Out-Law News | 02 Sep 2019 | 4:16 pm | 1 min. read
Immediate custodial sentences for money laundering and other regulatory breaches are getting longer, making compliance increasingly important for business.
New research by Thomson Reuters showed the average length of prison sentences handed down to people convicted of money laundering had risen from 20.5 months to 27 months between 2008 and 2018.
The increasing use of custodial sentences is likely to make companies focus on compliance with regulations.
In the past few years the UK government has introduced a number of measures designed to reduce money laundering, including a register of beneficial ownership for UK companies and the use of unexplained wealth orders (UWOs).
Sentencing guidelines introduced in October 2014 gave English and Welsh judges guidance on the sentencing of bribery and money laundering offences for the first time and were designed to encourage a consistent approach to the sentencing of these offences.
UWOs were introduced in January 2018 and require individuals to explain where their wealth has come from. Bodies such as HM Revenue & Customs, the Serious Fraud Office and the National Crime Agency have the ability to apply to the High Court for a UWO to freeze and forfeit funds in bank and building society accounts.
The Thomson Reuters research, reported by the Financial Times (subscription required) also said fines for money laundering offences were now less common. In 2013 fines were handed down in 13% of money laundering cases, but this had dropped to 7% last year.
The harm caused by economic crime is well documented and the UK government has been consistent in its determination to make it as difficult as possible for criminal proceeds to be laundered through the UK, with the introduction of tools such as UWOs and the register of beneficial ownership, with further reforms on the horizon as loopholes are closed.
An effective deterrent depends not just on legislation and regulation, however, but on effective, consistent and transparent enforcement. The courts have the tools for this and, as we have seen with other regulatory breaches - for example, in health and safety and environmental matters - are increasingly using them to their full force to bring home the message that misconduct will not be tolerated. Immediate custodial sentences are no longer reserved for the most flagrant breaches and are becoming increasingly commonplace for a variety of regulatory misdemeanours. With such high stakes at play, compliance issues cannot be ignored.
The EU’s 6th Anti-Money Laundering Directive, which was published in November last year and comes into force in December 2020 across the EU, proposed an increase in the minimum prison sentence for money laundering offences for individuals from one year to four years, alongside a variety of other ‘dissuasive’ sanctions. Conviction on indictment in the UK allows imprisonment for longer than this already.
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