Legal Practice Course
Professional Conduct & Regulation
LECTURE 1: Money Laundering
General exam tips
• Watch out for words like:
o WILL BE A BREACH – if Outcome is not complied with
o MAY BE A BREACH – if IB is not complied with
o Eg May breach O(1) because not told that this particular solicitor is
dealing with the case on a day to day basis
IB(1.3): ensure that the client is told in writing the name and status of
the person dealing with the matter and name and status of the person
responsible for its overall supervision
• Q can give you wrong P or O or IB reference.
Eg: “not able to act for both of them because under IB(3.6) there is unequal
bargaining power between them”
o IB(3.4) – unequal bargaining power
• Sentence can flow right out of context but may be wrong
o Can continue to act for both CityBank and Cosmo by relying on
exception under O(3.7) because they are sophisticated users of legal
services à CORRECT WHEN READ LIKE THAT à BUT they are not
competing for same objective so O(3.7) does not apply
I. POCA 2002
Offences:
Ø Direct Involvement s327-9
o s327: concealing, disguising, converting or transferring criminal
property or removing criminal property from the UK
§ eg of converting - If Bernard’s money is the proceeds of crime
and you help him to use those funds to acquire his sister’s
property, you will be converting such criminal property
o s328: entering into or becoming concerned in an arrangement which
you know or suspect facilitates acquisition of criminal property
§ eg - becoming directly involved in the scheme yourself would
probably mean that you are guilty of being party to an
arrangement which acquires or uses criminal property on behalf
of a third party
o s329: acquiring, using or possessing criminal property
§ if client money is the proceeds of crime and it is paid into your
firm’s client account, you/your firm will have possession of the
criminal property
Defences s327(2), s328(2) and s329(2)
o making authorised disclosure to the firm’s MLRO or police under s338
and (if the s.338 disclosure was made before the prohibited act) gets
the appropriate consent from the nominated officer; OR
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, Legal Practice Course
Professional Conduct & Regulation
o not making a s.338 disclosure but having a reasonable excuse for not
doing so; OR
o the prohibited act is in carrying out a function he has relating to the
enforcement of any provision of PoCA or any other enforcement
relating to criminal conduct or benefit from criminal conduct.
Nominated officer = constable, customs officer or a nominated officer
o S338(2)
o S338(2A)
o S338(3)
o S338(5): a “disclosure to a nominated officer” = made to a person
nominated by the alleged offender’s employer to receive authorised
disclosures, and (b) is made in the course of the alleged offender’s
employment”. In law firms this is the MLRO.
Ø Non-direct involvement – further offence if you failed to report to MLRO
-‐ [Offence for you and firm]
o s330 Failure to disclose to nominated officer in the ‘regulated sector’
if:
§ Know/suspect someone is laundering
§ Receive information in the course of business in the regulated
sector* AND
§ Can identify the person who is laundering or whereabouts of the
laundered property
• S330(5) Disclosure must contain:
o Identity of person
o Whereabouts
o Information on which your knowledge/suspicion is based
s331 Failure to disclose – nominated officers in regulated sector
-‐ [offence for MLRO himself]
-‐ [also an offence for MLRO under s332 if didn’t disclose to NCA]
-‐ Person nominated to receive disclosure under s330 à offence if conditions in
(2)-(4) are satisfied
(2) Knows or suspects or reasonable grounds for that another person MLs
(3) The information came to him in consequence of disclosure made under
s330
(3A) knows the identity of the person or whereabouts of the laundered
property in consequence of a disclosure under s330
(4) does not make the required disclosure to an authorised person by the
NCA as soon as practicable after the information comes to him
*Regulated sector Sch 9 POCA:
financial or real property transactions concerning:
• the buying and selling of real property or business entities;
• the managing of client money, securities or other assets; - the
opening or management of bank, savings or securities accounts;
2
Professional Conduct & Regulation
LECTURE 1: Money Laundering
General exam tips
• Watch out for words like:
o WILL BE A BREACH – if Outcome is not complied with
o MAY BE A BREACH – if IB is not complied with
o Eg May breach O(1) because not told that this particular solicitor is
dealing with the case on a day to day basis
IB(1.3): ensure that the client is told in writing the name and status of
the person dealing with the matter and name and status of the person
responsible for its overall supervision
• Q can give you wrong P or O or IB reference.
Eg: “not able to act for both of them because under IB(3.6) there is unequal
bargaining power between them”
o IB(3.4) – unequal bargaining power
• Sentence can flow right out of context but may be wrong
o Can continue to act for both CityBank and Cosmo by relying on
exception under O(3.7) because they are sophisticated users of legal
services à CORRECT WHEN READ LIKE THAT à BUT they are not
competing for same objective so O(3.7) does not apply
I. POCA 2002
Offences:
Ø Direct Involvement s327-9
o s327: concealing, disguising, converting or transferring criminal
property or removing criminal property from the UK
§ eg of converting - If Bernard’s money is the proceeds of crime
and you help him to use those funds to acquire his sister’s
property, you will be converting such criminal property
o s328: entering into or becoming concerned in an arrangement which
you know or suspect facilitates acquisition of criminal property
§ eg - becoming directly involved in the scheme yourself would
probably mean that you are guilty of being party to an
arrangement which acquires or uses criminal property on behalf
of a third party
o s329: acquiring, using or possessing criminal property
§ if client money is the proceeds of crime and it is paid into your
firm’s client account, you/your firm will have possession of the
criminal property
Defences s327(2), s328(2) and s329(2)
o making authorised disclosure to the firm’s MLRO or police under s338
and (if the s.338 disclosure was made before the prohibited act) gets
the appropriate consent from the nominated officer; OR
1
, Legal Practice Course
Professional Conduct & Regulation
o not making a s.338 disclosure but having a reasonable excuse for not
doing so; OR
o the prohibited act is in carrying out a function he has relating to the
enforcement of any provision of PoCA or any other enforcement
relating to criminal conduct or benefit from criminal conduct.
Nominated officer = constable, customs officer or a nominated officer
o S338(2)
o S338(2A)
o S338(3)
o S338(5): a “disclosure to a nominated officer” = made to a person
nominated by the alleged offender’s employer to receive authorised
disclosures, and (b) is made in the course of the alleged offender’s
employment”. In law firms this is the MLRO.
Ø Non-direct involvement – further offence if you failed to report to MLRO
-‐ [Offence for you and firm]
o s330 Failure to disclose to nominated officer in the ‘regulated sector’
if:
§ Know/suspect someone is laundering
§ Receive information in the course of business in the regulated
sector* AND
§ Can identify the person who is laundering or whereabouts of the
laundered property
• S330(5) Disclosure must contain:
o Identity of person
o Whereabouts
o Information on which your knowledge/suspicion is based
s331 Failure to disclose – nominated officers in regulated sector
-‐ [offence for MLRO himself]
-‐ [also an offence for MLRO under s332 if didn’t disclose to NCA]
-‐ Person nominated to receive disclosure under s330 à offence if conditions in
(2)-(4) are satisfied
(2) Knows or suspects or reasonable grounds for that another person MLs
(3) The information came to him in consequence of disclosure made under
s330
(3A) knows the identity of the person or whereabouts of the laundered
property in consequence of a disclosure under s330
(4) does not make the required disclosure to an authorised person by the
NCA as soon as practicable after the information comes to him
*Regulated sector Sch 9 POCA:
financial or real property transactions concerning:
• the buying and selling of real property or business entities;
• the managing of client money, securities or other assets; - the
opening or management of bank, savings or securities accounts;
2
