On 2 June 2021, the Crown Prosecution Service (the ‘CPS’) published its revised guidance on the prosecution of money laundering offences (the ‘Guidance’).
- The most significant changes introduced by the Guidance relate to section 330 of the Proceeds of Crime Act 2002 (‘POCA’), which criminalises failure to report money laundering in the ‘regulated sector’
- The Guidance now clarifies that it is possible to charge an individual under section 330 of POCA even though there is insufficient evidence to establish that money laundering was planned or has taken place. Previously, the CPS did not do so.
- This change in approach represents a relaxation of the existing guidance, and firms in the regulated sector should therefore take note of the change and the resulting increased risk of prosecution for failure to report under section 330 of POCA.
- The effective date for the Guidance is the date of publication (i.e., 2 June 2021), so the new approach will not apply retrospectively.
The money laundering offences under POCA
Money laundering offences are set out in Part 7 of POCA. Sections 327-329 of POCA outline the principal money laundering offences, extending criminal liability to any persons who deal with criminal property in certain circumstances.
Alongside the principal money laundering offences, POCA requires those working in the regulated sector to report knowledge or suspicion of money laundering, or reasonable grounds to suspect money laundering, in certain circumstances. Under section 330 of POCA, a person may commit an offence if they do not disclose their knowledge or suspicion of money laundering to their firm’s nominated officer (commonly known as the money laundering reporting officer or MLRO). Under section 331, the relevant nominated officer may commit an offence if they do not report that disclosure by filing a Suspicious Activity Report with the National Crime Agency. The maximum sentence is five years’ imprisonment.
A new approach
Contrary to the previous position, which required the prosecution to prove that money laundering was planned or undertaken in order to establish liability under section 330 of POCA, the new approach outlined in the Guidance enables prosecutions to proceed even if no money laundering offence is proven. The Guidance makes clear that “section 330 … creates an obligation to report suspicions of money laundering to the authorities, regardless of whether money laundering actually takes place.”
It is important to note that the new approach only applies to the ‘suspicion limb’ of section 330 of POCA, and not the ‘knowledge limb’. Evidence of planning or undertaking are required to establish a person’s knowledge as regards another person’s involvement in money laundering. Where money laundering cannot be proven, the prosecution can now proceed under the suspicion limb.
The Guidance is an attempt by the CPS to remove barriers that have historically inhibited prosecutions under section 330 of POCA, which have been rare to date. While it remains to be seen whether the Guidance will in fact precipitate an uptick in prosecutions, the changes introduced undoubtedly increase the risks associated with failing to report money laundering. As such, firms operating in the regulated sector should ensure that their employees are aware of their money laundering reporting obligations, and the risks associated with failure to report.