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More bad law?

A Secret Policeman Bawls

Link: Proceeds of Crime Act 2002.

Britain implemented the EU’s Second Money Laundering Directive, partly by the Proceeds of Crime Act 2002, which was enacted on 24 February 2003 and partly by the Money Laundering Regulations 2003, made by the Financial Secretary to the Treasury, which came into force on 1 March 2004.

You probably didn't realise that these laws require your bank, your lawyer and your accountant to denounce you secretly to the authorities if they suspect you are investing “proceeds of crime”.

You probably think of money laundering in the context of organised crime. However, the rules apply to all crime, however trivial. For example, if you failed to declare some of your income last year, the pounds you should have paid in tax are now “proceeds of crime.” Once upon a time, a lawyer or accountant who noticed your error, would have pointed it out and advised you to fix it. Now, if -say- you are buying a house partly with that money, he must also inform the authorities. It is a crime for him not to do so. Actually it can be a crime for him not to notice, as he can be convicted if he should reasonably have suspected that proceeds of crime were involved.

Telling you about his suspicion is “tipping off” - also a crime. Instead of advising you how to comply with the law, he is now obliged, on pain of imprisonment for up to five years, a fine (or both), to drop you right in it. He is effectively a secret policeman, working against you at your own expense. If you look at the “retainer letter”, “standard terms of engagement” or “account agreement” you signed when you became a client of your bank, accountancy or law firm, you will find some weasel words to the effect that they will respect your confidentiality “to the extent permitted by law”. Historically, there was always a risk that they would be ordered to disclose information by a court. You probably thought that’s what those words meant. You may have a mental image of your trusted professional defending your confidential information until all legal appeals are exhausted and he reluctantly complies with a court order. That’s how it was, but not any more.

Now the fees you pay have been increased to cover the costs of employing individuals specifically to comply with the legislation. Those individuals have the telephone number of the SOCA (the "British FBI") and are constantly calling them to report suspicions. This is not theoretical. I assure you that every bank, law firm and accountancy firm in Britain is now regularly briefing, training and haranguing its staff to comply. Section 337 of the Proceeds of Crime Act specifically absolves professionals of their confidentiality obligation. Any disclosure the Act obliges them to make “is not to be taken to breach any restriction on the disclosure of information (however imposed)" Whatever they may have agreed with you; whatever professional ethics they follow, they are not doing anything wrong, because their political masters say so.

Successive versions of these laws were promoted (and passed by the somnolent poodles in Parliament) as counter-drugs and later counter-terrorism measures. Today these are the all-purpose excuses for all bad laws. Utter the words "terrorism" or "drugs" and the critical faculties of electorate and legislature are switched off.

The act which generates the “proceeds of crime” need not even have been criminal in the country where it happened. The most famously stupid example is that a solicitor acting for a Spanish bullfighter buying a house in London should report him secretly to the police because bullfighting is criminal in Britain, so his earnings are “proceeds of crime”. The government is considering an amendment to correct that particular stupidity. Knowing these people as we do, they will probably slip in something worse in the process.

All this is a rusty, poisoned dagger to the heart of the lawyer/client relationship. It is also a death blow to the independence of the legal profession and a further step on the road to a police state.

Companies and individuals spend millions on legal advice every year. They live in complicated societies with complicated rules, with which they want to comply. They go to their lawyers, not to be “shopped”, but for advice about how to comply or, if they have breached the law, how to bring themselves back into compliance. Maybe some of them have committed crimes. In modern regulated societies, it’s hard not to do so. But none have never consulted me about how to do it. Clients come to me because they have a commercial objective and they want to achieve it lawfully. If I point out criminality or potential criminality, they are always anxious to revise their plans to avoid it. How can I advise them, if they are afraid (as they now should be) to tell me all the facts? How can I help them stay on the straight and narrow path, if they are afraid to tell me which route they have in mind? Since my duty to sneak applies not just to my client but to his business partners, how is he supposed to do business with strangers knowing I will call the police if I don’t like the look of them?

An independent legal profession may not be the most popular element of a free society, but it is a necessary one. If the profession is more answerable to, and more afraid of, the Government than its clients, then it is not independent. The British legal profession is already, by that test, a cur at heel. As are British accountants or bankers.

Britain is currently planning to enact the Third Money Laundering Directive 2005/60/EC of 26 October 2005. into local law. The government's implementation will no doubt be just as enthusiastic, vigorous and early (some Member States still haven't implemented the last one) this time as last. There's something for formerly respectable professionals to look forward to.


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I think the situation is appalling, but I cannot see the Conservatives will commit to reversing this, as power is conceded to this electoral dictatorship will be difficult to recover. The Banks are now just an extension of the state.

I am also a big fan of Keith Olberman, unfortunately our media is somewhat to lightweight to have such a figure.

Tom Paine

So how do you feel about, say, your having a good win on the horses and depositing an unusual amount of cash, and your bank manager ringing SOCA to report it?


Yes I knew because my accountant,lawyer and bank told me, my belief is that we will continue to get the parading of passport production,gas bill etc etc until we all give in on the ID card issue.My bank manager, who is a slip of a boy, said it would be the best thing to happen, so things can be brought under control ! A bit like some of our major banks with Enron.

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