Money Laundering

Question 1

What 3 defences are available for acquisition, use, possession offence under POCA?

Answer 1

1. Authorised disclosure
2. Legal professional privilege
3. Adequate consideration - As long as there is no suspicion that money is proceeds of crime.

Question 2

What are the three stages of money laundering?

Define each.

Answer 2

1. PLACEMENT: Money injected into the financial system, e.g. depositing into bank account.

2. LAYERING: Process of obscuring origins by passing assets through complex transactions, usually involves multiple jurisdictions.

3. INTEGRATION: Invest funds into legitimate businesses, e.g. buying property/businesses.

Question 3

What 2 defences are available for concealing and arranging under POCA?

Answer 3

1. Authorised disclosure - Defence if reported to police, customs or nominated officer. NB relevant WHEN disclosure made - before, during (only if ASAP, on own initiative, and no knowledge/suspicion of when it started) or after (w good reason why not disclosed before)
2. Privilege - If legal prof privilege applies then no duty to disclose EXCEPT (1) if Sol knows transaction amounts to money laundering offence OR (2) if Sol suspects AND suspicion is correct, comms no longer privileged.

Question 4

What are the relevant 3 direct offences under POCA? Define each.

What is the requisite mental state for the direct offences?

Answer 4

1. CONCEALING - conceal, disguise, convert or transfer criminal property or remove criminal property from the UK
2. ARRANGING - Facilitating in the acquisition, retention, use or control of criminal property - NOT litigation, issuing proceedings, settlements, negotiations.
3. USE, ACQUISITION, POSSESSION - What is says on the tin!

MENTAL STATE: Subjective - Actual knowledge or suspicion

Question 5

What is sham litigation and why is it relevant under POCA?

Answer 5

Sham litigation is created for the purpose of money laundering.

Offence of arranging can arise upon execution of the judgment or completion of the settlement

Question 6

What is Criminal Property under POCA?

Answer 6

1. Money
2. Real property
3. Personal property
4. intangible property

Question 7

What is the mental state for indirect offences under POCA?

Answer 7

Objective test: should have known or been suspicious in the circs.

Question 8

What is the offence of failure to report under POCA?

Answer 8

Indirect offence

Failure to make a suspicious activity report when knew or ought to have known/been suspicious of ML.

Question 9

What defences are available for the offence failure to report under POCA

Answer 9

1. Privilege applies if Sol has come to info in privileged circs: (1) re legal advice, (2) legal proceedings/contemplated legal proceedings.
2. Lack fo training - If no training received BUT partners may be prosecuted.

Question 10

What is the offence of Tipping Off?

Answer 10

Disclosure that (1) SAR has been made or (2) that investigation is ongoing

Question 11

What are the 2 exceptions to the offence of tipping off under POCA?

Answer 11

1. Normal enquiries regarding client’s instructions and retainer;
2. Listing obligations under ML legislation in Terms of Engagement.

Question 12

What 4 defences are available for the offence of tipping off under POCA?

Answer 12

1. IF disclosure made to colleague/other legal prof WITHIN undertaking or group
2. IF disclosure between institutions if relates to (former) client for both, for purpose of preventing ML, and equivalent prof duties
3. IF disclosing to supervisory body
4. IF disclosing to client to dissuade them from engaging in the conduct

Question 13

What are the three indirect offences under POCA? What is the required mental state?

Answer 13

1. Failure to Report
2. Tipping off
3. Prejudicing an investigation

MENTAL - Objective - knew, ought to have known, suspicious, ought to have been suspicious

Question 14

What is the offence of prejudicing an investigation?

Answer 14

Know or suspect that a money laundering investigating is underway AND EITHER

disclose this to a person likely to prejudice invest.

OR

falsify/conceal/destroy docs

Question 15

What two defences are available to the offence of prejudicing an investigation?

Answer 15

1. Where the person did not know or suspect - NB this is confusing because it is part the element that must be met to establish the offence.
2. Disclosure made in connection with legal proceedings - classic ex - Sol reveals to client that neg of previous sol to do with investigtion.

Question 16

What is a regulated activity under FSMA?

Answer 16

Specified activity

relating to a specified investment

In the course of business

Question 17

In what 4 circumstances MUST client due diligence be conducted?

Answer 17

1. When Sol first establishes a business relationship with a client.
2. When carrying out occasionl transaction amounting to the equivalent of
   more than 15,000 euros.
3. Any time a solicitor suspects money laundering or terrorist financing.
4. Any time the solicitor has reason to doubt the veracity of documents or data
   previously submitted by a client.

Question 18

For how long must a firm keep client due diligence records?

Answer 18

5 years after the end of the relationship

Question 19

How is the defence of disclosure between institutions established for the offence of tipping off.

Answer 19

A solicitor has not committed the offence of tipping off because where they rely on the defence of disclosure between institutions.

This is established where:

(1) the disclosure is made to another legal professional in a European Economic Area state;
(2) the disclosure relates to a client or former client of both parties, or a transaction involving them both;
(3) the disclosure is made for the purpose of preventing a money laundering offence; and
(4) both parties have equivalent professional duties of confidentiality and protection around personal data.