Money Laundering
Money laundering is the process of disguising the proceeds of crime so they appear to come from a legitimate source. Under the Proceeds of Crime Act 2002 (POCA), the principal money laundering offences are concealing criminal property (s.327), entering into arrangements that facilitate it (s.328), and acquiring, using, or possessing criminal property (s.329). All three carry maximum penalties of 14 years' imprisonment.
accountants engage with money laundering chiefly through the obligation to identify, report, and avoid facilitating it. Knowing or suspecting that a client is laundering — and continuing to act without first submitting a SAR (and a DAML where consent is needed) — exposes the firm and individual to a principal POCA offence.
Other terms that go with Money Laundering
Anti-Money Laundering refers to the laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. In the UK, the primary framework is the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), which applies to accountants, lawyers, estate agents, and certain financial businesses.
A predicate offence is the underlying criminal activity that generates the proceeds laundered through a money laundering offence. Under POCA, almost any criminal offence — committed in the UK or overseas — that produces a financial benefit can be a predicate offence. Common examples include tax evasion, fraud, drug trafficking, corruption, theft, and modern slavery.
A Suspicious Activity Report is a formal disclosure made to the National Crime Agency (NCA) when a person in a regulated sector knows or suspects that someone is engaged in money laundering or terrorist financing. Filing a SAR provides a defence against money laundering offences. Failure to file when there is grounds to do so is itself a criminal offence.
Placement, layering, and integration are the three classic stages of money laundering. Placement is the initial introduction of criminal proceeds into the financial system. Layering separates the funds from their source through a series of transactions, transfers, or conversions designed to obscure the trail. Integration is the final reintroduction of the laundered funds into the legitimate economy as apparently clean assets — property, businesses, or investments.
A Defence Against Money Laundering — often called a 'consent SAR' — is a request to the NCA under POCA s.335 (or s.336 for terrorism) for permission to undertake an act that would otherwise be a principal money laundering offence. Approval is implied if the NCA does not respond within 7 working days (the 'notice period'); a refusal can be extended for a further 31 days (the 'moratorium period').
Put Money Laundering into practice with Certivus
Knowing the term is the first step. Certivus gives you the workflows — client intake, CDD, EDD, PEP and sanctions screening, audit-ready records — to apply it across every client.
Back to the full glossary