Internet Newsletter for Lawyers
January/February 2004, by Delia Venables

Internet Resources Relating to the Law on Financial Crime
by Khawar Qureshi

Recent developments at the domestic level and also internationally are likely to require lawyers to be extra vigilant when advising on commercial or financial issues from now on. Resources available freely on the internet can be of enormous assistance in keeping up to date with this topic. I cover here two key areas which have been the focus of particular attention recently, namely money laundering and corruption.

Money Laundering

At the beginning of 2003, key provisions of the Proceeds of Crime Act 2002 were brought into effect in England and Wales. The provisions dealing with money laundering (Sections 327 to 340) (www.hmso.gov.uk/acts.htm) will have considerable significance for financial advisers, as well as lawyers. In essence, anyone who is subject to the statutory regime will not be able to excuse a failure to report a transaction which may be tainted by criminality, if a person in their position who had exercised reasonable care and skill (by virtue of their professional KYC/KYB (know your customer/know your business requirements)) would have reported the same (see Section 330). The test for potential criminal liability by virtue of failing to report a suspicious transaction is arguably now akin to a negligence standard.

The National Criminal Intelligence Service (NCIS) is the body which is responsible for dealing with suspicious transaction reports ("STR's") submitted by those who fall within the statutory framework. In July 2003, the accounting firm KPMG produced a report which provides a very detailed analysis of the practical operation of anti-money laundering legislation (www.ncis.gov.uk/kpmgsarreport.asp or locate the report via the main site www.ncis.gov.uk). The NCIS web site also contains very useful information and guides as to the operation of the legislation and the workings of NCIS. Some of the guides are particularly directed towards legal professionals to take account of very recent case law (such as the family law case of P v. P, October 2003).

There are various initiatives taking place at the international level to deal with money laundering, especially in the aftermath of the events in the USA on 11th September 2001. The lead agency is the Financial Action Task Force ("FATF") set up by the OECD. This has produced 44 recommendations for States to incorporate into their domestic legal frameworks, so as to tackle money laundering and terrorist finance more effectively (you can find these on the main OECD site, at www.oecd.org).

There is also a very comprehensive web site, the International Money Laundering Information Network (www.imolin.org) which provides extensive international resources in this area as well as links to other key sources of information.

Corruption

In March 2003, the UK Government introduced the draft Corruption Bill with the stated intention of undertaking comprehensive reform of the UK Law relating to corruption, so as to bring it up to date and in tune with international standards (www.homeoffice.gov.uk).

A Joint Parliamentary Committee published a report in July 2003 which provides an excellent analysis of the present and proposed UK law relating to corruption, together with suggested amendments to the Bill (www.parliament.uk).

The Present UK Position

Four Statutes are relevant in this area (see www.hmso.gov.uk/acts.htm for the more recent ones) namely:

The core rationale for the law is clear, namely to prevent corruption from enabling a public official to abuse his or her position, and to prevent a party from using corruption to obtain an advantage.

The law in this area is aimed at essentially two types of activities which are engaged in intentionally:

Some of the difficulties with the existing legislation include the absence of any statutory definition of corruption, as well as the fact that the existing legislation is in certain respects obscure and complex. Given that corruption is difficult to prove in most cases (because the parties tend to cover their tracks) clarity in the legal framework is vital. The draft Corruption Bill is intended to comply with existing international conventions produced by the Council of Europe in 1999 (see the Report).

In December 2003, the UN Draft Convention on Corruption was made available to all UN member states for signature (this can be found in pdf form on the United Nations Office on Drugs and Crime site at www.unodc.org). The Convention is intended to provide a comprehensive legal framework to harmonise the domestic laws of UN member states, and to fill some of the gaps that have been found to hamper the fight against corruption.

Indeed, in the context of corruption, State laws and practice vary enormously. Some of the key anomalies include;

The Convention (comprising 85 very detailed clauses at present) seeks to address all of the above issues. If it is widely adopted by UN member states (many of whom have stated an intention to sign up to the Convention) it will provide the first ever comprehensive and uniform minimum standards to tackle the scourge of corruption.

The Convention itself recognises that some States will not have the infrastructure or technical expertise to properly give effect to the Convention. The UN intends to provide them with focussed technical expertise to help them in the implementation process.

Concluding Remarks

The area of financial crime is subject of rapid developments. Not so long ago, a UK lawyer would probably have considered money laundering and corruption to be areas which could be ignored in terms of their own practice. That would be a grave mistake now.

Khawar Qureshi practices mainly in Commercial and International Law at Serle Court Chambers. He is an "A" Panel Treasury Counsel and was Counsel for the Home Secretary in the "Abacha" corruption/MLA case. He was appointed a Special Adviser to the UNODC on financial crime matters in August 2003, and gave an expert legal opinion to the Joint Parliamentary Committee considering the UK Draft Corruption Bill.
Email: kmqureshi@aol.com.

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