Professional Conduct and Legal Services

What are the direct involvement offences under the Proceeds of Crime Act 2002?

• s 327: concealing, disguising, converting or transferring criminal property or removing criminal property from the UK

• s 328: entering into or becoming concerned in an arrangement which you know or suspect facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person

• s 329: acquiring, using or possessing criminal property

• NB. Apply to everyone

What are the defences available to the direct involvement offences?

• s. 338

  • Authorised disclosure before prohibited act committed

  • Authorised disclosure during prohibited act + did not know or suspect property was criminal when began act + disclosure made on own initiative

  • Authorised disclosure after prohibited act + good reason for failure to make disclosure before + disclosure made on own initiative

• s 327(2), s328(2) and s. 329(2)

  • s. 338 disclosure + appropriate consent

  • Not making a s 338 disclosure but have a reasonable excuse

  • Prohibited act is in carrying out a function the individual has relating to the enforcement of any provision of PoCAor any other enforcement relating to criminal conduct or benefit from criminal conduct

What are the non-direct involvement offences under the Proceeds of Crime Act 2002?

• NB. Apply only to those working within ‘regulated sector’

• s. 330: failure to disclose

• s. 333A: tipping off

Once you have made a disclosure to the MLRO/NCA – how long must you wait before you can take further action?

Neither the MLRO nor the fee earner should authorise or undertake any prohibited act unless:

• Authorised to do so

• 7 working days has passed from the disclosure

• NCA refused consent during the notice period, and the moratorium period (31 days) has expired

What is the general prohibition under FSMA?

No person may carry on a regulated activity in the United Kingdom unless they are (a) an authorised person or (b) an exempt person.

What is a “regulated activity” under FSMA?

Regulated Activity = Specified Investment + Specified Activity

What are the steps to approaching FSMA?

1. Is the investment ‘specified’?

   • Inc. shares, instruments creating or acknowledging indebtedness, regulated mortgage contracts

2. Is the activity ‘specified’?

   • Dealing in investments as principal or agent

   • Arranging deals in investments

   • Managing investments

   • Advising on [the merits of] investments - but generic advice relating to investments will not require authorisation

3. Is the activity excluded?

   • Regulated activities that are a necessary part of other services - carried on in the course of carrying on any profession or business + activities can reasonably be regarded as a necessary part of other services provided

   • Regulated activities in connection with the sale of a body corporate - must be 50% or more of the voting shares in the company or object of the transaction may reasonably be regarded as being the acquisition of day-to-day control of the affairs

   • Regulated activities in connection with an employee share scheme

4. If FSMA applies and activity is not excluded - solicitor must be directly authorised or supervised by a Designated Professional Body (but then must also meet s. 327 and SRA Scope Rules) to be exempt.

5. For s. 327 to be met:

   • No commission from third party

   • Activity must be provided in a way that is incidental to the provision of professional services - cannot be a major part of the practice of the firm

6. And for Scope Rules to be met:

   • Activity arises out of or is complementary to the provision of a particular professional service to a particular client

What are the restrictions on financial promotions under FSMA?

• Under s. 21 FSMA it is a criminal offence for an unauthorised person to communicate a financial promotion unless an authorised person has approved its contents or a relevant exemption applies

• Exemptions:

  • Sale of a body corporate

  • Distribution to investment professionals, high net worth companies and high net worth individuals

What are the requirements for an approved prospectus under FSMA?

• Under s. 85 FSMA it is a criminal offence to offer shares to the public in the United Kingdom without issuing a prospectus approved by the relevant regulatory authority

• Exemptions:

  • Directed at fewer than 150 persons

  • Sent only to qualified investors