BCL partner, John Binns writes for The Treasurer explaining that an awareness of financial crime and the responsibilities corporates have under law is an essential part of risk management.
Below is a short extract from the article* which you can read in full here.
How much do businesses that operate in the UK need to worry about financial crime?
Traditionally, the answer has been very different depending on whether that business is in the ‘regulated sector’ – which includes financial institutions, accountants, estate agents and others – for the purposes of the Proceeds of Crime Act 2002 (POCA). But increasingly, even those outside that sector have to keep financial crime in mind and may find themselves having to report suspicious activity. The Proceeds of Crime Act Part of the reason for that is that POCA imposes criminal liabilities on everyone – not just the regulated sector – for handling ‘property’ (very broadly defined) that represents the proceeds of ‘criminal conduct’ (also very broadly defined), or from becoming involved in arrangements that relate to such property. There is an important exception where the property is received for ‘adequate consideration’, though not where the goods or services might themselves assist in crime. A marketing firm may receive fees from someone they know to be a fraudster, but not if their work has helped him find and defraud his victims.
The arrangements offence
What that means in practice is that, unless your business handles others’ assets for them, the key POCA provision to be aware of is likely to be the ‘arrangements’ offence, which can create problems for those who finance or play another, even peripheral, part in a transaction that they suspect may involve the proceeds of ‘criminal conduct’. Lest that prospect seem remote, it’s worth bearing in mind that this can include, for instance, a pecuniary advantage arising from tax evasion, or a failure to obtain a proper licence, or even conduct that is lawful overseas, but would be unlawful if it happened here (such as Canadian cannabis sales).
Disclosures and consents
Fortunately, POCA provides for the scenario where a business finds itself in circumstances where a suspicion has arisen and wants either to exit the transaction, or go ahead with it. Depending on the circumstances, the answer may be to make a disclosure to, and request consent from, the National Crime Agency (NCA). The NCA receives such requests on a regular basis, mainly from banks, and has a statutory period within which to respond, otherwise consent is deemed granted.
Assisting with investigations
Other than banks and other large regulated-sector firms, most businesses will not be accustomed to spotting such scenarios or making disclosures, and the first sign they may have of a problem is
a request for information from the NCA (or other investigative body), perhaps in the form of a production order or disclosure notice. That may be in connection with a criminal investigation, or one to do with civil recovery, confiscation, frozen funds or seized cash, either in the UK or overseas.
* This article was first published by The Treasurer in their December 2019/January 2020 issue. If you wish to read the article in full please visit the publisher’s website here or read a copy of the article as a pdf here.