On 2 June 2021 the Crown Prosecution Service (‘CPS') revised their guidance and policy on the prosecution of regulated sector failure to disclose cases under section 330 of the Proceeds of Crime Act 2002 (‘POCA').
The guidance suggests that the CPS will now seek to prosecute those in the regulated sector who have failed to report suspicions of money laundering even though there is insufficient evidence to establish that money laundering was planned or has taken place. Previously the CPS would not prosecute in such circumstances. The CPS believes the new guidance will provide extra clarity to prosecutors and police officers when charging under section 330.
Dan Stowers, a regulatory partner at Shoosmiths, comments: “The result of the updated guidance is likely to lead to an increase in defensive suspicious activity reports (‘SARs') even when the suspicion is slight and where an offence may not have taken place. In light of the recent case of anti-money laundering expert Dominic Thorncroft on 23 June 2021, who was found guilty of failing to make the authorities aware of money laundering despite not committing the fraud himself, this should be a wake-up call for all those employed in the regulated sector. It certainly feels like the CPS are sharpening their tools for further cases to follow. Time will tell.”
Under section 330 POCA, individuals in the regulated sector commit an offence if they fail to make a disclosure in cases where they have knowledge or suspicion, or reasonable grounds for suspicion, that another person is engaged in money laundering.
The trigger for reporting is already very low and this revised guidance could be viewed as a tool by the CPS to add pressure to regulated individuals to make more reports. Over the 2019/2020 period there were 573,085 SARs and 62,408 requests for a defence against money laundering. This was a substantial increase on the preceding year. What's interesting is that of the 573,085 SARs made over that period 540,000 were made by banks and other financial institutions. The CPS clearly feel that other professionals in the regulated sector could do more.
An offence under section 330 is punishable by a maximum penalty on indictment, of up to 5 years' imprisonment. This revised guidance is therefore not something that regulated businesses or their people should be taking lightly. The revised guidance will not be applied retrospectively and as a standalone charge, it's important to note that a defendant does not have to be prosecuted for money laundering under the provisions of sections 327-329 POCA; simply failing to make a report under section 330 is sufficient.
Dan further comments: “We would suggest that this guidance should prompt businesses to adopt an increased and renewed focus on their financial crime compliance programmes to ensure that theirs is fit for this increased challenge. In doing so we would expect to see further risk assessments and reviews to identify any increased exposure and the amendment of and/or improvement of policies, procedures and training to meet any new threat arising from this updated guidance.”
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