S329 Proceeds of Crime Act 2002 (UK)

Acquisition, use and possession

(1)A person commits an offence if he—

(a)acquires criminal property;

(b)uses criminal property;

(c)has possession of criminal property.

(2)But a person does not commit such an offence if—

(c)he acquired or used or had possession of the property for adequate consideration;

But....

The Law Society of England and Wales at

https://www.lawsociety.org.uk/topics/anti-money-laundering/adequate-con… says

Adequate consideration and proceeds of crime

The Legal Sector Affinity Group anti-money laundering guidance for the legal sector, updated in 2023, currently states:

“You will also have a defence if you received adequate consideration for the criminal property that is acquired, used or possessed.

“This exception applies where there was adequate consideration for acquiring, using and possessing the criminal property.

"acquired for adequate consideration" does not mean "you received adequate consideration".

In this way, the Law Society and its Affinity Group have presented a case that is exactly the opposite of that set out in the Act.

The specific provision clearly refers to where a person received adequate consideration for something. In the case of lawyers, this means that the price paid for advice was adequate.

The term "adequate" is subject to interpretation in the Act.

It does not mean "sufficient" – if the price paid is obviously and significantly low, then it will not be adequate but it does not mean full value. This is an anti-avoidance measure for trade-based financial crime using under-invoicing schemes.

Also, while a lawyer may (on the face of the Act) accept payment from moneys that he knows or has reason to suspect may be derived from criminal assets that is subject to the restriction that such a payment must not be for services in furtherance of an offence. So a lawyer who accepts moneys to set up a company to be used as a vehicle in a commercial fraud is not protected. Nor is one that sets up a trust to hide illegally obtained funds in a divorce. In fact, basically, the only protection is for those presenting a criminal defence.

This has not always been the case: in the late 1990s, a solicitor was convicted of laundering the proceeds of drugs trafficking when, during a trial, he accepted GBP10,000 in cash from the defendant's wife to pay the barrister who, mid trial, demanded more money. The solicitor was convicted, the barrister suffered no adverse consequences. It would be arguable that the solicitor did not receive the money for services as he immediately handed it to the barrister and was, therefore, in effect acting as a postbox.

Guiding principle.

Don't blindly rely on what your professional body tells you and don't assume that those advising that body and/or regulator have got it right.

Nigel Morris-Cotterill is a financial crime strategist and a former solicitor. He has advised and trained businesses, including law firms, since 1994. He is the author of "How not to be a money launderer", "Sun Tzu and the Art of Litigation", "Trade-Based Financial Crime" and more including "Lawyers and Financial Crime Risk" (in preparation, provisional title). He will be conducting training for lawyers in Australia in October 2024.