The risks and penalties of money laundering for charities and how to guard against it
The director of a security company who is prepared to supply unlicensed and untrained guards to his customers, places public safety at risk and acquires significant commercial benefit from that conduct. The operator of a food business that sells off inferior products by labelling them as a better quality product, places public health at risk and acquires a significant financial benefit from that conduct.
Society demands that those who choose to engage in criminal conduct should not obtain a financial benefit from their crimes. To give effect to that principle it follows that those agencies tasked with the important job of investigating and prosecuting regulatory crime should have necessary enforcement tools at their disposal to strip defendants of the proceeds of their crimes.
Regulatory prosecutors generally use private prosecution powers to commence proceedings against those who flout their regulatory regimes or cause harm to those they are designed to protect. The Proceeds of Crime Act 2002 (POCA) empowers a prosecutor following a successful prosecution to obtain a confiscation order to deprive the defendant of the proceeds of their crime. When the prosecutor is one of the traditional state prosecuting agencies then this arrangement runs smoothly as they have the full POCA powers at their disposal. However, when the prosecutor is a regulatory private prosecutor then the process is not as straight-forward.
The Home Office has recognised this to be a problem and has recently launched a consultation on whether additional bodies should be granted access to the investigation powers under POCA. A number of bodies have sought POCA powers under this consultation and stand to benefit if the proposals set out by the Home Office are passed into law this Autumn.
The consultation proposes that each of the following organisations: the Food Standards Authority, the Security Industry Authority, the Marine Management Organisation and the Department of Health, will be given the power to have their own Accredited Financial Investigators to carry out financial investigations in future. The benefit to such agencies would be to alleviate them of the need to rely on others for conducting financial investigations into the often complex regulatory sectors that they have responsibility for prosecuting. This in turn will make confiscation a more simplified, cost-effective process for them and should have the knock-on effect of triggering more confiscation proceedings against the defendants who benefit from their criminal conduct.
The proposal is well overdue and is expected to be well supported by those who are tasked with enforcing and prosecuting regulatory crime.
The consultation document Changes to bodies granted investigatory and other powers under the Proceeds of Crime Act 2002 (July 2015) was published by the Home Office on 24 July 2015 and the consultation period will end on the 4th of September 2015.
Melinka has expertise advising regulatory bodies on confiscation proceedings commenced in respect of private prosecutions and leads the team responsible for criminal regulatory and private prosecutions.
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