469.Section 327 creates one of three principal money laundering offences. The other two are to be found in sections 328 and 329. Because of the definition of criminal property at section 340, all three principal money laundering offences now apply to the laundering of an offender’s own proceeds of crime as well as those of someone else.
470.Section 327 simplifies and replaces section 49 of the Drug Trafficking Act 1994 and section 93C of the Criminal Justice Act 1988 and the corresponding provisions in Scotland & Northern Ireland (section 14 of the Criminal Justice (International Co-operation) Act 1990 and Article 47 of the Proceeds of Crime (Northern Ireland) Order 1996). Along with sections 328 and 329, section 327 replaces the parallel drug and non-drug crime money laundering offences with single offences that do not distinguish between the proceeds of drug trafficking and the proceeds of other crimes.
471.The section 327 offence would be committed where a person concealed, disguised, converted, transferred or removed from the jurisdiction criminal property. Criminal property is defined at section 340(3) as being property which the alleged offender knows or suspects constitutes or represents benefit from any criminal conduct as defined in section 340(2).
472.The section contains defences against committing the offence. For example, the offence is not committed if an authorised disclosure is made under section 338 as soon as possible after the transaction has taken place, or if the disclosure is made before the act has taken place and the discloser has obtained the appropriate consent, or there was a reasonable excuse for not making such a disclosure. Additionally, it is not uncommon for the police or other enforcement authorities to take possession of criminal property in the course of their official duties and to convert or transfer it, for example into an interest bearing account pending further investigation. Therefore subsection (2)(c) gives them the necessary exemption from the offence.
473.The maximum penalty for the section 337 offence, and for the other two principal money laundering offences at sections 328 and 329, is 14 years imprisonment, as set out at section 334.
474.Section 328 simplifies and replaces section 50 of the Drug Trafficking Act 1994 and section 93A of the Criminal Justice Act 1988, section 38 of the Criminal Law (Consolidation) (Scotland) Act 1995 and Article 46 of the Proceeds of Crime (Northern Ireland) Order 1996.
475.To establish an offence under this clause, the prosecutor would need to establish that a person entered into or became concerned in an arrangement which he knew or suspected would make it easier for another person to acquire, retain, use or control criminal property and that the person concerned also knew or suspected that the property constituted or represented benefit from criminal conduct. Section 328 includes the same defences against committing the offence, as are included in section 327.
476.Section 329 unifies and replaces section 51 of the Drug Trafficking Act, section 93B of the Criminal Justice Act 1988, section 37 of the Criminal Law (Consolidation) (Scotland) Act 1995 and Article 45 of the Proceeds of Crime (Northern Ireland) Order 1996. As in sections 327 and 328, by reason of section 340, this offence is only committed where a person knows or suspects that the property which is acquired etc constitutes or represents his own or another’s benefit from criminal conduct.
477.Again, the same defences against committing the offence apply as in sections 327 and 328. Additionally, the effect of the defence in subsection (2)(c) is that persons, such as tradesmen, who are paid for ordinary consumable goods and services in money that comes from crime are not under any obligation to question the source of the money. Subsection (3)(c) makes it clear that the provision of goods or services that help a person to carry out criminal conduct would not be a defence. However, section 329(3)(c) only negates the defence in section 329(2)(c) if the person who provides the goods or services knows or suspects that they will help the recipient to carry out criminal conduct.
478.Section 330 replaces section 52 of the Drug Trafficking Act 1994 and creates an obligation to report suspicions of money laundering to the authorities. The equivalent provision in Scotland is section 39 of the Criminal Law (Consolidation)(Scotland) Act 1995 and in Northern Ireland is Article 44 of the Proceeds of Crime (Northern Ireland) Order 1996. Section 330 widens the scope of the offences that it replaces beyond reporting drug money laundering to reporting the laundering of the proceeds of any criminal conduct. Subsection (2)(b) introduces a negligence test which means that the failure to disclose offence would also be committed where a person has reasonable grounds for knowing or suspecting that another person is engaged in money laundering, even if they did not actually know or suspect.
479.The duty to report under section 330 is, however, restricted to those persons who receive information in the course of a business in the regulated sector, as defined in Schedule 9 to the Act. This definition closely follows equivalent provisions in the Money Laundering Regulations 1993 (as amended by the Financial Services and Markets Act 2000 (Consequential Amendments and Repeals) Order 2001), which determines the applicability of those Regulations. The definition provides that a business is in the regulated sector to the extent that it carries out the activities listed in Part 1 ofSchedule 9. The section reflects the fact that persons who are carrying out activities in the regulated sector should be expected to exercise a higher level of diligence in handling transactions than those employed in other businesses. Where a business carries out some activities which are listed in Schedule 9 and some which are not, then only employees carrying out the listed activities will be caught by the offence.
480.The offence is committed if the "required disclosure" is not made. The "required disclosure" is defined at subsection (5) as being a disclosure to a nominated officer, or to a person authorised by the Director General of the National Criminal Intelligence Service, which has been made in the form and manner (if any) prescribed under the order making power at section 339. This reflects the policy that disclosures in the regulated sector should be made directly to the National Criminal Intelligence Service (NCIS), rather than through a constable or a customs officer. It gives those in the regulated sector the choice of either disclosing direct to NCIS, which might be appropriate for sole practitioners, or disclosing to the nominated officer who will operate as a filter for disclosures to NCIS.
481.The maximum penalty for committing the offence, as set out at section 334, is 5 years imprisonment.
482.Subsection (6) provides a defence for a person who has a reasonable excuse for not disclosing the information and also for a lawyer, where the information came to him in privileged circumstances. There is also a defence for staff who have not had adequate training concerning the identification of transactions which may be indicative of money laundering. In order to use this defence successfully, the defendant would have to show that he did not actually know or suspect that another person was engaged in money laundering and that, in his case, his employer had not complied with requirements to provide employees with such training as is specified by the Secretary of State by order.
483.Guidance Notes on Money Laundering have been produced and issued since 1990 to regulated institutions by the industry’s Joint Money Laundering Steering Group, which operates under the auspices of the British Bankers’ Association. Section 330(8) recognises the potential value of such guidance and provides that the court must take any guidance issued by a supervisory authority (as listed in Part 2 of Schedule 6) or any other appropriate body (as defined at section 330(13)) into account when determining whether an offence has been committed. The court would only be obliged to take into account guidance, the content and manner of publication of which has been approved by the Treasury (in its capacity as the Government department which has overall lead responsibility for money laundering policy in the regulated sector). As at present, the industry itself will draw up relevant guidance, and it will be for the industry bodies to decide whether they wish to seek Treasury approval, and make use of this additional safeguard.
484.The scope of section 330 extends to inchoate offences such as conspiracy by reason of the definition of money laundering in section 340(11).
485.Section 331 creates an offence where a nominated officer who receives a report under section 330 (the failure to disclose offence) which causes him to know or suspect or gives reasonable grounds for knowledge or suspicion, that money laundering is taking place, does not disclose that report as soon as practicable after the information comes to him. Subsection (5) specifies that the "required disclosure" which a nominated officer must make, has to be made to the National Criminal Intelligence Service, in the form and manner (if any) prescribed by the order making power at section 339.
486.Section 332 creates an offence where a nominated officer who receives a report under section 337 or 338 (in other words, a disclosure in relation to one of the principal money laundering offences or a voluntary disclosure) which causes him to know or suspect that money laundering is taking place does not disclose that report as soon as practicable after the information comes to him. The nominated officer is required to disclose to the National Criminal Intelligence Service in the form prescribed by section 339. This clause applies to nominated officers both in the regulated sector and outside the regulated sector.
487.Section 333 creates the offence of making a disclosure likely to prejudice a money laundering investigation being undertaken or which may be undertaken by law enforcement authorities. Together with section 342 (offence of prejudicing an investigation), these new offences replace section 53 of the Drug Trafficking Offences Act 1994 and section 93D of the Criminal Justice Act 1988. The equivalent provision in Scotland is section 40 of the Criminal Law (Consolidation) (Scotland) Act 1995; in Northern Ireland it is Article 48 of the Proceeds of Crime (Northern Ireland) Order 1996.
488.As for sections 327(2)(c), 328(2)(c) and 329(2)(c), there is protection from the offence for law enforcement officers who may need to make a prohibited disclosure in the course of their official duties, and there is an additional defence if a person did not know or suspect that the disclosure would prejudice an investigation. As for section 330, section 333 also extends to inchoate offences, for the same reason. The maximum penalty for the offence, as set out at section 334, is 5 years imprisonment.
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