Money laundering refers to a process by which criminals make money that has been obtained through illegal activity appear to come from legitimate sources. This is often used by criminal enterprises to conceal the source of their funds.

There are three types of money laundering offences which are defined under the Proceeds of Crime Act 2002 (POCA). The act also gives law enforcement agencies powers to prevent, detect and prosecute them. Authorities like the police, the National Crime Agency, the Serious Fraud Office and others are empowered by the Proceeds of Crime Act and can use its provisions to take action against money laundering and related financial crimes. This includes powers to freeze funds and enable further investigation when someone is suspected of a criminal offence or to be financing one, and to recover funds that are not of legitimate origin.

Here, the leading business crime solicitors at JMW explain the three main money laundering offences as defined by the Proceeds of Crime Act and the options available when facing a money laundering charge or any related offence.

Money Laundering Offences Under the Proceeds of Crime Act

The three types of money laundering offences are designed to give authorities comprehensive powers to tackle the mechanisms behind criminal finances. As such, they apply to anyone who assists another person to launder money or who provides services that enable or facilitate it, alongside those who directly engage in money laundering.

The three principal money laundering offences under POCA are:

1. Concealing, disguising, converting, transferring, or removing criminal property

This offence involves taking any action that conceals or disguises the true nature, source, location, disposition, movement or ownership of money or assets that are derived from criminal activity. As such, there are several prohibited actions that fall under this category.

The intent of those committing this offence is typically to make it difficult to trace the origin of the money or assets in question, or to disguise it as legitimate income. This allows criminals to enjoy these proceeds without drawing attention from law enforcement or tax authorities. There are many types of activities that are used to hide the criminal origin of certain funds, all of which are made illegal under this section of POCA.

Concealing or disguising profits from criminal activity

Disguising or concealing criminal property involves hiding the true nature, source, location or ownership of funds or assets derived from criminal conduct. Concealment might involve placing money in offshore accounts, or disguising property through a complex web of transactions..

Converting criminal property or assets

Converting refers to activities that change the form of criminal property. An example would be using cash obtained from drug trafficking to buy luxury assets like cars or property, effectively converting the form of the proceeds from cash to assets. Purchasing cryptoassets is a common manner of converting criminal property, and can also be used to hide it. Transactions using cryptocurrencies are unregulated and criminals can carry out many transactions in a short space of time, creating complex audit trails making it difficult for investigators to follow to track the true origins of the money involved.

Transferring funds tied to criminal conduct

Transferring involves moving criminal property from one person or location to another. This might include transferring money between accounts or across borders to make it harder to trace the original source of the funds.

Removing acquired criminal property

Removing refers to taking the criminal property out of a jurisdiction, typically by moving it to another country with laxer laws or less stringent enforcement, to avoid detection, seizure or legal repercussions.

There are important considerations when a case has an international element. For example, if funds are believed to have originated through illegal activity overseas, but the relevant criminal conduct occurred in a country where the behaviour was not illegal, this may not meet the definition of money laundering. Speak to the business crime team at JMW for advice on mounting a defence if you are alleged to have been involved in any of the above activities.

2. Arrangements

This offence applies where a person becomes involved in an arrangement that facilitates the use or control of criminal property by someone else. It targets the facilitation aspect of money laundering and is designed to cover a wide range of activities that enable or assist in the laundering of the proceeds of crime.

The term "arrangement" is broad and can include any agreement, understanding, or plan, whether formal or informal, and whether legally enforceable or not. Any such 'arrangement' that you know or suspect facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person may be reasonable grounds to charge you with an offence.

Arrangements offences can involve complex business arrangements, individual financial transactions or simpler, more direct agreements, with the end goal of obscuring the origin of criminally obtained assets. The only requirement is that the arrangement must facilitate some aspect of handling criminal property, whether that means making it easier for another person to control or use them, hiding the true nature or source of funds, or helping to invest or move money in a way that makes it appear legitimate.

Both parties who create or initiate such arrangements and those who, knowing or suspecting the arrangement to be related to criminal property, choose to get involved or continue their involvement may be charged. This means that professionals and businesses can be held liable if they ignore or fail to act upon suspicions that their services are being used to launder money.

This knowledge is a key aspect of the offence. However, as with other types of money laundering crime, it is not necessary for the person to have complete certainty. Any degree of awareness or suspicion about the nature of the funds or assets involved may be enough to achieve a conviction.

3. Acquisition, use and possession of criminal property

A person commits this offence by acquiring, using or possessing criminal property, while knowing or suspecting that it represents the proceeds of crime. This covers directly handling or benefitting from money or assets known or suspected to be derived from criminal activities. Having prior knowledge or suspicion that assets or property were related to criminal activity when you received them is a vital element of this offence, but it can also be enough for authorities to demonstrate that you should have known or had reasonable suspicion.

Are There Other Criminal Offences Related to Money Laundering Cases?

Beyond the primary offences described above, the Proceeds of Crime Act also imposes obligations on certain businesses and financial institutions to report suspicions of money laundering - sometimes known as 'tipping off' and 'failure to disclose' offences.

The legislation imposes a rigorous regime on businesses in the regulated sectors to prevent money laundering, including the requirement to know their customers, monitor transactions and report suspicious activity. Under POCA and the related Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, certain individuals and organisations must conduct due diligence, monitor transactions and report suspicious activities to prevent money laundering activities.

Businesses must assess how exposed they are to money laundering and terrorist financing by identifying risks linked to customers, transactions, products and geography in a written risk assessment. They must conduct due diligence to verify each customer’s identity, and carry out ongoing monitoring and record-keeping. Businesses must put in place internal anti-money laundering systems, including written policies, controls, and procedures, appoint a nominated officer to manage risk, and train staff on recognising and handling suspicious activity.

These rules apply to financial institutions, financial professionals, such as bankers, accountants, and lawyers, and some businesses. The objective is to create a hostile environment for money laundering and make it harder for criminals to benefit from and further their illegal activities and, in this way, these professionals play a critical role in the detection and prevention of financial crime. The law requires that they apply proportionate controls based on the level of risk identified, but it is not always clear what would be considered sufficient. However, failures in this area can lead to serious penalties for organisations and their staff.

What Can I Do if I Am Accused of a Money Laundering Offence?

If you are suspected, accused of or charged with a money laundering offence, your first step should be to speak to a solicitor. The team at JMW has a wealth of experience in defending people who have been accused of committing a range of money laundering offences. We understand how investigations tend to unfold, which means that we can prepare you for interviews with the relevant authorities, guide you on when you are compelled to answer questions and explain what types of privileged information you do not need to provide.

Investigations can be carried out by various authorities in the UK and proceed in different ways, so it is vital to instruct a solicitor with a breadth of relevant experience. Each organisation that is empowered to investigate when it suspects money laundering has different powers at its disposal. For example, you will often face an account freezing order, restraint order or other court order that restricts your access to a bank account or other assets while the investigation is carried out. These can leave you without access to the funds you need for your daily living expenses, or to operate your business. It can take a long time to prove money laundering is taking place, and this means that restrictions on your accounts may remain in place for some time without intervention from a solicitor. JMW can often help you to regain access to your funds, as there is sometimes scope to have these orders set aside or varied.

The team at JMW has a track record of success in defending clients who are accused of money laundering. We understand the powers that authorities can use to investigate money laundering, and this means we can ensure your rights are upheld at all stages of this type of investigation. We can help you to comply at all times with the authorities in question while minimising the risk of self-incrimination. No matter how things unfold, we will make sure you are treated fairly at all stages and that you have an opportunity to mount a suitable defence.