Money Laundering

Money laundering is as old as acquisitive offending itself. In its broadest sense is the process by which ill-gotten gains can be safely enjoyed. Crime does not pay if its fruits cannot be converted into legitimate financial instruments and spent.

This simple proposition should have led to similarly simple anti-money laundering legislation. Exactly the opposite has happened, and of the many reasons for this, three particularly stand out.

1. First, terrorist financing is treated as a subset of money laundering. Draconian powers that might be thought proportionate to the risk presented by the former are carried over to the latter, e.g. the ‘snitching’ obligation contained within the Terrorism Act 2000 section 21A has been imposed in near-identical language upon the Regulated Sector by virtue of the Proceeds of Crime Act 2002 section 330. In a liberal democracy, such provisions require safeguards, exceptions and oversight, leading inevitably to ever-greater legislative complexity as the amendments to POCA pile up.
2. Second, the statutory scheme does not distinguish between home-grown money laundering and the imported variety. Whereas the harm done to the community by the local drug dealer is obvious such that measures taken to choke his ability to turn crack into cash are widely welcomed, the same cannot necessarily be said of the flow of illicit funds from abroad. To the extent that these are invested in the UK, notoriously in the London property market, it can be argued that the UK thereby benefits. This perhaps explains why the National Crime Agency complains not of the loss occasioned by receipt of these monies but rather of the risk to the ‘integrity of the UK’s financial system and international reputation’. Whether and to what extent ‘reputation’ continues to matter is debatable.
3. Third, the three principal money-laundering provisions (POCA sections 327 – 329) are so expansively drafted that they can be made to apply to a multitude of acquisitive offences. But unlike, say, theft or handling, two of these (sections 327 & 328) constitute ‘lifestyle’ offences for the purposes of confiscation (see the Proceeds of Crime tab). This aspect incentivises the prosecuting authorities to indict money laundering offences where otherwise they might not, because in the event of conviction, the entirety of a defendant’s assets, including those he is alleged to have hidden, are treated as criminal property unless he can prove otherwise. And all public prosecutors (save the SFO, which for the time being has opted out of the scheme) stand to receive up to 37.5% of the proceeds. Meanwhile, the Court of Appeal has upheld the right of a private prosecutor to prefer money laundering charges and thereafter conduct confiscation proceedings. These are especially attractive to the private prosecutor because he can seek compensation (for himself) to be paid out of confiscation (otherwise for the state).

Money-laundering as a legal concept has been stretched beyond its natural parameters. The potential for abuse is plain.