Contents
7.1 General comments
Terrorist organisations require funds to plan and carry out attacks, train militants, pay their operatives and promote their ideologies. The Terrorism Act 2000 (as amended) criminalises not only the participation in terrorist activities but also the provision of monetary support for terrorist purposes.
Top of page
7.2 Application
All persons are required to comply with the Terrorism Act. The principal terrorist property offences in s15 - 18 apply to all persons and therefore to all solicitors. However, the specific offence of failure to disclose and the two tipping off offences apply only to persons in the regulated sector.
The definition of business in the regulated sector was amended by the Terrorism Act 2000 (Business in the Regulated Sector and Supervisory Authorities) Order 2007 to reflect changes brought about by the third money laundering directive. There are similar changes to the definition of business in the regulated sector in the Proceeds of Crime Act 2002.
Top of page
7.3 Principal terrorist property offences
7.3.1 Section 15 – fundraising
It is an offence to be involved in fundraising if you have knowledge or reasonable cause to suspect that the money or other property raised may be used for terrorist purposes. You can commit the offence by:
- inviting others to make contributions
- receiving contributions
- making contributions towards terrorist funding, including making gifts and loans.
It is no defence that the money or other property is a payment for goods and services.
7.3.2 Section 16 – use or possession
It is an offence to use or possess money or other property for terrorist purposes, including when you have reasonable cause to suspect they may be used for these purposes.
7.3.3 Section 17 – arrangements
It is an offence to become involved in an arrangement which makes money or other property available to another if you know, or have reasonable cause to suspect it may be used for terrorist purposes.
7.3.4 Section 18 – money laundering
It is an offence to enter into or become concerned in an arrangement facilitating the retention or control of terrorist property by, or on behalf of, another person including, but not limited to the following ways:
- by concealment
- by removal from the jurisdiction
- by transfer to nominees
It is a defence if you did not know, and had no reasonable cause to suspect, that the arrangement related to terrorist property.
Top of page
7.4 Defences to principal terrorist property offences
The TACT Regulations 2007 of 26 December 2007 introduced three new defences to the main offences in s15 – 18. These defences are contained in s21ZA – 21ZC.
- prior consent defence – you make a disclosure to an authorised person before becoming involved in a transaction or an arrangement, and the person acts with the consent of an authorised officer
- consent defence – you are already involved in a transaction or arrangement and make a disclosure, so long as there is a reasonable excuse for failure to make a disclosure in advance
- reasonable excuse defence – you intended to make a disclosure but have a reasonable excuse for failing to do so. See 5.7.1 on reasonable excuse
Read chapter 8 for more information on how to make a disclosure and gaining consent.
There are further defences relating to co-operation with the police in s21. You do not commit an offence under s15-18 in the following further circumstances:
- you are acting with the express consent of a constable, including civilian staff at SOCA
- you disclose your suspicion or belief to a constable or SOCA after you become involved in an arrangement or transaction that concerns money or terrorist property, and you provide the information on which your suspicion or belief is based. You must make this disclosure on your own initiative and as soon as reasonably practicable.
The defence of disclosure to a constable or SOCA is also available to an employee who makes a disclosure about terrorist property offences in accordance with the internal reporting procedures laid down by the firm.
Top of page
7.5 Failure to disclose offences
7.5.1 Non-regulated sector
Section 19 provides that anyone, whether they are a nominated officer or not, must disclose as soon as reasonably practicable to a constable, or SOCA, if they know or suspect that another person has committed a terrorist financing offence based on information which came to them in the course of a trade, profession or employment. The test is subjective.
7.5.2 Regulated sector
Section 21A, inserted by the Anti-Terrorism Crime and Security Act 2001, creates a criminal offence for those in the regulated sector who fail to make a disclosure to either a constable or the firm's nominated officer where there are reasonable grounds for suspecting that another person has committed an offence. This was further expanded by the TACT Regulations 2007 to cover failure to disclose an attempted offence under section 15 -18.
Top of page
7.6 Defences to failing to disclose
The following are defences to failure to disclose offences under both section 19 and section 21A. Either:
- you had a reasonable excuse for not making the disclosure
- you received the information on which the belief or suspicion is based in privileged circumstances, without an intention of furthering a criminal purpose
The TACT Regulations 2007 introduced an additional defence for those in the regulated sector. A person has a defence where they are employed or are in partnership with a solicitor to provide assistance and support and they receive information giving rise to the relevant knowledge or suspicion in privileged circumstances.
Read about privileged circumstances in 5.7.2
It is also a defence under section 19 if you made an internal report in accordance with your employer's reporting procedures.
Top of page
7.7 Section 21D tipping off offences: regulated sector
- Section 21D (1) – disclosing a suspicious activity report (SAR). It is an offence to disclose to a third person that a SAR has been made by any person to the police, HM Revenue and Customs, SOCA or a nominated officer, if that disclosure might prejudice any investigation that might be carried out as a result of the SAR. This offence can only be committed:
- after a disclosure to SOCA or a nominated officer
- if you know or suspect that by disclosing this information, you are likely to prejudice any investigation related to that SAR
- the information upon which the disclosure is based came to you in the course of business in the regulated sector
- Section 21D(3) – disclosing an investigation. It is an offence to disclose that an investigation into allegations relating to terrorist property offences is being contemplated or carried out if that disclosure is likely to prejudice that investigation. The offence can only be committed if the information on which the disclosure is based came to the person in the course of business in the regulated sector. The key point is that you can commit this offence, even where you are unaware that a SAR was submitted
Top of page
7.8 Defences to tipping off
7.8.1 Section 21E – disclosures within an undertaking or group etc
It is not an offence if an employee, officer or partner of a firm discloses that a SAR has been made if it is to an employee, officer or partner of the same undertaking.
A solicitor will also not commit a tipping off offence if a disclosure is made to another lawyer in a different undertaking, provided that the undertakings the parties work in:
- share common ownership, management or control, and
- carry on business in either an EEA state or a country or territory that imposes equivalent money laundering requirements equivalent to the EU.
7.8.2 Section 21F – other permitted disclosures
A solicitor will not commit a tipping off offence if all the following criteria are met:
- the disclosure is made to another lawyer in an EEA state, or one having an equivalent AML regime
- the disclosure relates to a client or former client of both parties, or a transaction involving them both, or the provision of a service involving them both
- the disclosure is made for the purpose of preventing a money laundering offence
- both parties have equivalent professional duties of confidentiality and protection of personal data.
7.8.3 Section 21G – limited exception for professional legal advisers
A solicitor will not commit a tipping off offence if the disclosure is to a client and it is made for the purpose of dissuading the client from engaging in conduct amounting to an offence. This exception and the tipping off offence in section 21D apply to the regulated sector.
Top of page
7.9 Making enquiries of a client
You will often make preliminary enquiries of your client, or a third party, to obtain further information to help you to decide whether you have a suspicion. You may also need to raise questions during a retainer to clarify such issues.
These enquiries will only amount to tipping off if you disclose that a suspicious activity report has been made, or that an investigation into allegations relating to terrorist property offences is being carried out or contemplated.
Top of page
7.10 Other terrorist property offences in statutory instruments
7.10.1 The offences
Under The Al Qaida and Taliban (United Nations Measures) Order 2006 you must not:
- deal with the funds or economic resources of designated persons
- make funds and economic resources available, directly or indirectly for the benefit of designated persons.
Under the Terrorism (United Nations Measures) Order 2009, you must not:
- deal with the funds or economic resources of a designated person
- make funds, financial services or economic resources available, directly or indirectly to a designated person
- make financial services or economic resources available to any person for the significant benefit of a designated person
Finally, you must not knowingly and intentionally participate in activities that would directly or indirectly circumvent the financial restrictions, enable, or facilitate the commission of any of the above offences.
It is a defence if you did not know nor had no reason to suspect that you were undertaking a prohibited act with respect to a designated person.
In relation to funds, ?deal with' is defined by the legislation as:
- using, altering, moving, allowing access to or transferring
- dealing with in any other way that would result in any change in volume, amount, location, ownership, possession, character or destination, or
- making any other change that would enable use, including portfolio management.
In relation to economic resources, 'deal with' is defined as:
- using to obtain funds, goods, or services in any way, including (but not limited to) by selling, hiring or mortgaging the resources.
Financial services are defined broadly and include advisory services such as providing advice on
- acquisitions
- corporate restructuring and strategy.
7.10.2 Obtaining a licence from the Treasury
You must not proceed with a transaction without a licence from the HM Treasury Asset Freezing Unit where a client or the intended recipient of funds from the transaction is identified as a designated person.
You must do all of the following:
- suspend the transaction pending advice from the Asset Freezing Unit
- contact the Asset Freezing Unit to seek a licence to deal with the funds
- consider whether you have a suspicion of money laundering or terrorist financing which requires a report to SOCA
You must not:
- return funds to the designated person without the approval of the Asset Freezing Unit
The Asset Freezing Unit has the power to grant licences exempting certain transactions from the financial restrictions. Requests are considered on a case-by-case basis, to ensure that there is no risk of funds being diverted to terrorism.
Contact the Asset Freezing Unit to request a licence or obtain advice regarding financial restrictions at:
Asset Freezing Unit
1 Horse Guards Road
London SW1A 2HQ
Fax 020 7451 7677
Email assetfreezingunit@hm-treasury.gov.uk
Top of page