Essay: Money laundering

Money laundering is defined as “washing” proceeds to disguise their true source. The source of these proceeds can be from either legal or illegal activities. (Manning, 2005). Criminals use money laundering as a way to try and legitimise the money they have earned from criminal activities. There are laws to try and prevent money laundering from occurring. The Proceeds of Crime Act 2002 (POCA) is an act under the UK law which states and identifies various regulations which constitute to money laundering. POCA has multiple sections regarding money laundering offences; Sections 327 through to 331 and 333.
The various offences outlined in POCA are as –
1. Concealing etc
2. Arrangements
3. Acquisition, use and possession
4. Failure to disclose – regulated sector
5. Failure to disclose – nominated officers in the regulated sector
6. Tipping off
For the above offences, a prosecutor must establish a offence under the particular clause. “For example, the prosecutor would need to establish that a person entered into or became concerned in an arrangement which he knew or suspected would make it easier for another person to acquire, retain, use or control criminal property and that the person concerned also knew or suspected that the property constituted or represented benefit from criminal conduct.” (Legislation.gov.uk, 2019)
Professionals should have safeguards in place to try and prevent money laundering. One type of safeguard is responsibly completing customer due diligence (CDD). The rules on CDD are “intended to ensure that accountants are able to remain in control of the engagement and that their offices are not used for criminal purposes.” (Accaglobal.com, 2019) Essentially, CDD is the steps an accountant must take to verify the identity of their client using trustworthy documents. If the documents are found to be fraudulent then the client must be further investigated by relevant parties. There is a legal requirement to complete a suspicious activity report (SAR) if there is any suspicion of criminal behaviour. There are three requirements to be met before completing a SAR. The first being, reasonable grounds of suspicion for money laundering. Following that, if the suspicious activity came from your workplace. Finally, if you can identify the person/people who may be involved in the money laundering. This SAR can be completed by any individual that is relating to the offence, this is then sent to the money laundering reporting officer (MLRO) which is then submitted to the national crime agency.
Money Laundering Regulations 2017 (MLR), have been introduced as another way to combat money laundering. In MLR 2017, sections 19, 20 and 21b there are guidelines a professional must follow regarding policies, controls and procedures. The regulations in MLR require training to be completed so that a professional can spot irregularities which stops them from becoming involved in money laundering activities.
The possibility of pursing a negligent claim are based on four elements which must be identified in order to have a justified case. They are; duty of care, breach of duty, damage and causation.
Duty of care is a legal obligation to recognise a relationship between two parties, where one individual has an obligation to take action in a particular manner towards the other. As per the scenario, duty of care was owed by the local sports centre. The local sports centre was clearly aware of the water damages and yet still allowed members to access the indoor sports hall.
The second element of negligence is breach of duty, where a person/ entity does not fulfil their duty by providing reasonable care in order to complete the duty required. The local sports centre was at breach of duty as they were unable to rectify the issue, hence, resulting in Mikel’s injury. The third element of negligence is causation; this occurs when there has been a breach of duty for the care of individual(s) resulting in an injury where the defendant’s actions resulted in the plaintiff injury. From the scenario, Mikel was injured as a result of the sports centres disregard towards the water leak.
The final element of negligence is damages; this is regarding an injury where legally monetary compensation can be claimed. In the case for Mikel, the damages resulted in Mikel having multiple fractures and admitting him to hospital where plates were inserted to support the fractures thus, Mikel became immobilised for a period of time. Although, whilst playing in indoors it is advisable to wear flat soled trainers so partially Mikel is at fault.
The four elements of negligence have been identified and discussed and from this evidence, Mikel is able to make a negligence claim.
As there is a case to be made for negligence, a forensic accountant (FA) should be brought in to establish a justifiable amount of compensation, which is not always monetary, equal to the damages sustained by Mikel. There are multiple factors which the forensic accountant uses to come to a conclusion. The forensic accountant should consider –
1. The nature of the damage
2. The extent of damage
3. Any resulting consequences
4. Medical reports
5. Any precedents
The FA will take a look at any medical reports and find out further information about Mikel to see his economic stance, his employment status and how the injury will affect his lifestyle. Other factors will also be considered into the settlement, the fact that Mikel didn’t wear the correct shoes will have a negative impact on the case and as a result will receive less than he would’ve using appropriate attire. The FA would also look at the history of Mikel and see if he has any history of claims to prove the legitimacy of this case. After making a report on the scenario the information will be provided to relevant parties such as a solicitor, the defendant, or the claimant.