Money laundering - Written by Barry & Richard on Saturday, September 25, 2010 14:35 - 0 Comments
The bribe, the defence & the sting in the tail
Whether or not your procedures are adequate will of course be a question of fact.
Consultation on the guidance for the adequate procedures has just been published and widely publicised. Much has been and will be written about it. We will be adding our thoughts on the guidance in the next few days.
But just assume you have Adequate Procedures.
They work. You uncover bribery.
What happens next?
No doubt this will be the question at the emergency Board Meeting convened to discuss the matter.
It would be tempting to think that with the defence there is nothing to worry about and the whole matter could be forgotten about. But life isn’t that simple.
We are very surprised that in the vast quantity written about the impact of the new UK Bribery Act its cousin, the UK money laundering legislation, has taken a back seat.
However, ignoring the UK money laundering law would be a big mistake. Its penalties are harsh. Prison sentences longer than possible under the Bribery Act can be handed out.
Worse still. Contracts and assets (wherever they are in the world) acquired directly or indirectly as a result of a bribe will likely equate to Criminal Property under the legislation and be at risk of confiscation.
A fresh stand alone money laundering offence (s. 327 – 329 of the UK Proceeds of Crime Act 2002) is committed if someone either:
- acquires, uses, possesses, conceals, disguises, converts, transfers or moves from the UK, criminal property; or
- enters into or becomes concerned in an arrangement which they know or suspect facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another.
Broadly there is a defence to money laundering; that is disclosing the facts to the prosecution authorities. Failing which, a brand new money laundering offence will be committed.
The Bribery Act will force organisations to root around in the closet. If they find something, even if they have a defence under the Bribery Act, they will be forced to consider the broader ramifications under the UK money laundering legislation. They may conclude that the choice of whether or not to self report or disclose is rather like the choice Henry Ford once offered to his customers.
Or as the Director of the UK’s SFO, Richard Alderman, put it earlier this year:
“Someone said to me though that there seems to be little downside in not coming to the SFO and in hoping that we do not find out what has happened.
I could give you a number of reasons why I think that that would be wrong. Let me though just give you one. Which of you would like to go and visit your CEO and CFO in a police station where they are being held following arrest on money laundering charges. Those charges will be based upon decisions by the CEO and CFO on your advice that disclosure will not be made to the SFO and that the benefit of the corruption will therefore be retained within the corporate. I can imagine some difficult discussions.”