Introduction
3.1 Our principal objective in reviewing aspects of Part 7 of the Proceeds of Crime Act 2002 («POCA») is to improve the prevention, detection and prosecution of money laundering and terrorist financing in the United Kingdom («UK»). In our Consultation Paper, we considered the extent to which the better use of guidance might serve a role in achieving this objective. We argued that statutory guidance, covering key legal concepts within the consent regime would encourage greater consistency in reporting suspicious activity and reduce the burden on the regulated sector.
3.2 It is important to note that some of the existing guidance which we refer to in this report, published in respect of the consent regime, is also designed to supplement both legislation and Regulations which are outside of our Terms of Reference. Guidance published by the accounting sector supervisors (as discussed below), for instance, covers not only reporting suspicious activity but also customer due diligence, record keeping and training and awareness, which are beyond the scope of this review. Our aim in this chapter is to ensure that key legal concepts underpinning the consent regime are interpreted consistently across the reporting landscape as reflected in guidance.
3.3 Although, in our Consultation Paper, we acknowledged that statutory guidance was not a panacea, we observed that it would provide flexibility in the application of the consent regime and work in response to changes in money laundering behaviour, therefore promoting greater efficiency. We noted that there was precedent for using guidance to assist in interpreting and applying legislative regimes. We sought consultees' views on our provisional proposals to introduce statutory guidance on a number of topics to assist the reporting sector.
3.4 Our broad recommendation is for POCA to be amended to impose an obligation on the Secretary of State to issue guidance covering the operation of Part 7 of POCA insofar as it relates to businesses in the regulated sector, focussing on suspicion, reasonable excuse and consent. In subsequent chapters, we will deal with what form that guidance might take and what content it would include. In this chapter we consider the role of guidance more generally, focussing on the following:
(1) the current scheme of existing guidance;
(2) criticisms of the current scheme and a summary of our provisional proposals on guidance;
(3) consultees' views on the value of guidance;
(4) our recommendations for reform.
The current scheme
3.5 The complexity of the law has led to the creation of multiple layers of anti-money laundering guidance for those working in the reporting sector to consider.
3.6 The primary source of assistance, in the context of the consent regime, is sector¬specific guidance produced by supervisory or other appropriate bodies (that is those that regulate or are representative of a trade, profession, business or employment). POCA permits supervisory authorities and other appropriate bodies to publish such guidance which the court must consider when deciding whether an offence has been committed under the provisions governing reporting obligations. Accordingly, businesses and individuals may rely on guidance published by a supervisory body or appropriate body with HM Treasury approval in order to understand their reporting obligations.
3.7 The United Kingdom Financial Intelligence Unit («UKFIU») published a «communication product» designed to deal with the most common queries in relation to authorised disclosures (DAML SARs). Unlike guidance published by a supervisory authority or other appropriate body which gives an in-depth overview of a reporter's obligations in accordance with the legal framework, guidance published by the UKFIU gives practical advice to reporters about how and what to report. This guidance on best practice is aimed at improving the quality of SARs and promoting a better understanding of the reporting process amongst the reporting sector. In total, there are five sets of guidance issued by the UKFIU addressing different aspects of the consent regime. None have a statutory basis. Nor do these require the approval of the Government and none has involved a consultative process in its creation.