What is money laundering?
What is money laundering?

The following Risk & Compliance guidance note provides comprehensive and up to date legal information covering:

  • What is money laundering?
  • Definitions of money laundering
  • Stages of money laundering
  • Legal framework
  • Application of the anti-money laundering regime

The Proceeds of Crime Act 2002 (POCA 2002), the Terrorism Act 2000 (TA 2000) and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692, as amended from 10 January 2020 by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, SI 2019/1511, have a profound effect on legal professionals. Failure to comply carries heavy criminal, administrative and, for some, professional penalties.

Definitions of money laundering

Money laundering is the process through which proceeds of crime, and their true origin and ownership, are changed so they appear legitimate. However, the statutory definitions of money laundering are far wider than this.

Under POCA 2002 money laundering is defined as:

  1. concealing, disguising, converting, transferring or removing criminal property out of the jurisdiction

  2. entering into or becoming concerned in an arrangement that facilitates the acquisition, retention, use or control of criminal property

  3. acquiring, using or possessing criminal property

These are known as the principal offences and they also include conspiracy or attempt to commit such an offence. Money laundering includes counselling, aiding or abetting or procuring. For more information, see Practice Note: Proceeds of Crime Act 2002—key information for businesses.

Money laundering is further defined in TA 2000. It is an offence to enter into or become concerned in an arrangement that facilitates the retention or control