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09 Feb 2015

Serious Crime Bill and anti-money laundering guidance: An update

Participation in activities of an organised crime group

Last year the government announced the Serious Crime Bill, a bill designed to “send a clear signal to discourage corrupt and complicit professionals and others who provide the materials, services, infrastructure, information and other support that organised crime groups need.” The bill is currently progressing through Parliament and is presently at the report stage of the House of Commons. It is anticipated that the Bill will become law before the general election.

For professionals such as lawyers, the Serious Crime Bill contains an important new offence of “participation in the criminal activities of an organised crime group” which will carry a maximum sentence of five years imprisonment. The offence aims to target individuals that enable criminals to carry out criminal offences. It is thought that lawyers and accountants that provide materials, services and infrastructure that support organised crime groups will be a particular focus. The aim of the offence is to target those individuals that support the activities of organised crime groups at arm’s length.

The new participation offence will be committed if an individual takes part in any activities that they know or reasonably suspect are criminal activities of an organised crime group or take part in any activities that the person knows or reasonably suspects will help an organised crime group to carry on criminal activities. Arguably the second scenario could be extremely wide reaching. In order to prove the offence of helping an organised crime group, prosecutors will need to show that the individual knew or reasonably suspected they were doing so. The suspicion must be ‘reasonable’ and so the offence will not capture those individuals who genuinely did not suspect that they were helping an organised crime group. An ‘organised crime group’ is defined as ‘three or more people who act or agree to act together to further the pursuit of criminal activities.’ The prosecution will also have to show that the group was committing serious offences, attracting a sentence of more than seven years. For example, fraud, drug and human trafficking and child sexual exploitation will all be included.

Following lobbying by the Law Society’s Money Laundering Task Force, the scope of the offence was narrowed from its original draft. The mens rea of the offence was initially “reasonable cause to suspect” but this has since been amended to “reasonably suspects.” This means that the test will now be subjective rather than objective. It is hoped that this will stop those who unwittingly become involved in the activities of organised crime groups from being caught by the offence. However, it has been argued that the offence is still too wide and proposals were made last year to amend the mens rea element further to “reasonably believe.” However, this is not being implemented.

Concerns have also been raised by the Law Society as to how far an individual must go to satisfy themselves that whatever service they are providing is not assisting criminal activities.  For example, how much due diligence should a solicitor carry out to make sure that they could not be accused of turning a blind eye to criminal activity? The Law Society says that the offence is not designed to present more bureaucracy but to encourage individuals to think twice about proceeding where they suspect they are facilitating organised crime. Arguably, with existing anti-money laundering legislation such as the Proceeds of Crime Act, and with overriding professional standards, lawyers already have to apply such considerations and so the need for additional legislation is questionable. However, the Law Society has now expressed support for the new offence stating that they “do not believe professional regulation should be the only sanction for an activity as serious as helping an organised crime group.”

New AML guidance for lawyers

At the end of last year, the International Bar Association, the Council of Bars and Law Societies of Europe and the American Bar Association jointly issued new guidance on Anti-Money Laundering which is aimed at assisting lawyers to detect and prevent money laundering.

The guide is not meant as a ‘manual’ to ensure lawyers meet their AML obligations but it has been drafted as a practical guide to help professionals develop their own risk-based approached to AML compliance. The guidance contains the following: a summary of the international and national sources of AML obligations; a discussion of the vulnerabilities of the legal profession to misuse by criminals and a discussion of the risk based approach to detecting red flags, red flag indicators of money laundering and how to respond to them. The guidance also includes a series of case studies where lawyers could unwittingly be used to further the criminal activities of clients. It provides a range of practical examples for lawyers to consider and offers guidance as to the steps that should be taken if a lawyer finds himself in a comparable situation. A copy of the guide can be found on the Law Society’s website.

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