Part 1 of Roger Sahota's two-part summary of the provisions of the Criminal Finances Act 2017 as published in the Law Society Gazette on the 23rd May 2017.
The Criminal Finances Act received royal assent on the 27th April 2017. It represents a radical overhaul of the Proceeds of Crime Act 2002 (“POCA 2002”) anti- money laundering and confiscation regime. Notably, the Act also creates a new offence that is relevant to solicitors and other professionals providing any form of tax advice. The main provisions are summarised below and will take effect when commencement regulations are announced.
Unexplained Wealth Orders
Unexplained Wealth Orders (“UWO”) In the aftermath of the Panama papers scandal the Government has given law enforcement agencies new powers to seize suspected criminal property without bringing a prosecution. Two groups of individuals – Politically Exposed Persons (‘PEP’s) or those involved or associated with serious crime can be made subject to a UWO. In the case of PEP's no proof of a link to criminal behaviour is required. Orders for disclosure of the nature and extent of their interest in property and an explanation as to how they obtained it can be made by the High Court where there are reasonable grounds for suspecting that a person holds assets disproportionate to their known income. Failing to comply with an order can mean that the property is deemed to be “recoverable” for the purposes of the civil recovery provisions of Part V of POCA 2002.
Knowing or recklessly providing a false or misleading response is a criminal offence which carries a maximum two-year prison sentence. Amending the original proposals, the House of Lords lowered the threshold so that a UWO can be made with property valued at £50,000 rather than £100,000. Where it can be shown that any party has suffered loss as a result of serious default on the part of the enforcement authority applying for the UWO after an interim freezing order is made, compensation may be available (new ss362A-T to POCA 2002 inserted.)
Disclosure Orders Powers to order disclosure of relevant information or documents in a confiscation or SFO investigation are now extended to money laundering enquiries (s357 of POCA 2002 amended.)
Suspicious Activity Reports and Sharing Information Where the NCA refuses consent following an SAR authorised disclosure by a bank or other regulated body the 31 day “moratorium period” can be extended by a court in up to 31 day periods to a maximum additional 186 days. This will allow more time for law enforcement agencies to conduct their enquiries (ss.335 and ss.336 of POCA 2002 amended.) The Act also provides a legal gateway for regulated bodies to share information where suspicions of money laundering arise and the NCA is notified (new ss339ZB of POCA inserted). NCA officers have new powers to apply to the magistrates court for “further information orders” from regulated persons following a SAR. Client confidentiality will not be breached on compliance but LPP applies (new ss339ZH-ZK of POCA inserted).
New Police Forfeiture Powers
Forfeiture of Moveable Objects and Bank and Building Society Accounts Precious metals, stones, watches, artistic works, face-value vouchers and postage stamps that can be used to move value across international borders are designated as “listed assets” and are the subject of new civil powers similar to the cash seizure and forfeiture scheme of Chapter 3 of Part 5 of POCA. Where there is a reasonable suspicion that such property is the proceeds of crime or that it will be used in unlawful conduct new powers to search, seize and apply for forfeiture apply (new ss303B-Z inserted.) Similar powers allow for the freezing and forfeiture of monies in bank and building society accounts on application to a Magistrates Court subject to a minimum balance of £1,000 (new ss303Z1-Z19 inserted.)
The FCA and HMRC are given powers to bring Part V POCA 2002 civil recovery (i.e. non-conviction based asset forfeiture) proceedings in the High Court in addition to the NCA, SFO and CPS.