Nic Ryder: Convictions for money laundering at an all-time low?

Published on May 18, 2017

Money laundering continues to pose a significant threat to the UK economy.  The most recent estimate of the sum laundered through the UK economy, £36bn to £90bn, was published in late 2016 by the National Crime Agency.  In response, successive HM Governments have introduced a series of tough anti-money laundering legislative measures with two main objectives:

  • to prevent the UK’s financial system from being abused by money launderers and
  • to ensure that laundering of the proceeds of crime is criminialised in all forms.

Money Laundering Regulations 2007

The preventative measures are largely contained in the Money Laundering Regulations 2007 and the Financial Conduct Authorities (FCA) Handbook. The legislative measures to criminalise money laundering are contained in Part 7 of the Proceeds of Crime Act 2002 (POCA) and the related provisions of the Terrorism Act 2000. Additionally, the FCA is able to impose unlimited financial penalties on firms that breach its anti-money laundering obligations, by virtue of section 206(1) of the Financial Services and Markets Act 2000. The largest financial penalty imposed to date by the FCA is £163m on Deutsche Bank, earlier this year, “for serious anti-money laundering controls failings”. The FCA is also able to instigate criminal proceeding for money laundering offences under Part 7 of the Proceeds of Crime Act 2002, following the Supreme Court ruling in R v Rollins.

In light of the potentially devastating impact of the crimes that generate funds for laundering, it is appropriate that the maximum penalty for the offences contained within sections 327-329 of POCA is 14 years. In all cases, an unlimited fine can be imposed instead of or as well as imprisonment. All told then, the UK should be in a good position to rigorously prosecute breaches of anti-money laundering regulations. But according to a report published in The Times in March 2017, it isn’t happening. The article claims that only five people have been convicted of money laundering since the introduction of the Money Laundering Regulations in 2007, and that no convictions for breaches of these Regulations were obtained until 2012.

Money laundering prosecutions

However, it is important to note that between 1999 and 2007, there were 7,569 money laundering prosecutions in the UK, resulting in 3,796 convictions (a 50.15% conviction rate). The number of money laundering prosecutions and convictions in the UK between 1999 and 2007 increased steadily each year, although in 2008 convictions decreased slightly to 1,286. Nonetheless, the conviction rate of over 50 per cent suggests that the mechanisms as described above are working fairly well within the UK.

Perhaps different to other financial crimes, the court does appear to be using its maxima when it comes to sentencing those convicted of money laundering offences. For example, in R v Ussama El-Kurd, the defendant was sentenced to the maximum penalty of 14 years imprisonment and fined £1m million for being involved in a £70m money laundering operation. Likewise, the defendant in R v Tarsemwal Lal Sabharwal received 12 years imprisonment for the laundering of over £53m of drug trafficking proceeds. Similarly, in R v Simpson the defendant was given an 11 year custodial sentence money laundering. At the other end of the sentencing scale is R v Griffiths, where a solicitor received a six month sentence for failing to disclose a financial transaction where he had reasonable grounds for knowing or suspecting that it involved money laundering. Furthermore, the Court of Appeal in R v Duff upheld a six month custodial sentence against a solicitor who had failed to report the fact that he had received £70,000 from a client to invest in a joint business when the client was later charged with drugs offences.

All in all then, while the number of prosecutions for breaches of the legislation might not be satisfying to some sections of the media, and the enforcement mechanisms are far from perfect, the sentences imposed by the courts are generally severe when a convitction for money laundering is obtained.

Nic Ryder, Professor in Financial Crime, UWE