Recent guidance issued by the CPS on the offence of ‘failure to disclose’ under section 330 of the Proceeds of Crime Act 2002 (‘POCA 2002’) states that it is now “possible to charge an individual under section 330 even though there is insufficient evidence to establish that money laundering was planned or has taken place.”
To date, there have seldom been prosecutions for this offence but this guidance – effectively removing a significant element of the offence – suggests that the CPS may be looking to bring more charges in the future.
The offence of failure to disclose, which carries a maximum sentence of 5 years’ imprisonment, is committed when a person:
- knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in money laundering; and
- the information or other matter on which this knowledge or suspicion is based, or which gives reasonable grounds for such knowledge or suspicion, came to the person in the course of a business in the regulated sector; and
- can identify the other person mentioned or the whereabouts of any of the laundered property, or he believes, or it is reasonable to expect him to believe, that the information or other matter mentioned will or may assist in identifying that other person or the whereabouts of any of the laundered property; and
- fails to disclose this information to a nominated officer or to the National Crime Agency (by way of a Suspicious Activity Report – a ‘SAR’) as soon as practicable.
This offence reflects the fact that those working in a regulated sector (for example parts of the legal or financial sectors), are held to a higher standard and are expected to exercise a more sophisticated level of diligence in handling transactions than those who are employed in other non-regulated businesses. Those working in the regulated sector must be more vigilant in identifying and recognising any ‘red flags’ or characteristics which give rise to knowledge or suspicion of money laundering or a provide a reasonable ground for knowledge or suspicion.
Previously, the CPS would only prosecute the failure to disclose offence in circumstances where evidence was available to prove that a money laundering offence was planned or had taken place. This approach, however, is not reflected in the wording of the legislation. The newly updated guidance rectifies this inconsistency by confirming that a standalone offence of failing to disclose can be charged even where there is insufficient evidence to prove money laundering.
It will take some time before the impact of this new approach is felt given that it only applies in cases where the alleged offending has taken place on or after 2 June 2021, but it is likely to lead to further prosecutions for the failure to disclose offence. It also sends a clear message to professionals in the regulated sector that they must take their anti-money laundering obligations seriously or risk sanction – a sentiment echoed by the other prosecuting authorities in the UK.
Further Information
For further information on issues raised within this blog, please contact a member of our criminal team.
About the Author
Leena is a barrister in the Criminal Litigation department. Her practice covers all areas of criminal defence, white collar crime and internal investigations.
Leena regularly acts in cases of serious fraud, bribery and corruption and money laundering brought by the Serious Fraud Office (SFO), HM Revenue & Customs (HMRC) and Serious Fraud Division (SFD) of the Crown Prosecution Service. She has a particular interest in matters involving the breach of Anti-Money Laundering Regulations.
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