From this month, ten of Britain’s banks will voluntarily give the National Crime Agency the account and transaction details of those suspected of money laundering. Aziz Rahman considers whether this will actually make prosecutions any easier.
For many years, banks have refused to give the authorities details of client accounts unless they come asking with a court order. That is now set to change.
Under an agreement brokered between the National Crime Agency (NCA) and Britain’s ten biggest banks, the banks will now volunteer account and transaction details of people suspected of money laundering and other serious offences. It is a major change in banking practice and comes at a time when the behaviour of banks has come increasingly under the spotlight. This is in addition to banks’ responsibilities to provide ‘Suspicious Activity Reports’ of anyone it suspects of money laundering.
NCA director general Keith Bristow has gone so far as to say that criminal conduct at Britain’s banks is a national security threat because of the damage it could do to the economy. According to him, “many hundreds of billions of pounds of criminal assets” are being laundered through British financial institutions.
Fittingly, the under-fire HSBC is believed to be one of the banks signing up to this landmark agreement. The deal will end decades of secrecy. Banks have, until now, not handed over account details without the all-important court order being produced by investigators. There is every chance the new agreement will prompt legal action from bank customers unhappy that their financial details can be, or will be, handed to the authorities. The NCA’s argument is that the agreement is worthwhile because the scale of money laundering is so large.
Bristow said: “We need the evidence to investigate people and bring them to justice. We have an interest as an agency in the reputation of the UK.
“Hundreds of billions of criminal assets are laundered through UK financial institutions. Given how much our economy depends on financial services in this country, we can ill afford the reputation of those institutions to be damaged or for those institutions to lose their licences to operate because of criminals exploiting their services.
“We rely on the financial services and professional services sector for much of the wealth within our economy, so that is a significant threat to our national security.”
The banks, according to Bristow, deserve credit for signing up for some strong medicine: it may be difficult to swallow at first but it will be better for their health in the long term. This remedy follows a meeting in 2014 between Home Secretary Theresa May, the British Bankers’ Association, the Financial Conduct Authority (FCA) and the NCA.
Banks signed up to the agreement will pass on account information whenever the NCA says it has received a “suspicious activity” report from another institution about a customer’s financial dealings. The aim is to make sure someone suspected of money laundering at one bank cannot continue it elsewhere. Anyone objecting to it will probably be referred to Section 7 of the 2013 Crime and Courts Act, under which banks and other organisations have the legal right to disclose otherwise confidential information to the NCA to help it carry out its tasks.
The names of the banks in the scheme are not being revealed so that their involvement in it does not harm them commercially. Which is understandable. But what does it mean for those who are arrested after their bank volunteers their details to the authorities?
Investigators will be looking for evidence of either self-laundering – where a person launders the proceeds of their own criminality – or of a person laundering money on behalf of another person. The Proceeds of Crime Act 2002 (POCA) creates three offences of money laundering, punishable by up to 14 years’ imprisonment. Section 327 of POCA makes it an offence to conceal, disguise, convert or transfer criminal property or remove it from the jurisdiction – this is most relevant for self-laundering cases. S.328 makes it an offence to enter into (or become concerned in an arrangement to) facilitate the acquisition, retention, use or control of property by or on behalf of another person, knowing or suspecting that the property is criminal property. Under S.329, it is an offence to acquire, use or have possession of criminal property.
POCA does allow for a person to make an “authorised disclosure’’ to the authorities about possible criminal origins of what they possess. This was created mainly to give banks and other institutions the chance to bring their suspicions to the authorities without fear of prosecution. But while it gives banks a way of protecting themselves it does, at the same time, place a responsibility on them to raise suspicions. Quite how this will sit with the new agreement remains to be seen.
What is certain, however, is that the new agreement will make it speedier for prosecutors to seek and obtain the material they are looking to build a case against a suspect. The art of the defence solicitor in such a situation is to make sure they can challenge what, on first inspection, may seem a compelling prosecution case. There is little doubt that the new agreement has been created to give prosecutors quicker access to information that may help them build a case. But as a firm that specialises in defending business crime cases of all sizes and complexities, we can say that a lot of what the investigators may recover from the banks can often be contested and challenged. Yes, the new agreement will mean the authorities can obtain certain material quicker and easier. But will it place them at a greater advantage? Unlikely.
The agreement does not change the defence’s scope for contesting evidence. A defence team can still argue that what is being submitted does not prove that the defendant did, or could, know or suspect that the assets being handled were the proceeds of criminality. NCA prosecutors and all other agencies still have to convince a court that a defendant had more than a vague feeling of unease about what was happening. Juries are not permitted to infer things from, or speculate on, circumstantial evidence. A defence team’s job, therefore, is to rebut anything that a prosecutor implies while building a strong case that ensures its version of events takes centre stage rather than the prosecution arguments.
It is often the case that money laundering accusations are a secondary charge to a principal offence, such as drug dealing. This means that if the prosecution succeeds with the main charge there is more chance of it securing a money laundering conviction. If there is no principal offence, however, the situation is less clear. This offers a shrewd defence team the chance to use the expertise and analysis of forensic accountants, administrators or auditors to tell a court what the legitimate reason is for what appears, at first glance, to be a suspicious cash flow. This, coupled with strategic use of disclosure applications to gain access to all relevant material, can cast doubt on what can come to be seen as speculative arguments put forward by a prosecution.
The new arrangement between banks and law enforcers may mean the investigators gain quicker, easier access to the material they are seeking. But this is unlikely to make defending money laundering cases any more challenging than they have previously been.