Money Laundering

Money laundering is defined as the “process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source”.

There are three phases involved in money laundering:

1. Placement – moving the ‘dirty’ money into the financial system.  Banks tend to have extremely high anti-money laundering processes in place; therefore, criminals use other professional bodies such as Solicitors and Accountants to place the money into the mainstream markets.
2. Layering – the money is subjected to complex financial transactions using trusts and offshore entities to conceal its criminal roots.
3. Integration – once the money is cleaned’ through the layering process, legitimate assets such as property, shares, art, cars, and antiques are purchased.  The funds are now enmeshed in the legitimate financial system and its origins are virtually impossible to trace.

Financial institutions and professional bodies are extremely vulnerable to being used by criminals to ‘clean’ money.  If you are being investigated for money laundering offences, it is crucial that you contact our Money Laundering Solicitors immediately.

Anyone working in a regulated industry needs to be aware that dishonesty is not required to commit an offence under UK money laundering law.  Under the Proceeds of Crimes Act 2002 there are three separate money laundering offences:

• Concealing – it is an offence to conceal, disguise, convert, transfer, or remove criminal property (including money). 
• Arranging – this offence involves entering an agreement which you know or suspect enables the acquisition, retention, use or control of criminal property by or on behalf of someone else.  The penalty for arranging is the same as that for concealment.
• Acquisition, use or possession –if you know or suspect the property being acquired, used, or possessed is criminal property you are committing a criminal offence. 

If convicted of any of the above offences, you could face 14 years imprisonment following conviction on indictment or a fine or both and six months imprisonment or a fine or both if convicted on a summary offence.

The Money Laundering Regulations 2007 states that ‘relevant persons’ must create certain processes to facilitate the identification and reporting of suspected money laundering and terrorist financing offences to specified regulatory authorities.  ‘Relevant persons’ are defined as financial institutions, legal and accountancy professionals, and other identified regulated sectors dealing with financial transactions.

Failure to comply with the obligation to provide suitable processes is an offence.  For example, a Solicitor or an Accountant that does not undertake correct due diligence checks onboarding a new client may be committing an offence.  Failure to hold proper records to demonstrate compliance is also a crime.