National Crime Agency issues new FAQs on seeking a defence against money laundering offences: four key takeaways

Publication | May 2018

Introduction

On 1 May 2018 the NCA published a frequently asked questions document in relation to seeking a defence against money laundering offences (Defence) under the Proceeds of Crime Act 2002 (POCA)

The guidance has been compiled in consultation with various money laundering reporting officers and aims to provide practical cross-sector guidance on good practice in drafting Defence Suspicious Activity Reports (Defence SARs). It comes after a 24 per cent increase in Defence SARs between 2014-15 and 2015-16.

A Defence can be requested from the NCA where a reporter has a suspicion that property they intend to deal with is criminal property, and that by dealing with it they risk committing one of the principal money laundering offences under sections 327-329 POCA (i.e. receiving, dealing with or being concerned in an arrangement in relation to suspected criminal property).

The guidance provides a useful summary of the Defence SAR process and practical pointers on drafting and particular issues that can cause the NCA to close Defence SARs or request further information. We have summarised below four key takeaways.

Defences will be granted in most cases

The guidance states that “in the majority of cases, consent should only be refused when a criminal investigation with a view to bringing restraint proceedings is likely to follow or is already underway”. This is borne out by the statistics in the NCA's 2017 Annual SAR Report: around 93 per cent of Defences sought were granted in 2015/16.

Obtaining a Defence is not a general green light to proceed with a transaction

Although Defences are likely to be granted, the NCA repeatedly makes the point in the guidance that a defence against money laundering offences only provides a defence against the principal money laundering offences under sections 327 to 329 of POCA. It does not “cleanse” or “approve” a transaction and does not provide a defence to other offences (e.g. bribery or fraud predicate offences or other money laundering offences). In many cases specialist advice will be needed on these broader issues.

Criminal property is fungible

Although Defences are likely to be granted, the NCA repeatedly makes the point in the guidance that a defence against money laundering offences only provides a defence against the principal money laundering offences under sections 327 to 329 of POCA. It does not “cleanse” or “approve” a transaction and does not provide a defence to other offences (e.g. bribery or fraud predicate offences or other money laundering offences). In many cases specialist advice will be needed on these broader issues.

Although the threshold for suspicion is low, Defence SARs must be specific

While the guidance notes that the level of suspicion required for the principal offences is low following the R v Da Silva case, the NCA emphasises that this does not mean that Defence SARs can be vague: “explicitly explaining the [below] three criteria is crucial because the NCA is unable to interpret, assume, imply or infer anything from disclosures”

  • The information or other matter which gives grounds for knowledge, suspicion or belief;
  • A description of the property known, suspected or believed to be criminal property; and
  • A description of the prohibited act for which a defence is sought.

In practice, it is usually helpful to use these criteria as subheadings in a Defence SAR to ensure that they are each addressed and that the SAR is easy to follow.

In short, the guidance builds on the NCA's August 2017 SAR Guide and is a must read for anyone involved ‎in drafting SARs, advising on money laundering issues, or providing training on money laundering.


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Contacts

Jason Hungerford

Jason Hungerford

London Nordic region
Andrew Reeves

Andrew Reeves

London