We use cookies to improve your website experience. To learn about our use of cookies and how you can
manage your
cookie settings, please see our
Cookie Policy.
By continuing to use the website, you consent to our use of cookies.
2.1 As an additional measure to enhance the effectiveness of the anti-money laundering regime in Part 7 of the Proceeds of Crime Act 2002, section 12 of the Criminal Finances Act 2017 establishes a new power for the National Crime Agency to request further information from any person in the regulated sector following receipt of a suspicious activity report that has been filed under sections 330–332. A similar power has been introduced in to the UK’s anti-terrorist-financing legislation.
2.2 The request for further information can also be made where the National Crime Agency has been asked to provide investigative assistance from a financial intelligence unit in another country. If the information is not provided, the National Crime Agency can apply to a magistrates or sheriff’s court for an order compelling the person to provide it. Failure to comply does not constitute a criminal offence but it results in a fine. Section 12 adds the new provisions as sections 339ZH, 339ZI, 339ZJ and 339ZK of the Proceeds of Crime Act 2002. On 1 February 2018, the Home Office published guidance on obtaining a further information order in Circular 010/2018. Sections 339ZH–339ZK came into force under regulation 2(c) of the Criminal Finances Act 2017 (Commencement No. 2 and Transitional Provisions) Regulations 2017 on 31 October 2017. The Proceeds of Crime Act 2002 (Investigations in different parts of the United Kingdom) (Amendment) Order 2017 facilitates mutual recognition of further information orders across the different nations in the UK.
2.3 Before the new power was introduced, if the National Crime Agency or the police received a suspicious activity report that lacked sufficient information to assess whether an investigation should be undertaken, the reporter was not obliged to respond to requests for additional information. As the Government noted in pre-legislative material, the new power to obtain information for the purposes of analysis brings the UK into full alignment with the recommendations from the Financial Action Task Force. The new power ensures that the National Crime Agency can obtain the information it needs to conduct effective intelligence analysis.1 Inevitably, there will be costs to the regulated private sector for replying to requests for further information. The Government’s impact assessment estimated the annual net direct cost to business at approximately £0.3 million per year, based on a total of 1,400 requests, each requiring 7.5 hours to respond. The Government derived this unit cost through both internal analysis of the time burden involved in due diligence
procedures, as well as an independent review of the time commitment associated with completing freedom of information requests.2
The order
2.4 A further information order can be sought in England, Wales and Northern Ireland only by the National Crime Agency, and only by the procurator fiscal in Scotland. The two authorities are fined as ‘the relevant person’ for the purpose of making the application (section 339ZH(12)).
2.5 A further information order is an order requiring the respondent to provide the information specified or described in the application for the order, or such other information as the court or sheriff making the order thinks appropriate, so far as the information is in the possession, or under the control, of the respondent (section 339ZH(3)). The order must specify how the information required under the order is to be provided, and the date by which it is to be provided (section 339ZH(7)). Information provided in pursuance of a further information order will not to be taken to breach any restriction on the disclosure of information, however imposed (section 339ZK(3)).
The application
2.6 The application must be made to a magistrates’ court, or to the sheriff in Scotland (section 339ZH(a)), and the application must specify or describe the information sought under the order and specify the person from whom the information is sought. The latter person is known ‘the respondent’ (section 339ZH(2)).
2.7 One of two alternative conditions need to be satisfied before a further information order may be made. Condition 1 applies in domestic cases, whereas condition 2 provides the route where the information is required by a foreign authority where mutual investigatory assistance is sought.
2.8 Condition 1 is met if the information required to be given under the order would relate to a matter arising from a disclosure, the respondent is the person who made the disclosure or is otherwise carrying on a business in the regulated sector, the information would assist in investigating whether a person is engaged in money laundering or in determining whether an investigation of that kind should be started, and it is reasonable in all the circumstances for the information to be provided (section 339ZH(4)).
2.9 Condition 2 is met if the information required to be given under the order would relate to a matter arising from a disclosure made under a corresponding disclosure requirement, an external request has been made to the National Crime Agency for the provision of information in connection with that disclosure, the respondent is carrying on a business in the regulated sector, the information is likely to be of substantial value to the authority that made the external request in determining any matter in connection with the disclosure, and it is reasonable in all the circumstances for the information to be provided (section 339ZH(5)). For the purposes of subsection (5), ‘external request’ means a request
made by an authority of a foreign country which has responsibility in that country for carrying out investigations into whether a corresponding money laundering offence has been committed (section 339ZH(6).
2.10 In the case of both conditions 1 and 2, there is an important limitation to the exercise of the power.
2.11 A further information order can be made only where the respondent, as holder of the information, is carrying on a business in the regulated sector.3 This is consistent with the tenor of the legislation, since an order can be made at the request of a foreign authority only where ‘the information required to be given … would relate to a matter arising from a disclosure made under a corresponding disclosure requirement’ (section 339ZH(5)(a)). Here, it will be necessary to focus on the foreign law of the requesting country and whether it has ‘a corresponding disclosure requirement’. Whilst in the UK sections 327–329 of the Proceeds of Crime Act 2002 provide a gateway for a person to make an authorised disclosure to obtain an exemption from liability for undertaking a prohibited act, the making of a disclosure is not a requirement, in the sense that it is not compulsory. It is only sections 330–332 that require the making of a disclosure.
2.12 Interestingly, there is a discordance in the importance of the information to an investigation between conditions 1 and 2. If the information is sought by a foreign authority, the court must be satisfied that the information ‘is likely to be of substantial value’ to the investigating authority (section 339ZH(5)(d)). But if the further information is sought by the National Crime Agency or procurator fiscal, it is sufficient if the information ‘would assist in investigating whether a person is engaged in money laundering or in determining whether an investigation of that kind should be started’ (section 339ZH(4)(c)).
Rules of court: procedure
2.13 An application for a further information order may be heard and determined in private (section 339ZK(4)). Rules of court make provision as to the practice and procedure to be followed in connection with proceedings relating to further information orders (section 339ZK(5)). The relevant Rules of Court for application to the magistrate’s court are contained in rule 47.20 of the Criminal Procedure Rules 2015 as amended. There is a prescribed form for an application for a further information order available to be downloaded from the Ministry of Justice’s website in the Criminal Procedure Forms page under the heading ‘Proceeds of Crime Act 2002’.
Evidential status
Incriminatory evidence
2.14 The newly inserted section 339ZI addresses the issue as to whether a statement made by a person in response to a further information notice may be used in evidence against him if subsequently criminal proceedings were brought against him.
2.15 A statement made by a person in response to a further information order may not be used in evidence against the person in criminal proceedings. The raising of this issue is uncomfortable since it posits the institution of criminal proceedings against the maker of a suspicious activity report, presumably in a case where there has been a self-report of criminal conduct. But more to the point, it brings into question the scope of a further information order. The legislation clearly speaks to the provision of further information (section 339ZH(1)–(3)), which suggests that it relates to documents or data held in electronic form. There is no suggestion that the National Crime Agency or the procurator fiscal is afforded power under this provision to seek an order requiring the respondent who holds information to answer questions or to make a statement about the information he holds. Yet section 339Z1 is directed to precisely this issue, namely the treatment of self-incriminatory statements which may be made by a respondent in response to a further information notice. At some future point, this aspect of the legislation will need to be judicially considered.
2.16 In an event, the general rule set out in the legislation is that a statement made by a person in response to a further information order may not be used in evidence against the person in criminal proceedings (section 339Z1(1)). However, this provision does not apply in the case of proceedings in money laundering cases, on a prosecution for perjury, or on a prosecution for some other offence where, in giving evidence, the person makes a statement inconsistent with the statement made by a person in response to a further information order (section 339ZI(2)). But a statement may not be used for this latter purpose unless evidence relating to it is adduced, or a question relating to it is asked, by or on behalf of the person in the proceedings arising out of the prosecution (section 339ZI(3)).
Legally privileged material
2.17 The legislation is clear, for the avoidance of doubt, that legally professionally privileged information cannot be the subject of a further information order. Section 339ZK(1) provides that a further information order does not confer the right to require a person to provide privileged information. ‘Privileged information’ is defined as information that a person would be entitled to refuse to provide on grounds of legal professional privilege in proceedings in the High Court or in Scotland (section 339ZK(2)).
Appeals
2.18 An appeal against a decision on an application for a further information order is made to the Crown Court in England and Wales, a county court in Northern Ireland, and the Sheriff Appeal Court in Scotland (section 339ZJ(1), (2) and (3)). The appeal is not specified as limited to a point of law, and the appeal court may make or discharge, or vary, a further information order as it considers appropriate (section 339ZJ(4)).
Non-compliance
2.19 If a person fails to comply with a further information order made by a magistrates’ court, the court may order the person to pay an amount not exceeding £5,000 (section 339ZH(8)). This is an administrative penalty and not a criminal sanction, although for the purposes of collection by the magistrates’ court it is adjudged to be paid as if it
were a conviction (section 339ZH(9)). The default is a continuing one, in the sense that the respondent remains in breach of the terms of the further information order with each day that passes, but the financial penalty is not expressed as continuing at a daily rate. This means that if the respondent elects to ignore a further information order, his financial exposure will be capped at £5,000. There is power for the maximum sum to be altered to take account of changes in the value of money in due course (section 339ZH(10)).
2.20 Curiously, the penalty is not specified to apply in Scotland. The Home Office Circular 010/2018 (to which reference has already been made) indicates that in the case of Scotland, ‘any breach of the order would potentially be treated as a contempt of court’ (at paragraph 20).