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Money laundering part 10

We have seen in a previous article in this series namely Money laundering part 5

In broad terms the Money Laundering Regulations 2007 apply to relevant persons acting in the course of a business carried on by them in the United Kingdom. The first thing therefore is to identify the relevant persons, which is the exercise we will be undertaking having established certain important points principal. However before doing so it is necessary to understand the overall structure of these offences. Broadly speaking, being in the regulated sector means that you have an additional set of offences you can commit which those outside that sector cannot (even before considering direct application of the Money Laundering Regulations 2007). However the principal money laundering offences at sections 327-329 can be committed by someone whether within the regulated sector or outside it. Therefore these are not alternative offences depending on whether you are in the regulated sector or not. If you are in the regulated sector it merely means that there are a whole host of other offences which you can end up committing (and which have serious consequences).

Moreover in the light of the definition of suspicion referred to in Money laundering part 9 it is important to note that certain offences in the regulated sector have a constituent element of knowledge which differs from that elsewhere. We have already seen Money laundering part 6 that pursuant to section 340 (3) criminal property is only criminal property if it constitutes a person's benefit from criminal conduct or it represents such a benefit (in whole or part and whether directly or indirectly) and the alleged offender knows or suspects that it constitutes or represents such a benefit. Thus if the person alleged to be money laundering neither knows nor suspects that the property constitutes criminal property, even if it in fact is criminal property they are not involved in money laundering.

The position under section 330 and 331 (failure to disclose, regulated sector, and failure to disclose, nominated officers in the regulated sector, respectively, the precise details of which as regards the offences will be specified in later articles) is different. Under for example section 330 (5), the first condition for liability is that the regulated person knows or suspects or has reasonable grounds for knowing or suspecting that another person is engaged in money laundering. That takes it to an entirely new level from the offences which people outside the regulated sector are subject to. On the other offences, as we have seen, the question is, do you know or do you suspect? That is a question of fact. It might be for example that there were obvious reasons why you ought to have known or suspected, but that a jury accepts that in fact you did not believe or suspect. However in the regulated sector even if as a matter of fact you neither know nor suspect, you can have committed a criminal offence for which you may well be imprisoned (subject to the other conditions of the offence being satisfied including the source of knowledge) if you actually had reasonable grounds for knowing or suspecting even if you had in fact no such knowledge or suspicion at all. When analysing the various offences under the act, it is important to bear in mind this very important distinction. Unlike the public generally, those under the regulated sector can be caught by imprisonable offences when they ought to have suspected in consequence of reasonable grounds even when in fact they did not suspect.

Plainly the aim is to induce sufficient fear in the regulated sector that they will look to make the widest possible disclosures for fear of inadvertently missing something which they ought to have known. When going through the offences themselves we will deal with what might constitute reasonable grounds for this purpose. For the moment however this crucial distinction between the regulated and non-regulated sectors should always be borne in mind.

Next week we will turn to the definition of nominated officers.

Michael J. Booth QC