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What is the Proceeds of Crime Act 2002?

Compliance Knowledge Base | Anti-Money Laundering

Posted by: India Wentworth Published: Tue, 28 Aug 2018 Last Reviewed: Tue, 28 Aug 2018
What is the Proceeds of Crime Act 2002?

The Proceeds of Crime Act 2002 (POCA) deals with the process of recovering and freezing assets that were gained through unlawful conduct. Confiscation of proceeds of crime used to occur after a conviction had taken place, but the 2002 Act altered previous legislation so that assets could be recovered prior to conviction (i.e. cash seizure) to minimise criminals hiding, transferring, or otherwise stashing their money and assets.

Simply put, the primary aim of POCA is to reduce the number of loop-holes in the financial system and prevent criminals from profiting from their actions. It acts as both a penalty and a deterrent for unlawful conduct since assets can be seized and held pending conviction. The Act's aim was to strike at the heart of the main focus for criminals, namely money and assets.

About POCA:

When it was created, the Act …

  • Pushed for the creation of the Serious Organised Crime Agency (SOCA), to allow asset recovery.
  • Enforced a new power for civil recovery to allow the government to recover the proceeds of criminal activity, referred to as civil action in the high court.
  • Gave police and customs the power to seize cash they believe is linked to a crime.
  • Enabled courts to freeze a suspect's assets at the start of a criminal investigation.
  • Removed the requirement that you must prove what the crime was in order to recover the assets, therefore simplifying the requirements for convictions.
  • Placed more stress on the financial sector to disclose suspicious transactions.
  • Placed an onus on any professional person working in the regulated industries to immediately report any suspicions they have to the SOCA.

Once requested by the proper authorities, financial institutions and banks must offer up all the accounts of people under investigation and provide transactional information on suspect accounts to investigators through new court orders.

What is the Proceeds of Crime Act 2002?

Impact of the Act:

POCA was introduced to reform the legislation around proceeds of crime, making it more transparent and straightforward to enforce. It criminalised money laundering and made it an offence for persons in the regulated sector not to report suspicions regarding money laundering activity.

The Act essentially introduced a negligence test, meaning that an individual working in a firm that is regulated by money laundering regulations (e.g. banks and other financial institutions) can commit a criminal offence resulting in a prison sentence if they fail to report money laundering if there are "reasonable grounds for knowing or suspecting" that it is taking place.

These new rules caused some upset with professionals in the sector, with some arguing that the Act would force them to breach professional privileges and act against the interests of their own clients. They also claimed that the act was vague, meaning that they could end up sending law agencies a flow of useless reports relating to trivial breaches in the law to avoid any risk of prosecution.

Between 2010 and 2014 more than £746 million of criminal assets has been seized that would have otherwise been lost through laundering in the past. Over the same period, assets worth more than £2.5 billion were frozen, denying criminals access to them. These findings highlight just how much this act has changed the outcome for proceeds of crime.

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