In relation to regulations acting against money laundering, there are three Acts; Terrorism Act 2000, Proceeds of Crimes Act 2002, and Money Laundering Regulations 2007.

These defences also apply under s.328, regarding arrangements of those concerned knowing or suspecting in aid of retention, use or control of criminal property. There had not been any clear instruction on an ‘arrangement’. In the case of Bowman v Fels, a dispute between ex-cohabitees on a property dispute, had brought about a report on suspicious transaction from one party, which in effect brought about an adjournment on the basis that ‘appropriate consent’ had not been made. From this case it had been made clear that the relationship between a professional and his client constituted as an arrangement. Although the case was settled out of court, the courts had carried on to bring about clarity on the Proceeds of Crime Act’s view on litigation. Certain activities were excluded from the proceedings of s.328. such as the litigation from the issues of proceedings was one of the rulings. This would mean that those involved in litigation or settlements alike are not involved in ‘arrangements’. Another ruling by the courts was the final division of assets in accordance with a judgement or settlement including that handling of assets which are criminal property. The problem that arises here is that any property dealt with after judgement could still be interpreted as ‘criminal property’. Under s.17 of the Terrorism Act 2000, it is also an offence, concerning the involvement in an ‘arrangement’ in regards to money used for terrorist purposes. There is also a similar section under s.18, in regards to s.328 and s.327, in that it is an offence to enter an arrangement which facilitates the retention, use or control of terrorist property, whether done by concealment, removal from the UK, transfer to nominees or in any other way. 

S.329 deals with the acquirement, use, or possession of criminal property. As well as the three defence found in s.327, another defence arises on the lines that if there had been a good reason not to give a disclosure such as adequate consideration in the sense of traders, who have no duty to question the source of money or property involved. This would not suffice if the situation involved knowledge or suspicion that the goods were to assist in carrying out criminal activity. A quite similar provision can be found in the Terrorism Act under s.15(2) which states it is an offence to receive money or other property with the intention or reasonable suspicion that it be used for the purpose of terrorism.

According to s.330, it is an offence if an individual has (reasonable grounds of) knowledge or suspicion that someone is engaged in money laundering, and that the knowledge or suspicion came into the individual’s possession in the course of their business in the regulated sector. This becomes offence if the individual does not make the required disclosure as soon as is practicable after the information or other matter comes to them. In this provision there it also states how the disclosure should be made (originally disclosures were made to the National Criminal Intelligence Service [NCIS]. They are now made to the Serious Crimes Organisation Agency [SOCA]). Yet there is a defence in this provision also, in which legal advisers are dispossessed from this on the basis that the relevant information had come to them as privileged information. Under ss.11 any advice given to the offender in the purpose of furthering criminal purpose is considered an offence. There is a similar provision for this in s.19(2) of the terrorism Act. Another defence arises if the person of knowledge of the relevant information is ignorant of any money laundering and on that matter any training from their employer in regards to money laundering.

Under s.331, it is an offence if a money laundering reporting officers fails to make a disclosure, on the grounds of knowledge or suspicion, as soon as practicable. Yet under ss.6 of the provision it is not an offence if there is a ‘reasonable excuse’ not to do so. Again there is a dispute as to no definition of what amounts to a ‘reasonable excuse’. As to the Terrorism Act, a similar provision can be found in s.21.

Tipping off is an offence under, s.333, in which the individual concerned has made a disclosure under the notion that they have knowledge or suspicion of a report to SOCA and the disclosure would prejudice the investigation as to remove any involvement them. There is a defence in this provision under ss.2 in which the individual concerned had no knowledge or suspicion that the disclosure was to be prejudiced to the investigation. With this is another defence that the disclosure was to enforce any provision of the proceeds of crime Act or of any other enactment relating to criminal conduct or benefit from criminal conduct. A defence for legal advisers occurs in that the disclosure was to a client in connection of giving legal advice or to anyone in regards to legal proceedings of the matter. This defence will not apply if acts as a purpose of furthering crime.  

In matters regarding appropriate consent, under section s.335 consent may be given by a constable (SOCA) or by custom officers. In both matters there is a seven day notice period of which the individual may proceed without consent. If no refusal is given, a further 31 day moratorium period may suffice until consent may be rejected. This may be seen as not a sufficient means as there may be cases in which quick response may be required. As for money laundering reporting officers, consent can only be given if the officer is given appropriate consent to do so.

The Proceeds of Crime Act 2002 was viewed as the reform and expansion of money laundering offences in the UK. As most offences under the Act apply to all individuals in the UK and some had only applied to those carrying out business in the regulated sector, a Suspicious Activities Report (SAR) was to be made by these regulated sectors as soon as the knowledge or suspicion of the existence of criminal proceeds had come about and to be made at the earliest opportunity available. SARs acted as an important implement in tackling money laundering, as they assisted in the government’s action in producing successful measures in control over money laundering activity. They helped to identify any organisations that were involved in illegal activity. SOCA's preferred method for reporters to submit their suspicion is the SOCA Suspicious Activity Report Form, found on the SOCA website. The submission of reports is prefered to be sent electronically as to sending hard copies, as this would seem a faster means of delivery. 

The Serious Organised Crime Agency (SOCA) is an Executive Non-Departmental Public Body sponsored by, but operationally independent from, the Home Office. It was formed in May, 2006 through immergence of the National Crime Squad (NCS), The National Criminal Intelligence Service (NCIS), the National Hi-Tech Crime Unit (NHTCU), the investigative and intelligence sections of HM Revenue and Customs (HMRC) on serious drug trafficking, and the UK Immigration Service (UKIS) department dealing with organized immigration crime. SOCA is a national law enforcement agency and a Non-Departmental Public Body of the United Kingdom government. The basic aim of this agency is to reduce the organized crime which includes the , , and people’s smuggling.

The Money Laundering Regulations 2007 had come into force on the 15th December 2007, revoking the Money Laundering regulations for 2003. The purpose of these provisions is for financial businesses to conduct ongoing monitoring of customers as well as specify the situations in which the law is to be implemented. The regulations cover independent legal professionals, credit institutions, financial institutions, auditors, insolvency practitioners, external accountants and tax advisers, trust or company service providers, high value dealers and casinos. These regulations require that identity of new clients is to be checked in situations regarding the creation of a business relationship; the carrying out of transactions made on occasions, the suspicion of money laundering or terrorist financing; as well as any doubt concerning the adequacy of documents, data or information previously obtained for in aid of identifying or verifying the individual concerned. Due diligence and identification procedures is an important part of the Money Laundering Regulation 2007 and consist of obtaining two documents of identification of an individual, one relating to the individual’s face to name (e.g. passport), and the other is the individual’s name to an address (e.g. utility bill).

The problem that occurs with the Money Laundering Regulations views on identity is essential, is that those criminals committing money laundering may not have any difficulty in bring forth documents concerned to identity, but the documentation itself may be false. There may be sources available for money laundering individuals to obtain false identification. In these cases, holding proof of identity does not relatively mean that it will lower chances of suspicious activity in regards to money laundering.

Part 2 of the Money Laundering Regulation concerns customer due diligence and is the required means of checking identification. This part includes the meaning, application, ongoing monitoring, timing of verification, requirement to cease transaction, simplified and enhanced due diligence. This part also lets us know about the different branches and subsidiaries, anonymous accounts, and reliance on the customer due diligence. Part 3 of the regulations deal with record-keeping, procedure and training. This obviously deals with the procedure and policies training of record keeping as to the Money Laundering Regulations.

Under reg.5 of the Money Laundering Regulations 2007 there is a requirement of the ‘beneficial owner’ to be checked. Although in cases where criminal conduct is proceeding it would be unlikely that these checks are made. A ‘beneficial owner’ as to a body corporate is as respects any body other than a company whose securities are listed on a regulated market, ultimately owns or controls (whether through direct or indirect ownership or control, including through bearer share holdings) more than 25% of the shares or voting rights in the body. In regards to a partnership (other than a limited liability partnership), it is an individual who is entitled to or controls (whether the entitlement or control is direct or indirect) more than a 25% share of the capital or profits of the partnership or more than 25% of the voting rights in the partnership.

In regards to ongoing monitoring, it will be difficult to spot a suspicious transaction unless one has full understanding of the nature of the concerned business. Under s.8(2), ongoing monitoring of a business relationship means (a) scrutiny of transactions undertaken throughout the course of the relationship (including, where necessary, the source of funds) to ensure that the transactions are consistent with the relevant person's knowledge of the customer, his business and risk profile; and (b)     keeping the documents, data or information obtained for the purpose of applying customer due diligence measures up-to-date.

Under reg.21, training is required for the need of identifying suspicious transaction. In the Proceeds of Crime Act 2002 an individual must report if he ‘knows’ or ‘suspects’ suspicious transactions. This can be uncertain and therefore leads to an objective test, on the grounds of ‘to know’ requires proof and ‘to suspect’ is more so unclear. In the UK, there had been no case law in regards to what ‘suspicion’ in regards to money laundering, amounted to, till the case of NatWest v H.M. Customs with the SOCA an intervening party (2006), where the suggetsion form R v Da Silva had been taken into account and where Longmore L.J. described suspicion as when a person must ‘think there is a possibility, which is more than fanciful, that the relevant facts exist’ and suspicion ‘should be of a settled nature’.

Yet this obligation to report of suspicion may be costly to the innocent individual suspected of money laundering. In the case of Squirrel v National Westminster Bank, the bank had reported an account under s.328 of Proceeds of Crime Act and then froze the account in regards of being convicted of tipping off under s.333. The courts held that if the banks did not report the suspicion they would have been committing a crime under s.328 and the bank ‘suspicion’ was reasonable. This is may have harmful effects on businesses, with regards to any dealings that could be of great financial advantage to a business, could be regarded as ‘suspicious’.  

Money laundering can occur through different ways, in regards to physical and electrical methods. In today’s world, the movement of money is more efficient due to the modern techniques of financial systems via such methods like internet bank and ecommerce. The internet is a very effective tool that helps in movement of currency along with maintaining accounts with different countries and selling and purchasing of goods in different countries. Now in modern banking system with the help of internet face to face contact between customer and bank is reduced and the account holder can make transactions without the interaction of bank employees. The vast unchecked growth of the Internet presents what has been described as the ‘Armageddon scenario of banking on the Net - criminals could have money transferred without any audit trail’. Regulations in regards to the Internet are non-existent. This calls for authorities to create legislations in regards to technological advance institutes may use to tackle new techniques that professional money launderers may utilise.

These anti-money laundering laws intrude very much into the private spheres of individuals. Uncalled for intrusion into people’s lives can cause confliction in both the people and the Government. Privacy should allow one the ability or right to seclude himself or information of himself from others. Privacy is a basic necessity as well as a basic human right for every human being.

Domestically and in many other countries the action for invasion of privacy is possible to bring forth, under the guidance that it is needed to disclose information which may be in the public’s best interest, but this itself conflicts with privacy. Innocent people are being subjected to the anti money laundering laws due to the reasons of suspicion, which can allow any individual to be a target. In response to this their privacy is violated.

It is acceptable for state authorities to use powers of search and seizure to obtain evidence in regards to money laundering, notwithstanding Art. 8. This protects the right to private and family life, home and correspondence. It is also settled that Art. 8 does not prevent authorities from obtaining information under compulsory powers in non-criminal cases because that is also a justified interference with the right to privacy. The Court of Appeal has followed this approach in R v Special Commissioner of Income Tax, with regard to correspondence protected by legal professional privilege.

The government can be viewed in restricting individuals and their lives via different means of policies. Although the government may seem to ensure it’s reducing the need of any more interference in people’s lives, in reality its methods of doing so have lead to further intrusion in the enforcement of laws and regulations that conflict with the freedom of individuals. In respect of the Human Rights Act the government should tend in allowing the people to make their own choices and this should be done more in assurance that this is recognised as the individual’s privilege. Abiding by the law should not mean that privacy is sacrificed. This notion brings about a feeling of privacy at the cost of privacy.

Yet in disregard of whether privacy of the individual is right in prevailing over the individual’s safety is another view point to consider. The main point in tackling money laundering is on the ideals of keeping a watch over business in the sense of on-monitoring and record keeping. And therefore intrusion is needed.

In reality the government’s intrusion into private sphere already exists in regards to information concerning any personal information such as date of birth, education, earnings, etc. The need for information is heavily due to the increase in terrorist threat that are occurring in this modern day and age and the need for this certain information would be relevant for the welfare of the state. Such cases as when false identification is used for money laundering purposes, the need for intrusion is beneficial as it well assist in countering against money laundering crimes.

The common belief that an individual might think that the people should have a right to act according to their own free will and due to this privacy is an important factor. In not intruding the people are free to act accordingly and with this free will society as we know today would not exist resulting to the way of life from which we have successfully evolved from. With this is the need for government ruling. And the advances in time have lead to further need for rules to govern over society. Whether or not the intrusion into the private life of an individual is not easy task to tackle and has a double-edge sword effect. In a nutshell the need for intrusion depends on what is valued more, one’s privacy or well-being.

Bibliography

Website

‘The Human Rights Act 1998- What Relevance to Tax?’, M. Thomas, http://www.tax.org.uk/showarticle.pl?id=571&n=379

‘Money Laundering- What is Money Laundering?’, B. Steel, http://www.laundryman.u-net.com/page2_wisml.html

‘Money Laundering- Conclusion’, B. Steel, http://www.laundryman.u-net.com/page14_conclusions.html

‘Money Laundering- From Failur to Absurdity’, A. Haynes, http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/EmeraldFullTextArticle/Articles/3100110402.html

‘The Negative Effects of Money Laundering on Economic Development’, B. Bartlett, http://www.adb.org/documents/others/ogc-toolkits/anti-money-laundering/documents/money_laundering_neg_effects.pdf

‘SOCA- About Us’, http://www.soca.gov.uk/aboutUs/index.html

‘SOCA- Making a Suspicious Activities Report’, http://www.soca.gov.uk/financialIntel/suspectActivity.html

‘SOCA: We Are Tackling E-crime’, T. Espiner, http://news.zdnet.co.uk/security/0,1000000189,39286506,00.htm

Table of Cases

Bowman v Fels (2005) EWCA Civ 226

R v Da Silva EWCA Crim 1654

R v Da Silva 4 All ER 900

R (on the application of Morgan Grenfell) v Special Commissioner of Income Tax (2001) STC 497

Squirrel Ltd. v National Westminster Bank (2005) EWCH 664

Table of Statutes

s.327(1), Proceeds of Crime Act 2002

s.327(3), Proceeds of Crime Act 2002

s.328(2)(a), Proceeds of Crime Act 2002

s.328(2)(b), Proceeds of Crime Act 2002

s.328(2)(c), Proceeds of Crime Act 2002

s.328(1), Proceeds of Crime Act 2002

s.340(3) Proceeds of Crime Act 2002

s.329(1) Proceeds of Crime Act 2002

s.333(1) Proceeds of Crime Act 2002

s.336 Proceeds of Crime Act 2002

s.17(a), Terrorism Act 2000

s.18(1), Terrorism Act 2000

reg.7(1), Money Laundering Regulations 2007

reg.7(6,7,8,11,13,14), Money Laundering Regulations 2007

reg.7(15,16,17), Money Laundering Regulations 2007

reg.6(1) Money Laundering Regulations 2007

reg.6(2) Money Laundering Regulations 2007

Art. 8, Human Rights Act 1998        

---