3) of the POCA 2002 defines “inadequate considerations” as follows:

For the purposes of this section

(a) a person acquires property for inadequate consideration if the value of the consideration is significantly less than the value of the property;

(b) a person uses or has possession of property for inadequate consideration if the value of the consideration is significantly less than the value of the use or possession;

(c) the provision by a person of goods or services which he knows or suspects may help another to carry out criminal conduct is not consideration.

This defence can be relied on in particular by tradesmen, accountants and solicitors. Hence, traders are not obliged to ask about the origin of the money when they are paid for services and consumable goods in money which come from the offence. See Doug Hopton (n 913) 55.
The defence is also available to professional advisors, such as accountants or solicitors, when they are paid on account for expenses either from the customer or from another person on behalf of the customer.
In the case of R v Gibson [2000] Crim. L.R. 479, the defendant was accused of holding £28,000 of criminal proceeds for another person. At the trial, he argued that on returning the money he added an additional £500 and this extra fund embodied adequate consideration. The Criminal Division of the Court of Appeal stated that:

When he acquired that property, the appellant had given no consideration for it. Nor was there any express or implied promise or obligation on his part to pay for its use. In our view between 9th February and 8th March he gave no consideration for use of the £28,000. When he paid the cheque into his bank account, he had done an act which amounted to having possession of it. He had thus committed the offence. para 23.

Therefore, in the case of R v Kausar (Rahila) [2009] EWCA Crim 2242, the Criminal Division of the Court of Appeal stated that:

One of the issues that may arise under section 329 is whether the property in question was acquired for inadequate consideration. If it was not so acquired, no offence under it is committed ((2)(c)), and that is so even if the person who acquires it knows or suspects the property to be criminal property. para 8.

S.334 (1) of POCA 2002 states that a person guilty of any of the principal ML offences mentioned above can be liable to receive up to 14 years’ imprisonment and/or a fine and subject himself to civil recovery or a confiscation order. See Doug Hopton (n 913) 5.
157.
POCA 2002, s.340 (3).
158.
Alastair Hudson (n 789) 418.
159.
POCA 2002, s.340 (9).
160.
Charles Proctor (n 924) 154.
161.
S 340(2) of POCA 2002 states that:

(2) 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.

S.102 of SOCPA 2005 creates a defence for the principal ML offences, namely the relevant criminal conduct takes place outside the UK (already illustrated above) (n 914). The defence also applies to the three offences relating to failing to report ML cases, analysed in the following chapter.
162.
POCA 2002, s.340 (4).
163.
Arun Srivastava (n 784) 77.
164.
See (n 915).
165.
Robert Stokes and Anu Arora, ‘The duty to report under the money laundering legislation within the United Kingdom’ [2004 May] Journal of Business Law 332, 340. See also Chap. 4 (n 319).
166.
Doug Hopton (n 913) 47.
167.
[2008] EWCA Crim 1354.
168.
Ibid para 21.
169.
(N 906).
170.
Ibid para 12.
171.
Ibid para 15.
172.
David McCluskey, ‘Money laundering: the disappearing predicate’ (2009) 10 Criminal Law Review 719.
173.
‘Proceeds Of Crime Act 2002 Part 7—Money Laundering Offences’ (n 923).
174.
Robin Booth and others (n 923) 35 & 36.
S.340 (7) of the POCA 2002 provides that:

“References to property or a pecuniary advantage obtained in connection with conduct include references to property or a pecuniary advantage obtained in both that connection and some other.”
175.
S.340 (3)(a) of the POCA 2002.
176.
Robin Booth and others (n 923) 37.
177.
Ibid.
178.
POCA 2002, s.340 (3) (n 940).
179.
For example, when a customer physically deposits cash into his bank account and admits in the course of his conversation with a banker that this cash is the result of drug trafficking. In this case, the banker has actual knowledge that this cash constitutes criminal property since it emanates from criminal conduct.
180.
That a reasonable person would have known or the person charged ought to have known.
181.
Doug Hopton (n 913) 61.
182.
POCA 2002, s.340 (3) (n 940).
183.
Jonathan Fisher, ‘The anti-money laundering disclosure regime and the collection of revenue in the United Kingdom’ (2010) 3 British Tax Review 235, 237.
184.
[2006] EWCA Crim 1654.
185.
Ibid para 16.
186.
Ibid.
187.
Which was repealed by POCA 2002, sch.12 para 1.
188.
(N 967).
189.
[2006] EWCA Civ 1039.
190.
Jonathan Fisher (n 966) 238.
191.
[2001] UKHL 1.
192.
Ibid para 116.
193.
Robin Booth and others (n 784) 47.
194.
(N 967).
195.
Chambers English Dictionary, (Cambridge 1988).
196.
(N 967).
197.
Ibid paras 12 & 19.
198.
Ibid para 16.
199.
S.340 (3)(b) of POCA 2002.
200.
(N 967).
201.
Ibid para 8.
202.
(N 972).
203.
Ibid para 21.
204.
(N 967).
205.
Commonwealth Secretariat, Combating Money Laundering and Terrorist Financing: A Model of Best Practice for the Financial Sector, the Professions and other Designated Businesses (Second Edition, Commonwealth Secretariat 2006), 138.
206.
Robin Booth and others (n 784) 49.
207.
[2010] EWCA Civ 31.
208.
The basis of submitting a SAR will be critically analysed in Chap. 8.
209.
As analysed in Chaps. 5 and 6.
210.
As critically analysed in Chap. 5.
211.
Namely (1) clients not physically present, (2) non-EEA clients and (3) PEPs.
212.
MLR 2007, reg.14 (1)(b) (n 835).
213.
The two cases, analysed in Chap. 5, clearly confirm that the compliance officers played no role in detecting STRs at their banks.
214.
(N 967).
215.
(N 990).

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Dubai Public Prosecution, SHARJAH, UAE
Dr. Waleed Alhosani (Assistant Chief Prosecutor)

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Alhosani, W. (2016). The UK’s AML Legislation and System. In: Anti-Money Laundering. Palgrave Studies in Risk, Crime and Society. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-59455-6_7

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DOI: https://doi.org/10.1057/978-1-137-59455-6_7
Published: 09 July 2016
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