Money Laundering Offences Explained

What Exactly is Money Laundering?

Money laundering is the process by which ‘dirty' money from the proceeds of criminal conduct is ‘cleaned' so that it looks like it comes from a legitimate source.

It varies in its level of sophistication from simply taking a suitcase of money to a country that is less interested in the source of the wealth to using several layers and locations of the international banking system to make the source of money virtually untraceable. A more common and simpler form that specialist money laundering lawyers will regularly encounter involves putting the money through the bank accounts of friends and/or their businesses, who themselves may end up being prosecuted, even if they were not aware of the origin of the money.

The Law

The Proceeds of Crime Act 2002 (POCA) contains the money laundering offences.

The act criminalises three types of individuals:

1. People who benefit from property obtained from criminal conduct

2. People who use property obtained from criminal conduct

3. People who come into possession of property obtained from criminal conduct

Property that represents the benefit from criminal conduct is described as ‘criminal property. It includes money, shares and any other property. There are many such examples. It can take the form of bribes or could take the form of a business taking a benefit from its failure to comply with the law.

It is important to remember that the prosecution have to prove the type of criminal conduct which makes the property criminal. This is a crucial first limb the prosecution must overcome in any money laundering prosecution. A strategy of money laundering lawyers will often be to put the prosecution to proof in respect of this.

It is important to remember that property cannot be criminal property unless the alleged offender knows or suspects that the property is a benefit from criminal conduct. The understanding a recipient has as to the source of the property being received is often a crucial point that experienced money laundering lawyers will focus upon. Criminal conduct is conduct that is a crime in the UK, or would be if it happened in the UK. This means that an offence being committed outside the UK could result in the proceeds being classed as criminal property in the UK.

The Offences

• It is an offence to conceal, disguise, convert, transfer or move criminal property from England and Wales, Scotland or Northern Ireland.

• It is an offence for a person knowingly to enter into an arrangement that he/she knows or suspects will help another to acquire, retain use or control criminal property.

• It is an offence to acquire, use, or come into possession of criminal property.

A person does not commit this offence if he obtains criminal property at a fair price. Therefore a retailer would not commit this offence if he is paid for goods with what he suspects is criminal property.

Notifying the Authorities Authorised Disclosure

A person may have a defence to any of the above money laundering offences by informing the police, customs or a nominated officer about the suspicious transaction they are involved in. This is called an authorised disclosure. It gives the person protection from prosecution and allows him or her to carry on with the transaction. The logic of this procedure is that other people involved in the transaction might be tipped off if the person who wants protection disappears part way through the transaction.

Money Laundering - Lawyers, Other Professionals and Regulated Sector Members Failing to disclose and ‘Tipping Off'

A person operating in the regulated sector commits an offence if he fails to disclose his knowledge or reasonable grounds of suspicion of possible money laundering. The regulated sector includes financial and legal advice and banking but also the activities of casinos and estate agents. Legal advisers advising clients confidentially about a case are not committing an offence if they fail to disclose information about money laundering.

An offence may happen when a person knows or suspects that a disclosure has been made by a professional to the state regarding the suspected money laundering activities of another person, and ‘tips off' that person. He or she commits an offence if the tipping off is likely to harm any investigation that might follow. The offence is only committed if the ‘tipper off' receives the information while doing business in the regulated sector. Genuine legal advice is not part of the offence unless the tipping off is done with criminal intent (S.333 of POCA).

Sentences for Money Laundering

The maximum sentence for money laundering offences is 14 years imprisonment. Sentences near the maximum are rare but do happen. They are usually reserved for more serious cases, where the laundering has been going on for a long time, is for a very large amount of money, or is part of a sophisticated criminal operation. Drugs-related laundering often results in more serious sentences.

Where the laundering is a ‘one-off' action, is for a comparatively small amount of money, or the defendant is not part of a criminal gang, but involved through naivety or by virtue of being the spouse of another defendant, much shorter sentences are more common. In these types of situation, a well-handled damage limitation strategy by experienced money laundering lawyers may result in a community sentence, rather than prison.

Sentences for failing to disclose and tipping off are substantially shorter. The maximum is 5 years. Custodial sentences are common, and the Court of Appeal says that 6 months imprisonment is appropriate for a solicitor who acts in a conveyancing transaction while having grounds to suspect that money laundering is taking place.

Strategy in Money Laundering Cases

There is no set strategy that will work every time in a money laundering prosecution. Money laundering is often charged with a number of other offences related to fraud, theft, drugs, or other high-value criminal activity. Much will depend on the evidence of those defences.

In large criminal conspiracies, where the main criminal or criminals are at some distance from the person charged with money laundering, the money laundering solicitor may be able to show that monies or assets were held or transferred unknowingly, which will result in a not guilty verdict. Sometimes the defendant is a friend or family member of another more deeply implicated defendant and did not question the transaction because he or she trusted that it was all above board. In this type of situation, the nature of the relationship should be focused on and portrayed skillfully to the jury to explain the client's involvement.

Clearly, in cases such as these, money laundering lawyers will need to work very closely with their client to ascertain their understanding, based on the information available to them at the time, as to the source of the criminal property. A close analysis of the evidence is required to determine whether or not the prosecution will have, at their disposal, any material which might undermine a client's assertions as to their understanding at the time. Relevant, for example, to that understanding might be efforts undertaken by a client, most commonly in cases involving a business, to pursue due diligence procedures.

Forensic Accountants assisting the Criminal Defence Solicitor in a Money Laundering Case

In situations where there is evidence of large amounts of money being transferred, a forensic accountant is nearly always necessary. It is important that the accountant has experience of acting as an expert witness, and has experience of analysing accounts where there is alleged criminal activity. The forensic accountant will provide a report, and could appear as a witness. For money laundering cases this may be particularly relevant. This is because everything may depend on how the jury views a bank account money trail or business accounts records, and this may be influenced by a good accountant instructed by the money laundering lawyers.

Not Guilty or Damage Limitation?

It should always be the aim of money laundering lawyers acting for the defence to try to find a path out of a criminal case which results in his or her client avoiding any conviction or punishment. Every avenue must be followed, and no stone must be left unturned in that fight. However, in some cases, the evidence is overwhelming. Sometimes clients have admitted the offences in interview, or evidence of them and their bank accounts leave no way out. Where this is the case, the entire focus may shift towards avoiding a prison sentence, even if the client has to accept entering a guilty plea.

In some circumstances, clients in money laundering cases may receive suspended sentences or community sentences, and not go to prison. For there to be a chance of this happening, the defence must present a picture of the defendant to the judge beyond the offences admitted. The picture must show the offence(s) in the context of the client's family background and situation, any illnesses or other difficult situations that have acted on them leading up to the offence. This personal mitigation may end up making the difference between a 2 year prison sentence and a one year suspended sentence.

There may also be the chance for the money laundering lawyer and barrister to negotiate with the prosecution on the client's behalf, forcefully yet diplomatically, pushing for a lower charge or less serious slant on the facts from the prosecution. This may help turn a serious case involving a longer sentence into something less serious, resulting in a lower sentence or even a community sentence. Of course, every case is different, and there are no guarantees.