Bankers: Money-Laundering, Reporting Obligations And The New Criminal Finances Bill

Introduction

A terrorist attack on the UK is a case of 'when, not if', the head of the Metropolitan Police said earlier this year. In the last 12 months, the Charlie Hebdo massacre in Paris, the bombings in Brussels and the lorry ploughing into crowds in Nice have created a genuine fear that the UK will be the next target. The nature of terrorist financing varies considerably: the so-called Islamic State of Iraq and the Levant relies on funds generated within the territory it controls (for example from the sale of oil and extortion from individuals and businesses) whereas the financing of individual terrorists working alone is more difficult to trace, as they often rely simply on individual salaries or welfare payments. Yet whatever their differences, any serious terrorist enterprise will use the banking system for its own ends.

Central to combatting the financing of terrorism is the promotion of greater transparency across the financial sector, with banks now facing a set of stringent, complex obligations to cast light on suspicious transactions. The latest proposed addition to the Government's armoury is the Criminal Finances Bill, introduced to 'tackle money laundering and corruption, recover the proceeds of crime and counter terrorist financing'. This is currently making its way through Parliament. It is likely to come into force in mid-2017.

This article focuses on money-laundering offences, which are the most significant element of the Proceeds of Crime Act 2002 (POCA) for those working in the financial sector.

Client confidentiality?

The banker-customer relationship is of a confidential nature, and the banker is under a duty of secrecy (Tournier v National Provincial and Union Bank of England [1924] 1 KB 461). This duty applies not only to information obtained from an account, but from any source arising out of the relationship between the bank and its customer including assessments and information generated by the bank. It does not terminate upon the closing of the account.

Money-laundering: the current regime

The principal offences

These are set out in Part 7 of POCA.

Money laundering is essentially the process by which proceeds of crime are converted into assets which appear to have a legitimate origin. The substantive offences are set out in ss 327 to 329 of POCA. These are commonly known as the concealing offence, the arranging offence and the acquisition, use and possession offence. Penalties imposed may amount to a maximum of...