The Law Commission has today published a report arising from its review, commissioned in December 2017 by the Home Office, into limited aspects of 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. Specifically, the Law Commission was asked to consider whether scope exists, within the existing legislative framework, for reform of the system of voluntary disclosures known as the “consent regime”.
As is confirmed on the Law Commission’s website, it makes 19 recommendations in its final report. These include both legislative and non-legislative mechanisms designed to improve the efficiency and effectiveness of the consent regime. It summarises its main recommendations as follows:
- An advisory board with oversight for the regime, with a remit to oversee the drafting of guidance, to measure the effectiveness of the regime and advise the Secretary of State on way to improve it.
- Retaining the consent regime, subject to amendments to improve effectiveness.
- Statutory guidance on a number of key legislative concepts underpinning the reporting regime, to assist the regulated sector in complying with their legal obligations. This includes guidance on: suspicion, appropriate consent and arrangements with prior consent and what may amount to a reasonable excuse.
- Prescribing the form in which suspicious activity is reported, making use of technology to devise an online interactive form.
- An exemption to allow ringfencing of suspected criminal property by a credit of financial institution. This provides for a more proportionate response to the reporting of (suspected) criminal property. Supplementary to this, we recommend funds to be released by a Crown Court Judge when an application for an extension of the moratorium period is made.
- Maintaining the status quo for the reporting of “all crimes”.
- Extending the circumstances in which a reporter may have a reasonable excuse not to make a voluntary disclosure.
- Further research into the utility of thematic reporting or geographical targeting orders, which remove the reporter’s discretion to assess suspicion.
The Law Commission states that “collectively our recommendations will ensure a more proportionate and user-friendly regime; clarify the scope of reporting; reduce the burden of compliance and processing; and produce better quality intelligence for law enforcement”.
In terms of “next steps”, it adds that “it is now time for Government to review and consider the recommendation in our final report. We await an interim response”.
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