Attorneys
In essence law firms are being accused of providing the respectable interface between organised crime and financial institutions and structures. The often quoted example is that of accounts being opened for clients by law firms at banks where the latter already have an existing relationship, thus the probity of the law firm's client will not be questioned. Whilst it is obvious that such scare stories do have more than a basis in fact, it is perhaps interesting to note that one of the major complaints that National Criminal Intelligence Service, (NCIS) have is that although lawyers have to report suspicious transactions and customers, the level of such reporting in the United Kingdom is very low. Thus as no United Kingdom lawyers have been charged with money laundering offences (or if any have they are small fry and not on or of the scale that has been alleged in the reports), one does begin to wonder whether the point that is being made by NCIS concerns the justifiable plea about the very low level of suspicious transaction reporting from law firms. And then there is the other side of the coin in that one of the weaknesses in the UK system of money laundering regulation has been the inability of NCIS to keep up with the number of suspicious reports sent to them.
Accountants
The role of accountant's arid similar professional advisors is very rarely out of the money laundering spotlight, for very good reasons: the low level of suspicious reports usually generated by such professions compared with the fact that their core business centers on money and detailed knowledge of financial patterns, Structures and systems. The complex systems, products and transactions are ideal laundering mechanisms, particularly when they are established and operated by professionals with a sound reputation. Just as with solicitors, probability suggests that there will be rotten apples amongst professional groups, and their standing is not enhanced if (rightly or wrongly), there is a perception that it is not taking the threads of money laundering seriously.
Money managers
In moving the money offshore, Money Managers have a greater role to play. Moving money across jurisdictional lines makes tracing and recovery far more difficult for law enforcement. Many of the financial heavens are extremely reluctant to initiate action. In these circumstances the role of Money Managers to support AML regulations is very important. He can help, where the entire compliance requirements are met.
Compliance offences
The compliance officers are required to meet the requirements of law and regulations. Where compliance officer stacks, the money laundering is free to move money. Compliance officers are a key to anti-money laundering (AML) effort's success.
Compliance and trust advisors
A trust is a legal structure that is created to hide money. It authorises legal transfer of money from jurisdiction to jurisdiction. A trust advisor can play an important role in thwarting the efforts of money laundering.
Computer specialists
Computer and internet have become a key player in cross border movement of money. There a number of cash transfer forms like wire transfer, cash payments, credit cards etc where by large sums of money can be transferred. The role of computer specialist is very important to check the marked areas of such transfers and reporting of suspicious transfer.
The rules of professional ethics
Liabilities
The most important liability is to maintain the integrity of the profession. Integrity of profession is jeopardised when a professional misconduct is committed. The question arises what is professional misconduct: A professional misconduct is committed when one:
(a) Violates or attempts to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another;
(b) Commit a criminal act that reflects adversely on the professional's honesty, trustworthiness or fitness as a professional in other respects;
(c) Engage in conduct involving dishonesty, fraud, deceit or misrepresentation;
(d) Engage in conduct that is prejudicial to the administration of justice;
(e) State or imply an ability to influence improperly a government agency or official or to achieve results by means that violate the Rules of Professional Conduct or other law; or
(f) Knowingly assist a judge or judicial officer in conduct that is a violation of applicable rules of judicial conduct or other law.
Tipping-off
"Tipping off ",1 is an offence where a person discloses the vital information that may cause prejudice in the investigation which might be brought following a protected or authorised disclosure, when that person knew or suspected a protected or authorised disclosure had been made. Although law provisions did not make any reference to the mens rea required, it is evident2 that no offence stands committed unless the individual knew or suspected the disclosure was likely to prejudice any investigation. It may further be stated, no offence stands committed if no suspicious activity report (SAR) had been made at all.
Where three conditions are met, the facts constitutes an offence:3 (i) a person discloses that there has been a disclosure4 to a constable, an officer of Revenue and Customs, or a nominated officer or a member of staff of Serious Organised Crime Agency (SOCA) of information which came to the person making the disclosure in the course of business in the regulated sector; (ii) the disclosure is likely to prejudice any investigation which might be conducted following the disclosure; and (iii) the disclosure is based upon information which came to the person in the course of a business in the regulated sector. The actus reus is very similar to the old section 333 save that (i) the new offence focuses on tipping off where a SAR has been made and (ii) the new offence can only be committed by a person who acquired knowledge of the SAR whilst acting in the course of a business in the regulated sector. The mens rea requirement are the same as had been prescribed under the old section 333. No offence5 is committed where the person did not know or suspected that the disclosure was likely to prejudice any investigation.
The offence6 also occurs when (i) a person discloses that an investigation into a money laundering offence is contemplated or underway, (ii) the disclosure is likely to prejudice the investigation and (iii) the information on which the disclosure is based came to the person in the course of a business in the regulated sector. Again the actus reus is essentially the same as the old section 333 save for (i) the focus on a money laundering investigation that is contemplated or underway and (ii) the new offence can only be committed by a person who acquired knowledge of the investigation whilst acting in the course of a business in the regulated sector. The mens rea is the same as for section 333 and requires knowledge or suspicion that prejudice was likely.7
The new offences are subject to four sorts of exceptions. Where institutions make disclosure to each other; No offence is committed when a disclosure is made by an employee, officer or partner to another such individual within the same undertaking;8 No offence is committed when a disclosure is made between credit or financial institutions situated in the European Union or in a country with equivalent money laundering requirements and both institutions belong to the same group;9 Group is defined as10 (essentially parent and subsidiary companies). No offence is committed when a disclosure is made by a professional legal adviser or a relevant professional adviser (meaning an accountant, auditor or tax adviser) to another such adviser in a different undertaking that shares common ownership, management or control.11
No offence is committed when a disclosure is made (i) by a credit institution, financial institution, professional legal advisor or relevant professional advisor to an equivalent party (which is situated in the European Union or a country with equivalent money laundering requirements), (ii) which relates to a client or former client or a transaction or service involving both parties, (iii) the disclosure is for the purpose of preventing a money laundering offence and (iv) both parties are subject to equivalent duties of professional confidentiality and personal data protection.12 This is an exclusion which encourages the exchange of information between different professionals and entities in order to combat money laundering.
Disclosures made to a supervisory authority or made as part of compliance with POCA are not an offence.13
No offence is committed if a professional legal adviser or a relevant professional adviser makes a disclosure to the adviser's client for the purpose of dissuading the client from engaging in an offence.
(The writer is an advocate and is currently working as an associate with Azim-ud-Din Law Associates)
1. Section 333(1) of the Proceeds of Crimes Act, 2002.
2. Section 333(2)(a) of the Proceeds of Crime Act, 2002 (POCA).
3. Section 333A(1) of the Proceeds of Crimes Act, 2002.
4. Part 7 of POCA
5. Section 333D(3) of the POCA.
6. Section 333A(3) of the Proceeds of Crimes Act, 2002.
7. See Section 333D(4) of the Proceeds of Crimes Act, 2002.
8. Section 333B(1) of the Proceeds of Crimes Act, 2002.
9. Section 333B(2) of the Proceeds of Crimes Act, 2002.
10. Directive 2002/87.
11. Section 333B(4) of the Proceeds of Crime Act, 2002.
12. Section 333B(2) of the Proceeds of Crimes Act, 2002.
13. Section 333D of the Proceeds of Crimes Act, 2002.