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The government introduced the Criminal Finances Bill to the House of Commons on 13 October, as part of a package of measures which represent the most significant changes to the anti-money laundering and terrorist financing regime in over a decade.
The purpose of the bill is to assist the government to tackle money laundering and corruption, to recover the proceeds of crime and to counter terrorist funding. It follows an action plan published in April 2016, which outlined the proposed steps to tackle the key priorities.
The provisions of the bill fall into 4 categories:
1 Improving our ability to recover the proceeds of crime, including international corruption
This includes seizure and forfeiture of the proceeds of crime in UK assets (to include bank accounts, precious metals and jewels) and also new 'unexplained wealth orders'. The Law Society raised concerns about these orders, which would require an individual to prove assets had been lawfully obtained, on the basis that they were a breach of the presumption of innocence and required proper judicial scrutiny. The orders are now to be implemented using existing powers to ensure the rights of individuals are protected.
2 Transforming the relationship between public and private sectors
The bill involves the sharing of information between regulated companies, to ensure the 'best possible intelligence is provided for law enforcement agencies to investigate’. As part of this, there is a new power to extend the moratorium period in which Suspicious Activity Reports (SARs) can be investigated, as well as new powers to request information from regulated companies.
The government's original proposals to remove the defence for professionals provided by consent were strongly opposed by the Law Society on the basis that the regime would have been 'over-criminalised and fundamentally unworkable for solicitors,’ who were potentially facing an ‘unjustified removal of legal cover for meeting their obligations to report suspicious activity’. However, the government has put the original proposals on hold, allaying the concerns of the Law Society.
3 Enhancing the UK law enforcement response
It will be a criminal offence for companies to fail to stop their staff facilitating tax evasion. The bill also introduces disclosure orders for money laundering investigations (currently orders exist in relation to corruption and fraud investigations only).
The Law Society's concerns about threats to legal professional privilege and the need for express protection for legally privileged material from the outset have been addressed in the bill.
4 Combating the financing of terrorism
The bill makes complementary changes to the law enforcement response to the threat of terrorist finance by extending many of the provisions of the bill to offences under the Terrorism Act 2000.
The bill had its second reading in the House of Commons on 25 October and has been committed to a Public Bill Committee, which is expected to report to the House by 24 November.
Useful factsheets on the main aspects of the bill are available on the Gov.uk website https://www.gov.uk/government/publications/criminal-finances-bill-factsheets.
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The Law Society has issued a practice note about the risks to solicitors posed by this new legislation, which came into force on 30 September.
The SRA has urged all practices to check HM Treasury’s consolidated list of asset freeze targets, which lists designated persons subject to financial sanction under EU or UK legislation.
The practising certificate renewal period opened on Monday 2 October.
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