Solicitor - Howard Kennedy
Money laundering is a big problem. It destabilises financial markets, facilitates organised crime and funds terrorism. The best available estimate of the amount of money laundered worldwide is equivalent to some 2.7% of global GDP.
The POCA money laundering provisions require banks and other persons operating in a regulated sector which know of or suspect money laundering, or which have reasonable grounds to know or suspect, to make a disclosure to the National Crime Agency (NCA). This low bar of suspicion, coupled with an increasingly risk-averse banking culture, results in many thousands of Suspicious Activity Reports (SARs) being submitted every year.
The disclosure regime enables suspicious banks to ask the NCA to consent to monies being sent back to the customer. The NCA can give consent within 7 days, or refuse it, allowing for a moratorium period of 31 calendar days. Law enforcement can then apply for a restraint order, if appropriate. The bar for obtaining a restraint order is high and must be considered by a judge.
It seems however that law enforcement has hit upon a quick fix alternative. Their solution is this.
- Bank submits SAR.
- Police suggest POCA cash seizure.
- Bank converts the suspect assets into a good old fashioned cheque, which (incidentally) falls under POCA’s definition of “cash”.
- The bank’s Reporting Officer can opt for a “cash” seizure and arrange for a police officer to attend to “seize” the cheque, which can ultimately be forfeited.
The advantages of the manoeuvre are clear: the bank can dump the suspect assets, and they won’t just go back to the (possible) crim. The bank has no tipping off worries; it can tell its customer that the police have seized the funds and it’s up to them to persuade a court that the money is kosher.
“arguably this mechanism is used to deliberately circumvent judicial intervention”
There is a catch: arguably this mechanism is used to deliberately circumvent judicial intervention. It’s an abuse of process. Law enforcement should do just that – enforce the law, not make it. Legislators did not intend banks to churn out cheques to enable an easy seizure: this ignores the criteria which must be satisfied to obtain a freezing or restraint order and completely bypasses the court’s process.
It can only be a matter of time until a claim is brought and this practice is exposed. Until then, we have our hopes pinned on the Criminal Finances Bill, currently making its way through Parliament.