It is nearly 3 years to the day since the U.K anti-money laundering legislation was significantly amended and consolidated with the implementation of the Proceeds of Crimes Act 2002(POCA).It is only a matter of days before the 2nd European Directive, the so called EUgatekeepers initiative, will be implemented in the United Kingdom by the much Money Laundering Regulations 2003.The few years consultation and implementation period ends on the 1st March.
There is little doubt that the impetus behind the drive of governments worldwide to implement legislation to combat money laundering was given extra force by the events of September 11 2001.To this end attention has increasingly focused non gatekeepers the professionals such as lawyers, tax advisers and accountants who have become as essential resource to the criminals who nee to clean huge sums of money made from the proceeds of crime.
All EU members will have to implement the directive, including the new members joining the Union last year. At the time of writing, the following countries have fully implemented the second directive; Austria, Belgium, Finland, Germany, Ireland, Spain, the Netherlands and the U.K.Member states have a level of discretion in implementing the directive. It is important, therefore, that regulated UK professionals and business ensure that their own procedures are independently compliant with the 2003 Regulations, even where anti money laundering client checks have been complied with in another Member states.
The most significant impact of the directive is to bring lawyers and other professionals and business in Europe within the money laundering regime and imposes new duties to report suspicious transactions relating to criminal property and the proceeds of crime to the relevant UK authorities (Predominantly NCIS but can be made to, among other, the Inland Revenue, Customs and Excise, the CPS and the police).There are also new offences within POCA to prevent tipping off.
Traditionally, money laundering has been viewed as the processing of illegal or dirty money derived from the proceeds of a any illegal activity (e.g. the proceeds of drug dealing, smuggling fraud, theft, tax evasion or handling of stolen goods).This takes place through a succession of transfers and deals until the source of illegally acquired funds is obscured and the money takes on the appearance of legitimate or clean funds or assets.
Money laundering can be used as a means to disguise the nature of profits generated from many types of criminality. This criminality can be tax evasion and thereby of direct interest to the Inland Revenue. Or it can be other serious forms of criminality, such as dealing in drugs, alcohol, tobacco or people trafficking. These crimes are of interest to other such as Customs and the police, and the Inland Revenue will work with these bodies to ensure that effective and co-ordinated action taken against those engaged is such activities. In some cases money laundering is used to disguise both tax evasion and other criminality. In which case the Revenue will work with others to investigate and prosecute, sharing information as necessary.
However, the Proceeds of Crime Act 2002 updates, expands and unifies the money laundering offences. The predicate offences, which trigger other money laundering offences, include all criminal acts, irrespective of where in the world they occur. It is also a money laundering offence to make arrangements to facilitate the use, acqusation or retention of criminal property on behalf of another person. And the definition is extended sot that in certain circumstances no process is needed at all to trigger a money laundering offences. All that is needed is the acquisition, use or even possession of criminal property for money laundering offences applies. So the mere possession of the proceeds of Tax Evasion in someone’s wallet is sufficient money laundering to have taken place.
A recent government estimate suggested that annually around 25 million of criminal money might be available for money laundering in the UK.1 Definition: Money laundering is the process by which criminals attempt to conceal the true origin and ownership of their criminal activities. If done successfully it allows them to maintain control over the proceeds and provide legitimate cover for their source of income.2Interpol defines money laundering as being; Any act or attempted act to conceal or disguise the identity of illegally obtained proceeds so that they appear to have originated from legitimate sources.
Another briefer definition is; Rendering the proceeds of crime unrecognizable as such. However the Joint Money laundering Steering Committee Guidelines adopt a common mistake which provides false security in many of the larger laundering operations,i.e; Criminally earned money is invariably transient in nature. This is an area that is likely to become of greater importance following the declarations of the British and American Governments that the financial structures used to support international terrorism must be closed down.
Money laundering Regulations 2003 The Money Laundering Regulations 2003 replace and extend existing anti-money laundering laws. The Regulations are not specifically directed at legal business, but all those whose activities comprise relevant business including accountants, tax advisers, estate agents, IFAs, antique dealers and others High Value Dealers (HVDs). A variety of new business will therefore be caught by the new regulations.
The Regulations in forced from 1 March 2004.HVDs have been granted an extra month to prepare for the new regime and two other areas of regulated activity have been granted extensions, namely the regulated, activities of those arranging deals in investment or advising on investment, in so far as the investment consists of rights under a regulated mortgage contract, came into force on 31 October 2004 and the regulated activities of those dealing in investment as agent, arranging deals in investment, managing investment or advising on investment, in so far as the investment consists of rights under, or any right to or interest in, a contract of insurance which is not a qualifying contract of insurance, came into force on 14 January 2005.