Notes on BPP's PCR module covering:
- Money laundering (PoCA and FSMA)
- The Principles and the Codes
/!/ These notes have been restructured to optimise exam performance and thus are in table formats /!/
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MCQ only
o Client care, costs and complaints
o Conflicts of interest
o Confidentiality and disclosure
o Money Laundering
o Proceeds of Crime Act 2002
o Financial Services
Will all come up as one 3-mark question and one 5-mark question.
Engaging a new client
3 Cs:
Conduct Customer Due Diligence (if within the scope of Regulation 27(1) MLR)
Undertake a conflicts check
Write a client care letter
SECTION A: Money laundering
= financial transactions where proceeds from serious crime are ‘cleaned’ so that its source is harder (if not impossible) to trace OR simply receiving or benefitting from the small proceeds of relatively minor crime
Lawyers can be at risk when launderers try to deposit cash into a firm’s client account, ask lawyers to set up legal and transaction structures which are to be used for ML, etc.
Law firms must comply with both the PoCA and the MLR.
Internal Law firm partners nominate individuals R for ensuring compliance:
controls: Nominated Officer / Money laundering reporting officer
how do law
firms ensure
Money laundering compliance principal (MLCP): Regulation 21(1) MLR who sits on the board of directors of equivalent body.
compliance
with the
PoCA and Compliance officer for legal practice (CLOP) – Authorisation of Firms Rules (AFR) 8.1
MLR?
Compliance officer for finance and administration (COFA) – AFR 8.1
Putting in place policies and procedures obliging anyone in the law firm who knows or suspects ML to comply with the reporting obligations set out in PoCA
Conducting screening of involved employees (Regulation 21(1)(b)) and appointing an independent audit function to assess the adequacy and effectiveness of the firm’s AML policies, controls,
and procedures: Regulation 21(1)(c)
What is 4 key elements:
money 1) Criminal source of the funds is disguised
laundering?
2) Form of the funds will be converted e.g., cash cash in bank
3) Trail by which such ‘conversion’ occurs is disguised
4) The launderer will retain direct or indirect control of the funds
Offences
under PoCA
All offences are based around the notion of ‘criminal property’
as amended
by the
Criminal ‘Criminal property’: property which constitutes a person’s benefit from criminal conduct and the alleged offender knows or suspects it constitutes such a benefit: s. 340(3)
Finances Act
2017
Direct involvement with criminal property offences – you are directly involved in concealing, arranging or acquiring, using or possessing criminal property, i.e., a solicitor is asked by a client to
deposit funds (which are in fact criminal property) into the solicitor’s / client’s account
Objective?
Anticipates
!/! ML fact patterns often point to an offence under one or more of s.327, 328 or 329. Identify all of the relevant offences tying them to the fact pattern.
reporting
suspicious
transactions s. 327(1): Concealing s. 328(1): Arrangement s. 329(1): acquiring, using, or possessing
where
someone
benefits from Offence elements Concealing, disguising, converting or Entering or becoming concerned with an Acquiring, using, or possessing criminal
the proceeds transferring criminal property or removing arrangement which you know, or suspect facilitates property
of crime criminal property from the UK the acquisition, retention, use or control of criminal
property by or on behalf of another person
Concealing or disguising includes
concealing or disguising its nature,
source, location, disposition,
movement or ownership or any rights
with respect to it: s. 327(3)
Defence of authorised disclosure Defence of ‘authorised disclosure’ (s. 338): s. 327(2)(a) s. 328(2)(a) and s. 329(2)(a) with appropriate consent from the person to whom the
(s. 338) with appropriate consent: disclosure is made to do the prohibited act
s. 327(2)(a) s. 328(2)(a) and s.
329(2)(a)
There is a disclosure to a constable, customs officer or a nominated officer by the alleged offender that the property is criminal property AND
Either
a) s.338(2) disclosure is before the offender does prohibited act, i.e., before the solicitor accepts the money
b) s. 338(2A) disclosure is made during the prohibited act and began to do the act because he did not then know or suspect that 1)
the property constituted or represented a person’s benefit from criminal conduct 2) the act was not a prohibited act, and the
disclosure is made on his own initiative and ASApracticable
c) s. 338(3) disclosure is to be made after the prohibited act and there is good reason (e.g., threatened harm) for the solicitor’s
failure to make the disclosure before he did, and the disclosure is made on his own initiative and ASApracticable
Following disclosure, appropriate consent is obtained to do the prohibited act provided that certain conditions are met.
‘Appropriate consent’ is that of a s. 335(1)
nominated officer OR
constable OR
customs officer
to do the prohibited act provided that either:
s/he has not received notice that consent is refused within 7 working days starting with the first working day after the person makes the
disclosure: (s. 335(3)/ s. 335(5))
OR consent is refused within 7 working days starting with the first working day after the person makes the disclosure and the
moratorium of 31 days starting with the date of receipt of refusal has ended (s. 335(4) / s.335(6)
the person has disclosed that property is criminal property to a person authorised by the DG of the NCA
o AND
o either received their consent (s.336(2)),
o OR hasn’t received their refusal before the end of the 7 working day starting with the first working day after the person
makes the disclosure notice period (s. 336(3)/ s. 336(7))
o OR consent is refused within 7 working days of the disclosure and the moratorium of 31 days starting with the date of
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