Proceeds of Crime Act

Mark Young& David Humphries

Money Laundering?

Tax Evasion “CLEAN” MONEY

Proceeds of Crime Act 2002

• effective from 24 February 2003

• principal Money Laundering offences of concealing, making arrangements, acquisition, use, possession of criminal property (s327 - s329)

• all crimes approach

• requirement upon those in regulated sector to report knowledge or suspicion of money laundering (s330)

• Tipping off

Money Laundering Regulations 2003

• effective from 1 March 2004

• expands the regulated sector to include Tax advisers, Accountants, Auditors, IP’s, lawyers etc

• As well as requirement to report also requires:

- appoint an MLRO

- establish internal reporting procedures

- train staff

- identification procedures for new clients

Examples of offences

• An adviser knows that a client is keeping a bit back from the taxman and does not report

• a lawyer settles a divorce, whilst leaving the proceeds of tax evasion with one party

• a civil settlement with the Revenue over tax evasion is not the full picture of the evasion

Many parts of government involved

Home Office Treasury Customs

NCIS FSA SFO

CPS ARA InlandRevenue

Disclosure - a practical approach

I suspect Tax Evasion...

Should I make a

disclosure…?

Regulated Professional

When is a report to NCIS required?

A report is required where the following conditions apply:

1 Know or suspect, or have reasonable grounds to know or suspect that a crime has been committed

2 There are proceeds from the crime (criminal property)

3 The alleged offender knows or suspects that the proceeds arise from a crime

Has a crime been committed?

• Tax evasion can amount to offences such as theft, false accounting, cheat

• “Being knowingly concerned in the fraudulent evasion of income tax (s144 FA2000)”

• “Fraudulent activity with a view to obtaining a tax credit (s35 Tax Credits Act 2002)”

Reasonable grounds for suspicion?

• What is suspicion?

• In the course of your business, irrespective of who committed the crime

• Know your client (KYC)

• Objective test

Are there proceeds from the crime?

• Without proceeds from the crime there is nothing to launder

• Would the alleged offender have known or suspected that the proceeds arose from crime (s340 para 3b)

What happens to Reports concerning tax evasion?

• Reports should be sent to NCIS

• Revenue team in NCIS analyse reports concerning tax evasion

• Pass to Special Compliance Office and IR Centre for Revenue Intelligence

• Reports are sanitised

• Staff have been trained in handling

• Enquiry

Progress to date

• NCIS received 65,000 SAR’s in 6 months - Jan to June 2004

• 150,000 predicted for whole of 2004

• 7% from solicitors, 4% from accountants

The Revenue’s response

The Revenue’s response

• Our own strategy to countering money laundering was published on website this week

• where money laundering is predicated by tax evasion, we are in the lead

• to the extent that it is predicated by other criminality, we will disclose this to others in law enforcement

A new Revenue Unit

• To investigate money laundering offences which are predicated on tax

• to work alongside others in law enforcement

• to prepare cases for potential criminal prosecution

Inland Revenue prosecutions

• an agreement with other prosecuting bodies that we lead on tax evasion

• we have a selective exemplary approach

• generally settle civilly in cases of tax evasion, but do prosecute some serious cases

• will approach money laundering cases in a consistent way

Home Office consultation

• obligations of accountants to report Money Laundering

• granting professional privilege to accountants and tax advisers?

Further guidance

• Working Together Issue 13 in June 2003

• Tax Bulletin 70

• Revenue website

• CCAB ‘Guidance for Accountants’

QUESTIONS