Commentary on Sections Offences Section 330: Failure to disclose: regulated sector
478.Section 330 replaces section 52 of the Drug Trafficking Act 1994 and creates an obligation to report suspicions of money laundering to the authorities. The equivalent provision in Scotland is section 39 of the Criminal Law (Consolidation)(Scotland) Act 1995 and in Northern Ireland is Article 44 of the Proceeds of Crime (Northern Ireland) Order 1996. Section 330 widens the scope of the offences that it replaces beyond reporting drug money laundering to reporting the laundering of the proceeds of any criminal conduct. Subsection (2)(b) introduces a negligence test which means that the failure to disclose offence would also be committed where a person has reasonable grounds for knowing or suspecting that another person is engaged in money laundering, even if they did not actually know or suspect.
479.The duty to report under section 330 is, however, restricted to those persons who receive information in the course of a business in the regulated sector, as defined in Schedule 9 to the Act. This definition closely follows equivalent provisions in the Money Laundering Regulations 1993 (as amended by the Financial Services and Markets Act 2000 (Consequential Amendments and Repeals) Order 2001), which determines the applicability of those Regulations. The definition provides that a business is in the regulated sector to the extent that it carries out the activities listed in Part 1 ofSchedule 9. The section reflects the fact that persons who are carrying out activities in the regulated sector should be expected to exercise a higher level of diligence in handling transactions than those employed in other businesses. Where a business carries out some activities which are listed in Schedule 9 and some which are not, then only employees carrying out the listed activities will be caught by the offence.
480.The offence is committed if the "required disclosure" is not made. The "required disclosure" is defined at subsection (5) as being a disclosure to a nominated officer, or to a person authorised by the Director General of the National Criminal Intelligence Service, which has been made in the form and manner (if any) prescribed under the order making power at section 339. This reflects the policy that disclosures in the regulated sector should be made directly to the National Criminal Intelligence Service (NCIS), rather than through a constable or a customs officer. It gives those in the regulated sector the choice of either disclosing direct to NCIS, which might be appropriate for sole practitioners, or disclosing to the nominated officer who will operate as a filter for disclosures to NCIS.
481.The maximum penalty for committing the offence, as set out at section 334, is 5 years imprisonment.
482.Subsection (6) provides a defence for a person who has a reasonable excuse for not disclosing the information and also for a lawyer, where the information came to him in privileged circumstances. There is also a defence for staff who have not had adequate training concerning the identification of transactions which may be indicative of money laundering. In order to use this defence successfully, the defendant would have to show that he did not actually know or suspect that another person was engaged in money laundering and that, in his case, his employer had not complied with requirements to provide employees with such training as is specified by the Secretary of State by order.
483.Guidance Notes on Money Laundering have been produced and issued since 1990 to regulated institutions by the industry’s Joint Money Laundering Steering Group, which operates under the auspices of the British Bankers’ Association. Section 330(8) recognises the potential value of such guidance and provides that the court must take any guidance issued by a supervisory authority (as listed in Part 2 of Schedule 6) or any other appropriate body (as defined at section 330(13)) into account when determining whether an offence has been committed. The court would only be obliged to take into account guidance, the content and manner of publication of which has been approved by the Treasury (in its capacity as the Government department which has overall lead responsibility for money laundering policy in the regulated sector). As at present, the industry itself will draw up relevant guidance, and it will be for the industry bodies to decide whether they wish to seek Treasury approval, and make use of this additional safeguard.
484.The scope of section 330 extends to inchoate offences such as conspiracy by reason of the definition of money laundering in section 340(11).