ICAEW's business law team says that the proposed legislation will not achieve its aim of making it easier for law enforcement authorities to convict professionals who knowingly assist organised crime groups. It might even reduce the amount of valuable information they receive by removing professionals’ ability to report suspicions while money laundering is still in operation.
It may also make it harder for former criminals to reform and make an honest living since professionals will be put off providing such “higher risk” clients with advice.
The institute has gone public with its concerns ahead of the debate and Second Reading of the Bill this afternoon in the House of Lords.
The Home Office has heralded the Bill, which was announced in the Queen’s Speech earlier this month, as building on the current criminal and civil law “to ensure that the National Crime Agency and other law enforcement agencies can continue effectively and relentlessly to pursue, disrupt and bring to justice serious and organised criminals”.
ICAEW says it supports any measures that effectively tackle organised crime and that much of the Bill is sensible and helpful. However, it is difficult to see how the new offence aimed at people who knowingly participate in an organised crime group (s41) adds any substantive advantages to achieving that “highly desirable” end.
“Further, the section, as drafted, would have a number of serious unintended consequences, not only in potentially criminalising many innocent (if naïve) citizens but also reducing access to valuable intelligence currently unavailable to law enforcement authorities and unnecessarily burdening some businesses,” it adds.
Tried and tested provisions already exist in the Proceeds of Crime Act 2002 (POCA).
The institute argues that the law enforcement agencies might well find it more difficult to convict crooked professionals since the draft section in the Bill actually requires a higher burden of proof against them than POCA.
It points out that lawyers, accountants and other members of the “regulated sector” also come within the scope of s330, POCA which criminalises a failure to make a suspicious activity report in circumstances where they have “reasonable grounds for knowing or suspecting” that another person is involved in money-laundering.
POCA also includes provisions for people to apply for consent to continue with an activity which might otherwise be an offence. This provides a “very useful mechanism”, the institute says, by which professionals can ensure that activities that may or may not represent criminal activity are brought to the attention of law enforcement, while enabling them to carry on providing necessary professional services to clients.
“Furthermore, the ‘consent regime’ provides a mechanism for accountants or lawyers who suddenly recognise that they have been duped by criminals to bring the situation to the attention of law enforcement, and in some cases to enable law enforcement to have a rare opportunity to investigate money laundering activity while it is in operation.”
Since the Bill has no provisions for a consent regime, most professionals are likely to keep quiet about the unfortunate position they find themselves in.
ICAEW argues that the Bill will not result in jailing more crooked lawyers and accountants; rather, it is likely to catch people – like minicab drivers moving gang members away from the scene of a crime or hardware shop owners who provide useful materials to them – who intentionally or unintentionally help criminals, and who are outside the scope of the regulated sector for anti-money laundering purposes.
Ideally, the institute wants to see:
- s41 dropped altogether.
- a consent regime re-introduced similar to the one in POCA.
- changing “has reasonable grounds to suspect” to “knew or suspected” to lessen burdens on businesses and protect people who have unintentionally assisted criminals.
It also criticises the government for failing to consult – or even advise – the professions about the Bill and the fact that only 10 days have passed since the Bill was published and the House of Lords debate.