On 2 June 2021, the Crown Prosecution Service (CPS) updated its guidance on prosecuting failure to report cases under s330 Proceeds of Crime Act 2002 (POCA).

Prior to the update, the CPS did not charge failure to report offences under s330 POCA where there was insufficient evidence to establish that money laundering was in fact planned or undertaken.

Section 330 POCA requires persons in the regulated sector to report “money laundering” where under s330(2) they know or suspect, or have reasonable grounds for knowing or suspecting, that another person is engaged in money laundering.

Money laundering is defined as an act that constitutes an offence under ss327-9 POCA (broadly, receiving, dealing or being concerned in an arrangement facilitating the movement of criminal property, including attempts and secondary offences) or would constitute such an offence if it occurred in the UK.

During POCA’s passage through Parliament, the then Attorney General Lord Goldsmith QC stated that “the Concern that the negligence offence is unfair overlooks the fact that the offence in [section] 330 of failing to report to the authorities is permitted only if the prosecution proves that money laundering was planned or undertaken.”

The updated guidance states that the CPS considers that it is possible to charge a person under s330 POCA even where there is insufficient evidence to establish that money laundering was planned or has taken place[1]. The guidance refers to the case of Ahmad v HM Advocate [2009] HCJAC in which the Scottish High Court of Justiciary held that there is nothing in the language of section 330(2) that requires money laundering actually to be taking place. By comparison the substantive money laundering offences (ss327-9 POCA) require both a predicate offence (“criminal conduct”) to have taken place and the offender to know or suspect that the property represents a benefit from that “criminal conduct”. In Ahmad the High Court of Justiciary considered conflicting academic opinions on the point but ultimately found there was no requirement for money laundering actually to be occurring for the purpose of the failure to report offence.

The number of SARs currently filed by the regulated sector suggests that regulated persons are already taking a cautious approach to whether their reporting obligations are engaged. They are well advised to do so  (the bar for suspicion is very low and whether or not money laundering is in fact occurring often cannot be determined at the time the obligation to report arises). The CPS’s updated guidance indicates a renewed focus on so-called “professional enablers”  of money laundering and removes a barrier to prosecution under s330 POCA. The potential unintended consequence, however, is that the update guidance may encourage more “defensive” SARs to be filed.

[1] The updated guidance notes that the CPS should only pursue standalone s330 POCA prosecutions in cases where the conduct falling under s330 takes place after 2 June 2021, the effective date of the updated guidance.