Solicitors and law firms need be aware of recent CPS prosecution guidance update. It has potentially extended the reach of the ‘failure to disclose’ money laundering offence.
What is a section 330 ‘failure to disclose’ offence?
Section 330 of the Proceeds of Crime Act (POCA) is often overshadowed by the other AML offences. We all know we mustn’t help or facilitate money laundering. And most of us are aware of the ‘tipping off’ offence once a report has been made to the authorities.
But it’s worth reminding ourselves that failing to make a suspicious activity report can itself be an offence.
This provision is directly aimed at professional advisers. Lawyers cannot be wilfully blind to their suspicions. They also cannot avoid reporting duties by refusing to act for a client.
Once we have knowledge or suspicion of a financial crime, we are obliged to report it.
Thankfully, prosecutions under section 330 are few and far between. Most lawyers are well-versed in the main POCA offences.
But new CPS guidance on the prosecution of money laundering offences has the potential to increase lawyers’ exposure to the ‘failure to disclose’ offence.
No actual money laundering needs to take place
The new guidance makes it clear that ‘failure to disclose’ can be prosecuted as a standalone offence (“…it is not necessary to prosecute the defendant or other persons for money laundering under sections 327-329…”).
That means the lawyer could go to jail for up to five years, even if the actual criminal is not prosecuted.
Prior to June 2021, the CPS did not prosecute section 330 offences unless there was sufficient evidence that money laundering was planned or undertaken.
That has all changed:
“Section 330…creates an obligation to report suspicions of money laundering to the authorities, regardless of whether money laundering actually takes place. This means that where individuals in the regulated sector receive information giving rise to a suspicion, or provides reasonable grounds for suspecting, that another is engaged in money laundering, an offence is committed by failing to make a report under section 330, regardless of whether it subsequently transpires that the money laundering cannot be proven, or that it did not occur” [emphasis added].
As far as the CPS is concerned, if a lawyer has knowledge or suspicion of a s327-329 money laundering offence and does not make a suspicious activity report, but it turns out no money laundering offences had been committed, that lawyer can nonetheless be prosecuted.
Would a court take the same view? Who knows. But it’s certainly not worth testing out.
What to do in response to the CPS guidance
- Ensure your MLRO is aware of the CPS guidance.
- Underline the personal risk in anti-money laundering training programmes.
- Consider pushing out a briefing note to staff.
- Update your AML policies to reflect the guidance.
- Review your firm-wide risk assessment.