Few people who receive a notice of an application to extend a moratorium period under the Proceeds of Crime Act 2002 (POCA) will have the slightest idea what it means. An unfortunate effect of the evolution of the POCA regime over the years is that it appears long ago to have ceased trying to be intuitive or to have much if anything to do with common sense.
For those seeking to understand what it is the notice they have just received is trying to say, the short version is this: someone (it may not be clear who) suspects your property represents the proceeds of crime, and the police (or some other law enforcement body) want more time to work out what to do about it.
What has my account/property got to do with money laundering?
The slightly longer explanation starts with the very broad definition of money laundering in POCA, which broadly prohibit virtually any act in connection with property that represents the proceeds of ‘criminal conduct’ (which here means any crime in the UK, or anything done overseas that would have been a crime if it had happened here), where the person doing the act knows or suspects that this is so. Each of those sections contains a defence where the person seeks consent to do the act and either receives it explicitly, or waits for specified period. That period is either seven working days or (if they receive a refusal of consent before then) a ‘moratorium period’ lasting a further 31 calendar days. After the period expires, the person has ‘deemed consent’ and can do the act they asked for consent to do.
Who has made a suspicious activity report about me, and why?
In practice, most of these requests for consent come from the ‘regulated sector’ (which includes banks, accountants, most solicitors, and others), who also have additional obligations to make reports of suspicious activity, and not to ‘tip off’ relevant people that such reports have been made. The reports and consent requests are made to the National Crime Agency (NCA) via an online portal, and while most are dealt with within that initial seven working days, the more complex ones – including many that have an international element – take longer.
Why is the court being asked to extend the moratorium period?
The situation when a court is asked to extend a moratorium period, therefore, is one where: (a) someone, probably your bank or another institution in the regulated sector, perhaps while carrying out its obligations under the MLR, has formed a suspicion about you or your property; (b) that person has requested consent from the NCA to do something with your property (perhaps a transaction you have asked them to help with); (c) the police, the NCA, or another law enforcement agency has begun an investigation; and (d) it is important to them that for the time being, the act for which consent has been requested does not take place.
Why has no-one told me clearly what’s going on?
Part of the reason why the circumstances, in particular the reason for the suspicion, may yet be unclear is that the bank (or whoever) has so far been wary of ‘tipping off’, and the police (or whoever) may now be wary of giving you information that may prejudice their investigation. That of course may put you at a disadvantage in deciding what to do.
Is there anything I can do about it?
Nevertheless, you have a right to respond at this stage to the application and to try to persuade a court that the moratorium period should not be extended (which would, in effect, enable the person who asked for consent to do the act they asked for consent to do). The issues for the court are whether (a) an investigation is ongoing, (b) it is being carried out ‘diligently and expeditiously’, (c) further time is needed for it, and (d) it is ‘reasonable’ to extend.
What’s going to happen to my account/property?
The impact of an extension of course depends on what the property is and what you intend to do with it. It may be that in some circumstances the prospect of a bank account being blocked or a transaction being delayed for a further 31 calendar days may not be disastrous, and you may reasonably agree to the extension. Two things should be borne in mind, however: first, there may be further extensions (up to six are allowed in total); and second, it is well worth considering the various other legal and practical impacts that the investigation may have.
Could this lead to something worse?
To elaborate on the latter, while the reality may be that there is no reasonable basis for suspicion about you or your property, the impact of an investigation can include various investigative orders against you and/or others who may hold relevant information or material (which may prompt banks and others to withdraw from relationships with you), and/or other measures against your property (or property in which you have an interest), such as account or property freezing orders.
What can I do to protect myself?
The good news is that the present application may offer you an opening to find out more about what is being investigated, and an opportunity to get ahead of it. In some cases, that may mean opening a dialogue with the investigators, with a view to providing assistance and/or reaching some sort of compromise. In others, it may mean starting to marshal your defences to a case that may have the potential to become more combative.
Do I need advice?
In either case, the essential point is that, though both the legal provisions and the circumstances that have brought them into your life may seem somewhat obscure, it is important that you both treat them seriously, and take the opportunity to understand them and apply them to your best advantage. In practice that process will always start with seeking practical advice from true experts in this increasingly complex field.
If you’d like to discuss any of the issues raised in this article with one of our solicitors then please contact us in the strictest confidence.
John Binns is a partner at BCL specialising in all aspects of business crime, with a particular interest in confiscation, civil recovery and money laundering under the Proceeds of Crime Act 2002 (“POCA”). His business crime experience includes representing suspects, defendants and witnesses in cases invoking allegations of bribery and corruption, fraud (including carbon credits, carousel/MTIC, land-banking, Ponzi and pyramid scheme frauds), insider trading, market abuse, price-fixing, sanctions-busting, and tax evasion. He has coordinated and undertaken corporate investigations and defended in cases brought by BEIS, the FCA, HMRC, NCA, OFT, SFO and others.