Following agreement by both Houses on the text of the Bill, The Criminal Finances Act 2017, received Royal Assent on 27 April 2017.
You may now view the text of the act at legislation.gov.uk, which was published on 5 May 2017.
The following provisions contained within the Criminal Finances Act will be of particular interest to financial services practitioners:
•Amendments to the suspicious activity reporting (SARs) regime. Section 10 of the Act amends the Proceeds of Crime Act 2002 (POCA) to extend the current 31 day moratorium period for the National Crime Agency (NCA) to investigate consent SARs. This period, which is not currently renewable, often does not allow sufficient time for the NCA to develop evidence, particularly when it has to be sought from overseas through mutual legal assistance. Section 10 allows an extension of the moratorium period, by court order, up to a maximum period of no more than 186 days from the end of the initial 31 day moratorium period.
Section 12 of the Act also gives the NCA the power to request further information from any person in the regulated sector following receipt of a SAR, or where it has received a request from a financial intelligence unit (FIU) in another country.
•Enhanced information sharing. Section 11 of the Act amends POCA to provide a legal gateway for the sharing of information between entities in the regulated sector with a view to encouraging better use of public and private sector resources to combat money laundering.
Section 11 allows regulated bodies to share information with each other where they have notified the NCA that they suspect activity is related to money laundering. This will enable the submission of joint disclosure reports, bringing together information from multiple reporters into a single SAR that provides the whole picture to law enforcement agencies.
•New civil recovery powers for the FCA. Section 20 of the Act amends POCA by inserting provisions giving the FCA the power to recover property in cases where there has not been a conviction, but where it can be shown in the balance of probabilities that the property has been obtained through unlawful conduct. This will enable the FCA to take proceedings in the High Court to recover criminal property without the need for the owner of the property to be convicted of a criminal offence.
•Extending certain powers to apply to investigations relating to terrorist property and financing. The powers in the Act relating to enhancing the SARs regime and information sharing, among others, are extended by Part 2 of the Act (sections 35-43) to investigations relating to terrorist property and financing.
•New corporate offences of failure to prevent facilitation of UK and foreign tax evasion. Part 3 of the Act (sections 44-52) introduces two new offences: the UK tax evasion facilitation offence and the foreign tax evasion facilitation offence. The aim of these offences is to make legal persons (companies and partnerships) vicariously liable for the actions of their staff where a staff member criminally facilitates a customer to commit a tax evasion offence. These offences cannot be committed by individuals. It is a defence for a legal person if it could show that it had in place reasonable prevention procedures, or that it was not reasonable to expect such procedures; much like Section 7 of the Bribery Act’s defence
Corporates need to be aware of the new powers the financial investigation authorities will have at their disposal this year, and take steps to ensure they have proper business crime prevention procedures in place.