UK anti-money laundering law is based on the EU Third Directive on Money Laundering.
There are three key pieces of legislation:
- The Money Laundering Regulations 2007 ('the Regulations')
- The Proceeds of Crime Act 2002 (as amended by the Serious Organised Crime and Police Act 2005)
- The Terrorism Act 2000 (as amended by the Anti-Terrorism Crime and Security Act 2001 and the Terrorism Act 2006)
The Regulations set out the systems and procedures that relevant persons (see Appendix), must have and follow. One of these is to have a system for recording and reporting knowledge or suspicion of money laundering. The reporting obligations are further elaborated in the Proceeds of Crime Act (see below). Failure to comply with the requirements of either the Regulations or the Proceeds of Crime Act can carry criminal sanctions.
Regulators, such as the Financial Services Authority (FSA), may impose additional systems and controls requirements on persons and businesses regulated by them. A person or business regulated by the FSA needs to have regard to its Money Laundering Sourcebook as well as the Regulations.
The Proceeds of Crime Act sets out in Part 7 for the regulated sector (see Appendix) details of what constitutes money laundering and money laundering offences, the offences of tipping off and the offence of failing to disclose knowledge or suspicion of money laundering. It also lays down detailed responsibilities as regards disclosing (reporting) knowledge or suspicion to the criminal authorities and gaining consent to certain acts where needed. Section 342 in Part 8 describes a further offence of prejudicing an investigation.
The anti-terrorism legislation provides that financing terrorism or handling terrorist proceeds is laundering money and applies responsibilities similar to those in the Proceeds of Crime Act.
In addition to this legislation, supervisory bodies (e.g. the Consultative Committee of Accountancy
Bodies (CCAB) and The Law Society) issue guidance for their members to follow. The Joint Money Laundering Steering Group (JMLSG) also issues guidance to the financial community.
The CCAB and Law Society guidance gives detailed information about the Money Laundering legislation and associated offences, and provides comprehensive guidance on compliance with the various requirements imposed by the legislation. R3 recommends that insolvency practitioners have regard, in addition to the guidance attached, to the CCAB or Law Society guidance in accordance with their professional status. They should also refer to the JMLSG guidance with particular reference to matters of identification.
The guidance which follows is concerned principally with matters particularly affecting those acting as insolvency office holders within the meaning of section 388 Insolvency Act 1986 or Article 3 of the Insolvency (Northern Ireland) Order 1989. These relate to identification, reporting suspicions, and obtaining consent to transactions involving potentially criminal property. It should be borne in mind that because of the complexities and ambiguities of the legislation the legal position in many areas may not be clear and may need to be clarified by the courts.
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