Tag: Suspicious Activity Reports

Prosecuting “Illicit Enrichment”: a new offence for the UK?

This article by  James Maton and Jamie Humphreys was first published on the blog of the All-Party Parliamentary Group on Anti-Corruption.

There are many policy developments that would help improve asset recovery efforts in the UK (see Transparency International’s publication Closing down the Safe Havens). However, if we were to choose one initiative that we believe should be prioritised by the next Government, it would be the introduction of an illicit enrichment offence.

Article 20 of the United Nations Convention against Corruption (UNCAC) states:

Subject to its constitution and the fundamental principles of its legal system, each State Party shall consider adopting such legislative and other measures as may be necessary to establish as a criminal offence, when committed intentionally, illicit enrichment, that is, a significant increase in the assets of a public official that he or she cannot reasonably explain in relation to his or her lawful income.

In our view, Parliament should introduce legislation to bring the UK in line with the aspirations of UNCAC. In this blog we summarise how it would work and identify what benefits it would bring.

The jurisdiction for such an offence would be any suspicious transaction involving a public official’s assets which passes through the UK financial system. This would ensue that funds obtained corruptly abroad would still be covered, in much the same way as the Bribery Act operates.

In practice, when a financial institution files a Suspicious Activity Report (SAR) in relation to a Politically Exposed Person (PEP), the authorities could serve an Unexplained Wealth Order where there was no obvious explanation for the wealth. This would impose a moratorium on the time limit for the authorities to investigate – which currently stands at 31 days. Under current rules, the funds must be released if insufficient evidence has been found within 31 days. Unfortunately, in most cases this is simply not enough time to meet the evidential standards for seizing the assets. Accordingly, 90% of SARs are cleared and given the UK’s stamp of approval.

Once the Unexplained Wealth Order had been served, it would impose an obligation on the PEP to justify their wealth. Evidence would include their salary as a public officer and any Income and Asset Declaration they had filed in their home jurisdiction. In the event that the PEP could not justify their wealth, the authorities could forfeit the assets under existing civil forfeiture proceedings.

The new offence would remove the requirement for a conviction in the home jurisdiction – a stumbling block for many claims where political will is absent – and allow the UK to take a pro-active stance on corruption. It would strengthen the existing SAR regime and give the authorities sufficient time to conduct an investigation. The importance placed on Income and Asset Declarations may encourage PEPs to file accurate Declarations in their home jurisdictions. Finally, if successfully implemented, we anticipate that it would make the UK a considerably less attractive location for corrupt capital.

Asset recovery

What do I need to know about POCA?

If you’re a company officer or director and need a quick reminder on your responsibilities under the UK’s Proceeds of Crime Act and the anti-money laundering regime, take a look at our one page tipsheet. We cover the following areas:

  • an overview of the Act
  • the definition of “proceeds of crime”
  • confisction and forfeiture of the proceeds of crime
  • money laundering and related offences
  • reporting requirements
  • the regulatory regime