Seminar 2 – Money Laundering and Terrorist Financing: The
Legislative Framework
Learning outcomes
By the end of the seminar, you should be able to:
Define money laundering, terrorist financing and identify the
differences between the two processes
Critically analyse the suspicious activity reporting regime in the UK
Identify the instances/suspicious circumstances where banks may
need to report
suspicion to law enforcement
The Law Relating to Financial Crime in the United Kingdom:
- Part 7 Proceeds of Crime Act 2002
- Applies to money laundering activities on and after 23 February
2003
- 3 Principal offences:
o Concealing, disguising converting, transferring, or removing
criminal property from the jurisdiction
Section 327
Includes nature, source, location, movement, ownership
or disposition of the property
Criminal property constitutes a benefit and defendant
had suspicion or knowledge of this fact
Benefit definition- section 340: ‘not only the property
that the offender directly obtained as a result of or in
connection with the offence, but also any pecuniary
advantage that he or she obtained from it’- wide
The gain must flow from the criminal activity involved
Must be proven that the property or benefit derives from
criminal conduct- all conduct that constitutes a criminal
offence under UK law
o Entering or becoming concerned in an arrangement knowing
or suspecting it to facilitate the acquisition, retention, use or
control of criminal property on behalf of another person
Section 328
The prosecution must prove not only that a person
became concerned in an arrangement which they knew
or suspected would make it simpler for another person
to acquire, retain use or control criminal property, but
furthermore, that the person concerned also knew or
suspected that the property constituted or represented
benefit from criminal conduct
Covers situations where the third parties handling the
money as well
, Arguments on what is considered suspicion- question 4
o Acquiring, using, and processing criminal property
Section 329(1)
Proven that the property handled is criminal property
and that it comprises a benefit
Prosecution has to prove that the defendant knows or
suspects that the property is obtained from criminal
conduct
- Defences:
o A person does not commit an offence under section 327 POCA
2002 if ‘he makes an authorised disclosure under section 338
and (if the disclosure is made before he does the act
mentioned in subsection (1)) he has the appropriate consent’-
consent defence on the basis of authorised disclosure
o No offence if:
a) he knows or believes on reasonable grounds, that the
relevant criminal conduct occurred in a particular
country or territory outside the United Kingdom, and
b) the relevant criminal conduct – (i) was not, at the
time it occurred, unlawful under the criminal law then
applying in that country or territory, and (ii) is not of a
description prescribed by an order made by the
Secretary of State
o 329(2)(c): accepted dirty money for ordinary consumable
goods and/or services
o A person receiving money is not obliged to question the
source of it
- Secretive nature of money laundering- difficult to measure the
extent of the problem
- IMF- 1998: equal to 2-5% of global gross domestic product (GDP)
- UNODC- 2009: estimated amount of money laundering by criminals
is 2.7% global GDP
- Origination
o Declaration of the ‘war on drugs’ by President Richard Nixon
o UN and EU and other bodies introduced a wide range of
legislative measures that aimed to tackle money laundering
and the problems it presents
o Vienna Convention: signatories must criminalise the
laundering of drug proceeds
o First Directive introduced in 1991- identification focused: FATF
Slipping through the net:
- Criminals have devised means of laundering their proceeds of crime
and disguising it using the legitimate financial system, so the
proceeds appear to be legitimately earned
- UK relies on a number of regulatory approaches to combat the
incidence of money laundering- Financial Conduct Authority
Legislative Framework
Learning outcomes
By the end of the seminar, you should be able to:
Define money laundering, terrorist financing and identify the
differences between the two processes
Critically analyse the suspicious activity reporting regime in the UK
Identify the instances/suspicious circumstances where banks may
need to report
suspicion to law enforcement
The Law Relating to Financial Crime in the United Kingdom:
- Part 7 Proceeds of Crime Act 2002
- Applies to money laundering activities on and after 23 February
2003
- 3 Principal offences:
o Concealing, disguising converting, transferring, or removing
criminal property from the jurisdiction
Section 327
Includes nature, source, location, movement, ownership
or disposition of the property
Criminal property constitutes a benefit and defendant
had suspicion or knowledge of this fact
Benefit definition- section 340: ‘not only the property
that the offender directly obtained as a result of or in
connection with the offence, but also any pecuniary
advantage that he or she obtained from it’- wide
The gain must flow from the criminal activity involved
Must be proven that the property or benefit derives from
criminal conduct- all conduct that constitutes a criminal
offence under UK law
o Entering or becoming concerned in an arrangement knowing
or suspecting it to facilitate the acquisition, retention, use or
control of criminal property on behalf of another person
Section 328
The prosecution must prove not only that a person
became concerned in an arrangement which they knew
or suspected would make it simpler for another person
to acquire, retain use or control criminal property, but
furthermore, that the person concerned also knew or
suspected that the property constituted or represented
benefit from criminal conduct
Covers situations where the third parties handling the
money as well
, Arguments on what is considered suspicion- question 4
o Acquiring, using, and processing criminal property
Section 329(1)
Proven that the property handled is criminal property
and that it comprises a benefit
Prosecution has to prove that the defendant knows or
suspects that the property is obtained from criminal
conduct
- Defences:
o A person does not commit an offence under section 327 POCA
2002 if ‘he makes an authorised disclosure under section 338
and (if the disclosure is made before he does the act
mentioned in subsection (1)) he has the appropriate consent’-
consent defence on the basis of authorised disclosure
o No offence if:
a) he knows or believes on reasonable grounds, that the
relevant criminal conduct occurred in a particular
country or territory outside the United Kingdom, and
b) the relevant criminal conduct – (i) was not, at the
time it occurred, unlawful under the criminal law then
applying in that country or territory, and (ii) is not of a
description prescribed by an order made by the
Secretary of State
o 329(2)(c): accepted dirty money for ordinary consumable
goods and/or services
o A person receiving money is not obliged to question the
source of it
- Secretive nature of money laundering- difficult to measure the
extent of the problem
- IMF- 1998: equal to 2-5% of global gross domestic product (GDP)
- UNODC- 2009: estimated amount of money laundering by criminals
is 2.7% global GDP
- Origination
o Declaration of the ‘war on drugs’ by President Richard Nixon
o UN and EU and other bodies introduced a wide range of
legislative measures that aimed to tackle money laundering
and the problems it presents
o Vienna Convention: signatories must criminalise the
laundering of drug proceeds
o First Directive introduced in 1991- identification focused: FATF
Slipping through the net:
- Criminals have devised means of laundering their proceeds of crime
and disguising it using the legitimate financial system, so the
proceeds appear to be legitimately earned
- UK relies on a number of regulatory approaches to combat the
incidence of money laundering- Financial Conduct Authority
