Money laundering is the process of converting money or assets that derive from a criminal activity into ”clean” assets, for the purpose of disguising their illicit origin. This offence covers virtually any act that constitutes a person’s benefit from criminal conduct. These definitions are quite broad and easy to fall under.
The money laundering process usually takes place in three stages:
Stage 1 – Placement: criminally derived funds are introduced into the financial system.
Stage 2 – Layering: assets are being ‘laundered’ by means of conversion, transfer or concealing.
Stage 3 – Integration: laundered assets are re-introduced into the legitimate economy.
Money laundering therefore enables criminal organisations to seep illegal profits in the financial system, and facilitates criminal activities such as terrorism, corruption, tax evasion, smuggling, drug or human trafficking.
It is not only the money laundering offences that you should be aware of but also those offences resulting from a failure to act on a suspicion of money laundering. There are also a variety of administrative and regulatory requirements for firms within the regulated sector.
The primary legislation on this topic includes:
the Proceeds of Crime Act 2002;
the Terrorism Act 2000; and
the Fraud Act 2006.
The principal secondary legislation is the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.