Financial Crime - Money Laundering and Bribery

Flashcards on Money Laundering, Bribery, and Insider Dealing

Money Laundering

The process by which the proceeds of crime are converted into assets which appear to have a legal rather than an illegal source.

Proceeds of Crime Act 2002

Primary source of legislation regulating Money Laundering

Laundering s.327 POCA 2002

Offence to conceal, disguise, convert, transfer or remove criminal property.

Placement

Initial disposal of the proceeds of crime into an apparently legitimate business activity or property

Layering

The transfer of money from business to business, or place to place, in order to conceal its initial source

Integration

The result of the previous steps, whereby the money now takes on a legitimate appearance

Failure to Report s.330 POCA 2002

Individuals carrying on a “relevant business” must disclose knowledge or suspicion of money laundering where they know or suspect, or have reasonable grounds for knowing or suspecting, that another person is engaged in money laundering.

Tipping Off s.333 POCA 2002

Offence to make a disclosure likely to prejudice a money laundering investigation

Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017

Replaces Money Laundering Regulations 2007 and fills gaps, transposes EU fourth money laundering directive (2015) into UK law and gives effect to the global Financial Action Task Force (FATF) standards.

Money Laundering Regulations 2017 - Secondary legislation

Requires firms to put preventative measures and staff training in place such Know Your Client (KYC) /due diligence checklists must be completed for ALL clients at the start of the relationship and periodically

Money Laundering and Terrorist Financing (Amendment) 2019 and (Amendment) (No 2) 2022 Regulations, and 2023

Regulations introducing, by way of example: Extend scope of regulations to include virtual currency holders (e.g. Bitcoin) and to those who carry out similar services to accountants and tax advisors as a principal business activity

Bribery

The offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in charge of a public or legal duty

The Bribery Act 2010

Legislation came into force on 1 July 2011. The Act creates four offences: Bribing, Being Bribed, Bribing a Foreign Official, Failure to Prevent Bribery.

Market Abuse Regulation (MAR)

Aims to increase market integrity and investor protection, enhancing the attractiveness of securities markets for capital raising.

Insider Dealing - Offences

An individual will be guilty of insider dealing if they have “price sensitive information” as “an insider” and they: Deal in price affected securities based on that information (i.e. they use the information to buy or sell shares)

Inside Information

Relates to a specific security or company, Has not been made public, If made public would be likely to have a significant effect on the price

Insider

A person has information as an insider only if they know it is inside information and they have it from an insider source