With a view to helping law enforcement crackdown on money laundering, the Law Commission has published a consultation paper (that can be downloaded below). You can also download below a helpful summary paper. The consultation is open until 5 October 2018.
One of its principal aims is to cut back on low quality suspicious activity reports with a view to providing better information to law enforcement agencies and helping refocus attention on the most suspicious activity.
Responses may be sent by email to [email protected], by post to Criminal Team, 1st Floor, Tower, Post Point 1.54, 52 Queen Anne’s Gate, London SW1H 9AG (access via 102 Petty France) or by telephone on 020 3334 0200. Anyone requiring assistance in formulating their response, including gambling operators in particular, should contact us. We will be pleased to help.
The Law Commission sets out the following explanation of the consultation on its website:
Money laundering is the process where criminals hide the origins of their illegally gained money.
Money laundering is estimated to cost every household in the UK £255 a year and allows criminals to profit from their crimes. It is widespread, with between 0.7 and 1.28% of annual European Union GDP detected as being involved in suspect financial activity.
The current law has a system for reporting suspicious financial activity.
This provides law enforcement with the means to investigate and gather intelligence and protects honest businesses from inadvertently committing a crime.
But the reporting scheme isn’t working as well as it should. Enforcement agencies are struggling with a significant number of low-quality reports and criminals could be slipping through the net.
In December 2017 the Home Office asked the Law Commission to review the anti-money laundering regime in Part 7 of the Proceeds of Crime Act 2002. And the counter-terrorism financing regime in Part 3 of the Terrorism Act 2000.
This is to make one aspect of the UK anti-money laundering law – known as the ‘consent regime’ – even more effective.
The review will focus on the consent provisions in the 2002 Act: sections 327 to 329 and sections 335, 336 and 338 and the 2000 Act: sections 21 to 21ZC
The review will also consider the disclosure offences in sections 330 to 333A of the 2002 Act. And sections 19, 21A and 21D of the 2000 Act.
The review aims to analyse and produce proposals addressing the problems with the anti-money laundering and counter-terrorist finance reporting regimes.
Defensive reporting of suspicious transactions under the consent and disclosure provisions and the high volume of reports;
The burden placed by the consent and disclosure provisions on businesses under duties to report suspicious activity;
The impact of the suspension of transactions under the consent provisions on reporters and those who are the subject of reporting.
On 20 July 2018 we published our open public consultation paper. Proposals include:
statutory guidance on what to look for and a set format for submitting suspicious activity reports
asking whether new tools could help enforcement like US-style Geographic Targeting Orders
a new power to require additional detail and record keeping requirements targeted at specific transactions
cutting back on low quality reports by focussing on accounts where there are reasonable grounds to suspect property is criminal property
legal protection for banks which choose to lock into an account the suspected criminal funds but leave the rest of the account open to trade thereby minimising the risk of severe financial loss for those who are the subject of a disclosure
providing detail as to what amounts to a defence of ‘reasonable excuse’ for not making a suspicious activity report
asking whether commercial organisations, rather than the individual employees, should be liable for failure to prevent a criminal offence when an employee fails to disclose a suspicion
It is hoped that these proposals will help banks and businesses provide better information to law enforcement agencies and help refocus attention on the most suspicious activity.