In the latest of our legal guide series, BCL partner John Binns discusses the three distinct categories of people that can potentially need anti-money laundering advice:
- those who are suspected of an offence
- those who are otherwise involved in an investigation, i.e., a complainant or a witness
- those who need advice on how best to comply with the law
Perspectives on the law
Any aspect of the criminal law can potentially give rise to a need for advice from three distinct categories of people: those who are suspected of an offence; those who are otherwise involved in an investigation (for instance as a complainant or a witness); and those who, for a variety of reasons, need advice on how best to comply with the law, or in other words, avoid or prevent the commission of an offence.
It can be tempting to see the differences between those categories as broader than it is. On the very superficial level, the individual caught holding a bag full of bank notes presents very differently from the multinational corporation that wants to brush up on its compliance procedures. But in strict legal terms, the offences to advise upon are generally the same for each of them.
The regulated sector
In money laundering and terrorist financing, the position is made more complicated because the regulated sector (as listed in the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000 (TA)) has additional obligations arising from money laundering regulations (MLRs), and there are additional offences that can be engaged (broadly speaking, by breaching those obligations, by failing to report, or by ‘tipping off’ a suspect that a report has been made).
Again, the circumstances in which a person’s need for advice can arise are threefold – because they are suspects, because they are witnesses, or because they are proactively seeking help with compliance. But the difference is that, in many circumstances at least, the enforcement of these obligations is likely to be policed not by a law enforcement agency, but by the supervising agency responsible for their particular type of business (such as the Financial Conduct Authority (‘FCA’) or HM Revenue and Customs).
A clash of interests?
The scheme of anti-money laundering (‘AML’) and counter-terrorist financing (‘CTF’) law is such that, in a vast number of common scenarios and on an extremely frequent basis, the interests of these people – all, technically speaking, potential offenders in the eyes of the criminal law – are pitted against each other.
The individual with the bag full of cash who wants to deposit it into a bank account, to take a simple example, may be asked questions by the bank and become the subject of a Suspicious Activity Report (SAR) submitted by it to the National Crime Agency (NCA).
If the bank fails to do this, or tells the individual that it has submitted a SAR, then it is at risk not only of awkward questions and fines from the FCA, but of liability for serious criminal offences of acquiring criminal property, failing to report, and breaches of the MLRs.
The fundamentals of this scheme have, over the decades that it has been in force, led to a large and sophisticated compliance sector, especially in the major banks, which in some ways has taken over much of the function of policing financial crime.
A plethora of powers
The other complication in advising people about money laundering and terrorist financing is the large and increasing array of powers that can be brought into play by law enforcement. In addition to the usual powers to arrest, bail, charge, interview, search and seize property that apply in criminal law generally, there are specific investigative powers (including production and disclosure orders, and orders against financial institutions), as well as various powers to restrain, freeze or block access to relevant assets. Whatever the capacity of the person seeking it, advice on this area needs to consider all these aspects of the law, and how they interact with each other in practice.