Restraint Orders, Confiscation and Third Party Rights

On 17 January, the Serious Fraud Office (SFO) secured its first Unexplained Wealth Order, in respect of a property believed to have been purchased with the proceeds of a £100 million fraud. 

The NCA’s UK Financial Intelligence Unit (UKFIU) has published its latest Annual Report (somewhat later in the year than usual). The UKFIU is responsible for receiving, analysing and disseminating intelligence submitted through the Suspicious Activity Reports (SARs) regime and its role is to alert law enforcement agencies, both at home and abroad, to potential instances of money laundering and terrorist financing.

Many of the SFO’s most notable recent investigations have begun with dawn raids, so-called because they normally occur very early in the morning. These raids can be a disorientating and uncomfortable experience in themselves, but as we explain further below, unfortunately they normally signal the beginning of a major SFO investigation. The period between arrest and charge – which can be lengthy in complex white-collar crime investigations – is absolutely critical. So, what should you and your legal team be doing in this period?

For more than a decade, lawyers, academics and business representatives have been discussing the need for a new approach to corporate criminal liability for economic crime. With significant expansion of the tried and tested failure to prevent (FTP) structure now imminent, and further debate on the Economic Crime and Corporate Transparency Bill scheduled for late March, there are questions still to be answered.

It is estimated that 30% of the world’s production of cotton originates in China. Of that cotton 85% originates in Xinjiang, which is the centre of the Uyghur atrocities. Recently before the High Court, the World Uyghur Congress (“the WUC”) argued that UK authorities were under a duty to block and/or launch money laundering investigations into the many imports of Xinjiang cotton brought into the UK - many by household names in the clothing industry – because of the high likelihood of prison and forced labour forming the start of the supply chain

The latest Annual Report of the NCA’s UK Financial Intelligence Unit (UKFIU), published this week, makes interesting reading. The UKFIU is responsible for receiving, analysing and disseminating intelligence submitted through the Suspicious Activity Reports (SARs) regime and its role is to alert law enforcement agencies, both at home and abroad, to potential instances of money laundering and terrorist financing.

With the back-to-back release of public statements, regulatory actions by the Gambling Commission are coming thick and fast. On 17 January the Commission announced it had agreed a regulatory settlement with the online gaming company, Vivaro Limited trading as Vbet, in respect of its AML and responsible gambling failings. Following swiftly on its heels was the statement of action taken against another online gaming company, TonyBet, for imposing unfair terms and for its AML and responsible gambling failings.

Over the past few months, the FCA has handed out a string of significant financial penalties relating to anti-money laundering (AML) systems and controls failures at financial institutions in the UK.

Following a lengthy period of research and consultation, the Law Commission (‘the Commission’) has published its final report and recommendations for the reform of Part 2 of the Proceeds of Crime Act 2002: the post-conviction confiscation regime (‘the report).

Kingsley Napley contributes to significant Law Commission criminal justice reform project. The Law Commission has today published its long-awaited recommendations for reform of the UK’s post-conviction confiscation regime. Work on the project began in November 2018, after the Home Office asked the Law Commission to review the regime found in Part 2 of the Proceeds of Crime Act 2002.

Since the introduction of the Money Laundering Regulations in 2017, HMRC have maintained a public list of businesses within the regulated sector who have breached their AML obligations. Aside from being a warning of the perils of non-compliance, the identities of the publicly named and shamed businesses offer a glimpse into HMRC’s priorities. The eagle-eyed observer of the latest update to this list will note that it includes for the first time a business within the art market sector.

On 10 January 2020, the Financial Conduct Authority (FCA) became the anti-money laundering (AML) and counter-terrorist financing (CTF) supervisor for UK cryptoasset firms. Two years in, how effectively is it performing its role as the gatekeeper of the new registration regime?

On 9 December the Gambling Commission published its annual Compliance and Enforcement Report for the financial year 2020–2021. This confirmed that the period was particularly active for the Enforcement and Compliance teams, with a record total of £32.1 million being paid by 15 gambling businesses as a result of fines or regulatory settlements. This included over £1.3m being paid by White Hat Gaming Ltd, after a January 2020 review by the Commission of its operating licence revealed inadequate policies and produces in respect of anti-money laundering (“AML”) and safer gambling.

Account Freezing Orders (AFrOs) are a measure introduced by the Criminal Finances Act 2017 and have been available to a wide range of law enforcement agencies since February 2018.

In September 2020 the FCA published a statement regarding the listing of cannabis-related businesses (CRBs) in the UK. Since then several CRBs have been admitted to the London Stock Exchange (LSE) and appetite for investments in the medicinal cannabis industry continues to grow.

Many art dealers, galleries and auction houses are now subject to the UK’s anti-money laundering regime and are defined as art market participants (AMPs) - see our related blog The compulsory embrace of the art market by the UK's Anti-Money Laundering regime. On 28 June HMRC published its first assessment of the key areas that AMPs should consider when conducting their own assessments of the risk of money laundering and terrorist financing to which their business is subject.

A Director at the National Crime Agency recently voiced concern about crypto assets being used to fund property purchases in the UK. The NCA’s Nigel Leary was quoted by The Times as saying: “Anything purchased with crypto assets I’d be slightly sceptical about. I’d like to see why they’re being done in that way and what the requirement is for that anonymity, and why it needed to be done in a crypto transaction.”

Recent guidance issued by the CPS on the offence of ‘failure to disclose’ under section 330 of the Proceeds of Crime Act 2002 (‘POCA 2002’) states that it is now “possible to charge an individual under section 330 even though there is insufficient evidence to establish that money laundering was planned or has taken place.”

To date, there have seldom been prosecutions for this offence but this guidance – effectively removing a significant element of the offence - suggests that the CPS may be looking to bring more charges in the future.

Money launderers will look for any opportunity to take advantage of organisations with weak financial controls in order to launder their ill-gotten gains. Charities, trustees, employees and volunteers who knowingly or unwittingly assist money launderers, or who fail to report suspicions, may commit a criminal offence and find themselves liable to prosecution. 

HMRC monitors over 30,000 businesses to ensure their compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the regulations). Businesses which are found to have breached their regulatory obligations are at risk of civil and even criminal penalties.