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Legal Services - 4 - Money Laundering - Coggle Diagram

- - - - Conceal or disguise criminal property; or
      - Transfer criminal property or remove criminal property from the UK
      - Convert criminal property
    - - Must subjectively "Know or SUSPECT" (SUSPECTING IS ENOUGH!) property represents a benefit of criminal conduct
  - - - Arrangements to facilitate
        
        Acquisition, Use, Retention, Control of Criminal Property
    - - Must subjectively "Know or SUSPECT" (SUSPECTING IS ENOUGH!) they are arranging for property that represents a benefit of criminal conduct
    - - Arrangement doesn't apply in ordinary conduct of litigation (remember, it's transactional), including any ADR methods, settlements, negotiations, etc
      - However, Sham Judgements created for purpose of Arrangement/ML do count
        
        Offence here occurs upon execution of judgement/completion of settlement
  - - - If a person acquires, uses, or has possession of criminal property
      - 'Possession' means physical custody
    - - If a person acquired, used, or possessed, criminal property in good faith for adequate consideration
      - Must not have known or suspected property was proceed of criminal conduct or that it would benefit criminal conduct
      - Reasonable amount must've been paid for item they did not know was stolen
  - - - Conspire to, or attempt to launder money
      - Counsel, aid, abet, or procure money laundering
  - - - Disclosure
        
        Authorised disclosure of the transfer BEFORE prohibited act occurs to:
        
        Customs officer
        
        NCA
        
        MLRO
        
        Disclosure DURING act is a defence ONLY IF
        
        Person had no relevant knowledge or suspicion when act started; and
        
        Disclosure made as soon as practicable after knowledge acquired; and
        
        Disclosure was made on own initiative (not prompted by realisation of imminent discovery or someone else's suggestion
        
        Disclosure AFTER act is defence ONLY IF
        
        Good reason it was not done earlier
      - Information is covered by legal professional privilege
        
        But does not apply if solicitor knows transaction they're working on constitutes an ML offence
        
        If solicitor merely suspects
        
        And suspicions are unfounded, communications remain privileged
        
        If suspicions are correct, communications with client are NOT privileged
- - - - Related to ANY information gained in course of business
        
        Ie not just your own client and their affairs, but also;
        
        Potential clients, associates, counterparties of clients, acquisition targets, and even employees of businesses solicitor is dealing with
    - - Contrast with Direct MLO where they must know or suspect to be guilty
      - Solicitor cannot deliberately ignore an obvious inference suggesting money laundering is occuring
    - - Information is privileged or came to solicitor in privileged circumstances
        
        (In a way not excluded by AML laws or crime-fraud exception)
        
        If the information that leads to the suspicion is protected by LPP, the solicitor does not have to report it to the authorities
        
        Contrast with Direct Money Laundering Offences where there's a LEGAL REQUIREMENT to report to NCA as soon as solicitor knows or suspects money laundering is occurring
        
        Essentially:
        
        LPP Protected: If the client is genuinely seeking legal advice without intending to commit a crime, the information remains protected, and the solicitor WOULD NOT NEED TO MAKE A SAR
        
        Crime-Fraud Exception: If the solicitor reasonably believes that the client is trying to use the legal advice to carry out money laundering, the communication would not be protected by LPP, and the solicitor must report the suspicion.
        
        And this is when Concealing, Arrangement, Acquisition/Use/Possession may be happening
        
        DOES NOT APPLY IF
        
        When the communication is made with the intention of furthering money laundering itself - solicitor must report despite LPP here
        .
        
        Where the solicitor knows or suspects that the client is using their advice or legal services to carry out criminal activities
      - Delay in making SAR due to solicitor taking prompt actions to seek legal advice
      - Lack of training
        
        If a firm has not trained employees in AML, even if there are reasonable grounds for suspicion or knowledge, aren't guilty of failure to report
        
        But partners may be prosecuted for providing insufficient training
  - - - (1) disclosing investigation to a third person**
      - (2) Disclosing SAR -> prejudicing investigation
      - disclosing a SAR is only tipping off if it prejudices or could prejudice the investigation
        
        whilst Disclosing an ongoing or upcoming investigation is treated more seriously under Section 342 POCA, and it can be a criminal offence regardless of prejudice.
        In other words, disclosing the fact that an investigation is underway or about to start is automatically a criminal offence, whether or not it causes actual prejudice to the investigation.
    - - Exceptions
        
        Normal Inquiries about instructions and retainers
        
        Only tipping off if disclosed that SAR made or that ML investigation considered/being carried out
        
        Solicitor/employee can make normal enquiries about client instructions and proposed retainer to to remove any concerns and enable them to decide if they wish to take on the retainer
        
        Language in standard terms of engagement
        
        Solicitor may say in terms of engagement that they have obligations under Anti-ML laws
      - Permitted disclosures
        
        Disclosures within an undertaking (UNDERTAKING MEANING business entities or legal entities, such as firms or companies), or group that a SAR has been made
        
        Disclosure to fellow employee, officer, or partner in same undertaking - ie same company/legal entity SAR is made in; OR
        
        To another legal professional (and legal professional only) in different undertaking (ie overseas office), provided the entities the parties work in
        
        Share common ownership, management, or control; AND
        
        Carry on business in the UK, EEA state, or region that imposes AML requirements equal to the EU's
        
        Disclosures between institutions - Permitted, provided ALL these conditions are met
        
        Disclosure is made to prevent a money laundering offence
        
        Disclosure relates to a client or former client of both parties, or a transaction involving them both, or provision of service involving them both (the parties)
        
        Disclosure is made to legal professional in UK, EEA state, or region imposing AML requirements equal to EU's
        
        Both parties have equivalent professional duties of confidentiality and protecting personal data
        
        Additional exceptions
        
        Disclosure to Dissuade a Client:
        
        A legal professional will not commit an offence if they disclose information to their client for the purpose of dissuading the client from engaging in criminal conduct that would amount to an offence (e.g., to prevent the client from laundering money).
        
        I must advise you that transferring these funds in this manner could amount to money laundering, and if you proceed, it could result in serious legal consequences, including criminal prosecution.
        
        May still have to make SAR though
        
        Disclosure to a Supervisory Body or for Legal Purposes:
        
        This applies to investigations in the UK or elsewhere, or to investigations under POCA or related court orders.
        
        No offence is committed if the disclosure is made to a supervisory body (such as a regulator); or for the purpose of preventing, investigating, or prosecuting a criminal offence.
      - Intent is not necessary; if client suspects even if you try to hide it, you've tipped off
    - - Committed when
        
        Person knows/suspects money laundering investigation is being conducted or about to be conducted; and
        
        Makes disclosure to any person likely to prejudice the investigation (TIPPING OFF!!) or
        
        Falsifies, conceals, or destroys documents relevant to the investigation, or causes that to happen
      - Can (unlike tipping off) be done by anyone, not just legal professional
      - Defences
        
        Person making disclosure did not know or suspect that
        
        The documents they removed were relevant to investigation
        
        Or they Did not intend to conceal any facts from person investigating
        
        Their disclosure would prejudice an investigation
        
        Disclosure of investigation done in connection with legal proceedings
        
        This defence applies if the disclosure is made to:
        
        A client or their representative in connection with the giving of legal advice.
        
        Anyone involved in legal proceedings or contemplated legal proceedings.
        
        Provided the disclosure is not made with the intention of furthering a criminal purpose
      - Does not have to intend to prejudice with disclosure for it to be an offence
    - - Under s 333A, it is also an offence to ‘tip- off’ clients about any report made of information that came to you in the course of business in the regulated sector, (ie if you know or suspect that an internal or external report has been made and you tell your client or a third party, thereby possibly prejudicing any investigation).
        It is also an offence under s 333A(3) to disclose that an investigation is being contemplated or carried out if the disclosure is likely to prejudice the investigation