Anti-money laundering and fraud

In general terms, money laundering is a process whereby criminals:

  • retain, disguise and conceal the proceeds of their crimes;
  • raise, consolidate or retain funds for use in financing terrorism.

In UK law money laundering is defined in the Proceeds of Crimes Act 2002 (POCA) and includes all forms of handling or possessing criminal property, including possessing the proceeds of one's own crime, and facilitating any handling or possession of criminal property. Criminal property (defined in POCA) constitutes or represents a person's benefit from criminal conduct where the alleged offender knows or suspects that the property in question represents such a benefit. Criminal property may take any form, including money or money's worth, securities, tangible property and intangible property.

Money laundering can be carried out in any part of the world and can range from a single act involving one person to complex set ups involving various individuals. There are no materiality or de-minis exceptions in relation to money laundering.

According to POCA 2002, a person can commit a money laundering offence if they:

  • Conceal, disguise, convert or transfer criminal property, or remove criminal property from England and Wales, or from Scotland or from Northern Ireland (section 327); or
  • Enter 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 (section 328); or
  • Acquire, use or have possession of criminal property except where adequate consideration was given for the property (section 329).

Examples of money laundering offences include tax evasion, theft, fraud, bribery, smuggling, including drug trafficking and illegal arms sales. There are certain circumstances where offences will not be deemed to be committed. For example, money laundering offences will not be committed if the accountant reports suspicious activity to the National Crime Agency (which replaced the Serious Organised Crime Agency).

Given the nature of their role and services they provide, IFA members might be in a position to facilitate any of the above money laundering offences and should therefore be familiar with the law and guidance in this area, particularly the CCAB Anti-Money Laundering Guidance 2008 which is specifically aimed at the accountancy sector. Failure to take this guidance into account could have serious legal, regulatory or professional disciplinary consequences.