Acca aaa s21 Notes

September 2021 to June 2022 exams
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3. Legislation
Many countries now have legislation to combat money laundering and the proceeds of crime and 
also to interfere with the supply of money to terrorist organisations. As well as creating criminal 
offences for the immediate perpetrators of the crimes, the legislation can also cover the behaviour 
and responsibilities of auditors and accountants.
In the UK the Proceeds of Crime Act 2002 sets out three types of offence that can be committed by 
any
person:
๏
Concealing, disguising, converting or transferring money that is from the proceeds of crime.
๏
Entering into an arrangement to launder the proceeds of crime or having the suspicion that 
money laundering is taking place yet not reporting it. 
๏
Acquisition, use or possession of criminal property.
Two further offences are relevant to individuals in 
regulated sectors
(financial services, law firms, 
estate agents, casinos, etc):
๏
Failure to disclose knowledge or suspicion of money laundering:
‣
internally to a Money Laundering Reporting Officer (MLRO) or 
‣
externally to the Serious Organised Crime Agency (SOCA).
๏
Tipping off.
The penalties are severe. For example, taking part in money laundering attracts a maximum prison 
sentence of 14 years and/or an unlimited fine.
Note that if the prosecution can show that a defendant had a even 
suspicion
that money had criminal 
origins that the defendant can be found guilty of these crimes. So, ‘turning a blind eye’ is no defence.
Obviously an accountant could be directly participating in or abetting money laundering, but here we 
will assume you are all ethical and won’t take part in that. However, it is easier to inadvertently 
commit some of the other offences.
For example, suspicions would be expected to arise if:
๏
You work in a bank and see a customer dealing in large amounts of cash without any reasonable 
explanation of their origin.
๏
You are an auditor and see cash passing through various banks accounts for no apparent 
reason.
Tipping off is the disclosure of information that is likely to prejudice an investigation. So, saying to a 
client “I think this is money laundering and I am going to report my suspicions to the authorities” is 
clearly tipping off. However, what if you repeatedly ask for evidence about a transaction? The client 
then knows that you might be suspicious and that your next step is to report the matter. However, if 
you make no enquiries at all or inadequate enquiries, you might fail to uncover a perfectly innocent 
explanation.