Related offences

The Proceeds of Crime Act 2002 (POCA) makes it an offence to:

• conceal, disguise, convert, transfer or remove from the UK;
• enter into an arrangement that facilitates the retention, use or control of: or
• acquire, use or possess,

“criminal property” (being something – whether money or anything else – constituting or representing someone’s benefit from “criminal conduct”), where the alleged offender knows or “suspects” it to be criminal property.  Criminal conduct is conduct which constitutes an offence in any part of the UK or would do so, if it occurred there.

Case-law indicates that “suspicion” is a relatively low threshold – it must be “more than merely fanciful”, but need not meet any balance of probabilities threshold.  In addition, a genuinely held but irrational suspicion would still be relevant to trigger the offence in a particular case.  On the other hand, if the alleged offender did not have the suspicion required – even if it might be thought that a reasonable person would have such a suspicion – then there will be no offence.  It would be for the prosecutor to show that the person did in fact have the required suspicion.

An example of when these offences may be triggered if is where a parent company receives a dividend from a subsidiary which it knows or suspects comprises or represents profits made from an unlawfully obtained contract.

As well as the “general” money laundering offences, there are a number of offences specific to persons operating in the regulated sector.  Some of those offences do not require actual suspicion; in some cases an objective test of whether the person ought to have been suspicious will apply.

Both the general and regulated sector offences carry substantial penalties, with up to 14 years’ imprisonment and/or unlimited fines, depending on the offence in question.  But there are also defences available, in particular where the person with the relevant suspicion has made a disclosure to the National Crime Authority.

There are a number of offences under the Fraud Act 2006, which could also be triggered, depending on how particular bribe payments are structured and/or the particular issue faced. These include:

• False representation fraud - i.e. dishonestly making a representation (known to be untrue or misleading) with the intention of either making a gain or to cause loss to a person (s. 2).  
• Failure to disclose information fraud - i.e. dishonestly failing to disclose to another person information one is under a legal duty (e.g. under contract) to disclose with the intention of either making a gain or to cause loss to a person (s. 3).  
• Fraud by abuse of position - i.e. dishonestly abusing a particular position with the intention of making a gain or causing a loss (s. 4).
• Possessing, making or supplying articles for use in fraud - i.e. fictitious or falsified order forms or invoices (ss. 6 and 7).

An example of when these offences may become an issue for a company is where it comes to light that an employee has somehow become involved in a fraud, which may in turn give rise to money laundering concerns for the company.

The Civil Law Act 1977 contains a statutory offence of conspiracy to commit an offence.  This offence is established if a person agrees with another to pursue a course of conduct that, if carried out in accordance with their intentions, will either:

• amount to or involve the commission of any offence by one or more of the parties to that agreement; or
• would do so but for the existence of facts which render the commission of the offence or any offences impossible.

This is particularly relevant where two or more persons agree, for example, to pay a bribe, as it would catch all persons who reached that agreement, regardless of which person actually paid the bribe and even regardless of whether the bribe was in fact paid at all. The penalties for the statutory offence replicate those of the offence which was the object of the conspiracy.

There is also a separate wider, common law offence of conspiracy to defraud, which makes it an offence to agree with another to act dishonestly either:

• to deprive a person of something which is theirs or of something to which they are, or would, or might, but for the perpetration of the fraud, be entitled; or
  to do an act which tends to corrupt public morals or outrage public decency, whether or not the act amounts to a crime.  

Sometimes, the substantive offence may not have been completed, but nevertheless an offence of a different kind has been committed because of the actions or agreements in preparation for the substantive offence. These are known as inchoate offences.  

Conspiracy offences (as described above) are, by nature, inchoate offences.  However, there are others, including offences covering those who may have encouraged, procured, aided or abetted others to commit an offence, such as bribery.  The penalties for such offences are the same as if the main offence had been committed.

In addition, there may be specific statutory, inchoate-type offences, such as “consenting and conniving” offences.  In particular, under s. 14(2) of the Bribery Act, where a bribery offence (other than the offence under section 7 of failing to prevent bribery) is proved to have been committed by a corporate with the consent or connivance of a senior officer or a person purporting to act in such capacity, the senior officer (as well as the corporate) is guilty of an offence.

Companies and their directors need to be alert to how they record payments made or received in their books and records.  In particular, directors have an over-arching obligation not to approve accounts unless they give a true and fair view of the financial position of the company.  To the extent that illegal payments have been made or/received, careful consideration should be given to whether the accounts fairly and accurately account for these payments.

In particular, companies and directors can face criminal liability for offences under the Companies Act 2006 if:

• the accounts are not reasonably accurate - every director who is in default is potentially criminally liable (to a fine and/or imprisonment) unless he can show that he acted honestly and the default was excusable (s. 387);
• false statements are made in the audited reports as to whether all reasonable steps have been taken to ensure all relevant information has been disclosed to the auditor (s. 418); and/or
  materially false, deceptive or misleading information is provided to an auditor (s. 501).

The UK criminal law extends beyond the geographical bounds of the territory. In general, where there is a substantial link to the United Kingdom, for example through the actions of UK national directors or employees, UK law will apply to conduct which might on first review appear to have taken place entirely abroad. There are other, rare instances, where UK companies or individuals might be guilty of assisting or conspiring in the commission of crimes abroad. We recommend that companies with a UK connection carefully consider compliance with the criminal law of this jurisdiction.