The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
MONEY LAUNDERING
AND THE DISCLOSURE
REGIME:
A UK PERSPECTIVE
MARTIN EVANS QC
31 July 2017
1
THE UK ANTI-MONEY LAUNDERING REGIME
PART 7 OF POCA
Threefold structure:
• The principal money laundering offences: ss.327-329.
• The consent regime defences (or pre-emptive shields)
to certain of those offences.
• The disclosure regime: failing to disclose offences;
protection from claims for breach of duty.
• There is also a freestanding offence of tipping off: s333A
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
2
(1) THE PRINCIPAL MONEY LAUNDERING OFFENCES
• Section 327: concealing, disguising, converting or
transferring criminal property or removing criminal property
from the UK.
• Section 328: entering into or becoming concerned in an
arrangement which D knows or suspects will facilitate the
acquisition, retention, use or control of criminal property by or
on behalf of another person.
• Section 329 creates an offence of acquiring, using, or
possessing criminal property.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
3
(1) THE PRINCIPAL MONEY LAUNDERING OFFENCES cont
• Serious offences: 14 years’ imprisonment on indictment
(s.334)
• Part 7 applies to offences committed after 24th February
2003
• “criminal property” is defined in section 340 as property
which:
(1)
(2)
constitutes a person's benefit from criminal conduct or
which represents such benefit (wholly or in part, and
directly or indirectly); and
the alleged offender knows or suspects that it
constitutes such a benefit.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
4
(2) THE CONSENT REGIME – ‘DEFENCES’
•
Each of the principal offences has a statutory
‘defence’ more accurately regarded as an exception
(ss.327(2), 328(2), 329(2):
“But a person does not commit such an offence if—
(a) he makes an authorised disclosure under section
338 and (if the disclosure is made before he does the act
mentioned in subsection (1)) he has the appropriate
consent;
(b) he intended to make such a disclosure but had a
reasonable excuse for not doing so;
(c) …
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
5
(2) THE CONSENT REGIME – “Authorised Disclosure”
An "authorised disclosure" is (s.338):
• a disclosure to a constable, customs officer or
nominated officer by the alleged offender that the
relevant property is criminal property, and must be made
prior to the commission of the act which would comprise
a breach of section 327, 328 or 329 … unless there is a
good reason for not making the disclosure prior to the
act and it was made as soon as practicable thereafter –
s.338(3).
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
6
(2) THE CONSENT REGIME – “Appropriate Consent”
• "Appropriate consent" is defined in section 335 of
POCA.
• It is the consent of a constable, a customs officer or a
nominated person, being the persons to whom an
authorised disclosure may be made, to do the
prohibited act.
• Consent may be actual, or deemed.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
7
(2) THE CONSENT REGIME – ‘Deemed Consent’
Deemed consent may arise in two ways:
• (1) if no reply to an authorised disclosure is received
by the disclosing party within seven days (starting
from the first working day after the authorised
disclosure is made – "the notice period"), consent is
deemed to have been provided: section 335(3).
• (2) if consent is expressly refused within the notice
period, a 31 day "moratorium period" commences (on
the date on which the disclosing party receives notice
of refusal).
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
8
(2) THE CONSENT REGIME – ‘Deemed Consent’
• If the disclosing party does not receive notification
within that 31 day moratorium period, consent is
deemed to have been given.
• At any time during either of these periods, actual
consent may be given.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
9
(3) THE DISCLOSURE REGIME – OFFENCES
Section 330: “Failure to disclose: regulated sector’
Four conditions:
(1) He knows or suspects, or has reasonable grounds
for knowing or suspecting, that another person is
engaged in money laundering
• Introduces a ‘negligence test’ for the regulated sector
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
10
(3) THE DISCLOSURE REGIME – SECTION 330 cont
(2) the information or other matter on which his
knowledge etc. is based came to him in the course
of a business in the regulated sector
• ‘Regulated sector’ is defined in Schedule 9
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
11
(3) THE DISCLOSURE REGIME – ‘Regulated Sector’
Schedule 9 POCA:
The ‘regulated sector’ includes:
• the provision of accountancy services by a firm or sole
practitioner who by way of business provides such
services to other persons;
• the provision of advice about the tax affairs of other
persons by a firm or sole practitioner …;
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
12
(3) THE DISCLOSURE REGIME – ‘Regulated Sector’ cont
• The provision by a firm or sole practitioner of legal or
notarial services in respect of financial or real property
transactions concerning —
(i) the buying and selling of real property or business entities;
(ii) the managing of client money, securities or other assets;
(iii) the opening or management of bank, savings or securities
accounts;
(iv) the organisation of contributions necessary for the creation,
operation or management of companies; or
(v) the creation, operation or management of trusts, companies
or similar structures
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
13
(3) THE DISCLOSURE REGIME – Third condition
(3) The obligation to disclose suspicions of money
laundering arises only if:
• the person required to make a disclosure knows the
identity of the person engaged in the money-laundering
offence; or
• the whereabouts of any of the laundered property; or
• the information which would have to be reported
discloses, or may assist in uncovering, the identity of
the person engaged in that offence or the whereabouts
of any of the laundered property.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
14
(3) THE DISCLOSURE REGIME – Fourth condition
• The fourth condition is that he does not make the
required disclosure to—
(a) a nominated officer [MLRO], or
(b) a person authorised for the purposes of this Part
by the Director General of the National Crime
Agency,
as soon as is practicable after the information or other
matter mentioned in subsection (3) comes to him.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
15
(3) THE DISCLOSURE REGIME – “required disclosure”
• By subs.(5) a required disclosure is a disclosure of:
(a) the identity of the other person, if he knows it,
(b) the whereabouts of the laundered property, so far as he
knows it, and
(c) the information or other matter on which his knowledge
etc. is based, or which gives reasonable grounds to
suspect
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
16
(3) THE DISCLOSURE REGIME – Legal Privilege exception
Legal privilege exception [s.330(6)]:
• But a professional legal adviser or relevant professional
adviser does not commit an offence under this section
if—
• he knows or suspects the things mentioned subs.(5)
because of information or other matter that came to him
in privileged circumstances.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
17
PROTECTED DISCLOSURES: SECTION 337
• A disclosure that satisfies the following three conditions, is not to be
taken to breach any restriction on the disclosure of information
(however imposed).
• (1) the information or other matter disclosed came to the person
making the disclosure in the course of his trade, profession,
business or employment.
• (2) the information or other matter causes him to know or suspect,
or gives him reasonable grounds for knowing or suspecting that
another person is engaged in money laundering.
• (3) the disclosure is made to a constable, a customs officer or a
nominated officer as soon as is practicable after the information or
other matter comes to the discloser.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
18
(3) THE DISCLOSURE REGIME – Legal Privilege exception
• Information etc. comes to a professional legal adviser or
relevant professional adviser in privileged
circumstances if it is communicated or given to him—
(a) by a client of his (or by a representative of a client)
in connection with the giving by the adviser of legal
advice to the client,
(b) by a person seeking legal advice from the adviser
(or by a representative of such a person), or
(c) by a person in connection with legal proceedings or
contemplated legal proceedings.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
19
BOWMAN v. FELS [2005] 2 CR. APP. R. 19, CA (CIV)
• Is a solicitor, handling the ordinary conduct of legal
proceedings on behalf of a client, participating in an
“arrangement which …..facilitates the acquisition ,
retention, use or control of criminal property” giving rise to
an obligation of disclosure to the authorities?
• CoA said “No”.
• Although wording of s.328 very wide, to apply it to the te
ordinary conduct of legal proceedings would undermine
two basic human rights: (i) access to justice through legal
proceedings and (ii) access to legal advice on a private
and confidential basis.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
20
BOWMAN v. FELS (cont)
• Absent clear words, Parliament could not have
intended that s.328 should interfere with these basic
rights. CoA adopted a narrow construction of s.328:
“... the proper interpretation of s.328 is that it is not
intended to cover or affect the ordinary course of litigation
by legal professionals. That includes any step taken by
them in litigation from the issue of proceedings and the
securing of injunctive relief or a freezing order up to its final
disposal by judgment”.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
21
BOWMAN v. FELS (cont)
• CoA came to same conclusion in relation to the need
to preserve the right to legal professional privilege:
“… it would require much clearer language than is contained in
section 328 ….before a parliamentary intention could be gleaned
to the effect that a party’s solicitor is obliged, in breach of this
implied duty to the Court, and in breach of the duty of confidence
he owes to his client as his litigation solicitor, to disclose to [NCA]
a suspicion that he may have that documents disclosed under
compulsion by the other party evidence one of the matters
referred to in s.328.”
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
22
ORDRE DES BARREAUX FRANCOPHONES ET
GERMANOPHONES v CONSEIL DES MINISTRES (2006)
• ECJ preliminary ruling on the legality of Directive 91/308
Art.2a(5) and Art.6(1), which imposed an obligation on
lawyers to inform the authorities of any facts which might
indicate money laundering
• Held: right to a fair trial not infringed
• The obligations laid down in Directive 91/308 art.6(1), which
were designed to combat money laundering, and which were
imposed on lawyers by art.2a(5), when read in conjunction
with the second paragraph of art.6(3), did not infringe the
right to a fair trial
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
23
ORDRE DES BARREAUX FRANCOPHONES ET
GERMANOPHONES v CONSEIL DES MINISTRES (2006)
• LPP expressly preserved by Art 6(3) of the First Directive
(91/308/EEC) in connection with institution, defending or
avoiding judicial proceedings
• “The obligation under Art.2a(5) applied to lawyers only in so far
as they advised their client in the preparation or execution of
certain transactions, essentially of a financial nature or
concerning real estate, or when they acted for and on behalf of
their client in any financial or real estate transaction. As a rule,
the nature of those activities was such that they took place in a
context with no link to judicial proceedings, and consequently,
they fell outside the scope of the right to a fair trial”.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
24
LPP AND THE ‘INIQUITY’ EXCEPTION
• If a person consults a solicitor in furtherance of a criminal
purpose then, whether or not the solicitor knowingly assists in
the furtherance of such purpose, the communications
between the client (or his agent) and the solicitor do not
attract legal professional privilege.
• The touchstone for LPP is whether the communication was
made for the purposes of giving or receiving legal advice, or
for the purposes of the conduct of actual or contemplated
litigation.
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
25
LPP AND THE ‘INIQUITY’ EXCEPTION (cont)
• Iniquity puts the advice or conduct outside the normal
scope of ‘the ordinary course of the professional
engagement’ of a lawyer
• A communication for such a purpose does not attract
legal professional privilege.
• See: JSC Bank v Ablyazov [2014] EWHC 2788
(Comm)
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
31 July 2017
26
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
Who we are
We are an internationally
renowned set of Barristers’
Chambers who specialise in
advocacy and advice across
a spectrum of needs
including regulatory and civil
actions, criminal trials and
emergency advice.
We provide the skills and
experience essential for
domestic and international
litigation involving
commercial and financial
wrongdoing of every type.
July 31, 2017
The Chambers of Andrew Mitchell QC, 33 Chancery Lane London
Consistently acknowledged as the
leading set in relation to
heavyweight asset forfeiture.
The knowledge base and expertise
here is unparalleled:
"A chambers renowned not only for
financial criminal work but also for
the confiscation proceedings that
frequently follow successful
prosecutions."
(Chambers & Partners 2017)
The Chambers of
Andrew Mitchell QC
33 Chancery Lane
London WC2A 1EN,
T: +44 (0) 207 440 9950
F: +44 (0) 207 430 2818
DX: 33 Chancery Lane
July 31, 2017