Money Laundering in England and Wales

This paper assesses the significance and impact of the Criminal Justice Act 1993 and the Money Laundering Regulations in the context of previous legislation and examines the extent to which the law has been strengthened by the new legislation. It also highlights the major international initiatives which have been responsible for exposing the extent of the money‐laundering phenomenon and which have helped shape the present legislative framework. The banking and financial system is finding itself in the front line of the war being waged internationally against money launderers. Traditional concepts of banking secrecy are being undermined as governments struggle to preserve the integrity of the banking system. The war is on a vast scale. The Financial Action Task Force (created in 1989 by the seven major industrial nations and the President of the European Commission) estimated that the amount of money being laundered through the financial system was US$85bn per year. The extent of the problem was recognised in the International Narcotics Control Strategy Report for 1993 which found that eight of the world's major money‐Iaundering states are located in Europe. Europe has responded to the growing crisis in the financial sector with the Money Laundering Directive which was due to be fully implemented across the Community by 1st January, 1993. The directive, which applies to credit institutions and financial institutions, including Community‐based branches of non‐Community institutions, reflects a number of key international initiatives and attempts to harmonise the anti‐laundering legislation of the Member States, though with varied success. This paper outlines the directive and its antecedents, before tracing the considerable developments within the UK since the Drug Trafficking Offences Act 1986, which marked the beginning of the Government's campaign to deprive criminals of the fruits of their crime, culminating in the Criminal Justice Act 1993 (CJA 1993). The secondary legislation is also analysed, in the form of the Money Laundering Regulations (the ‘Regulations’), which came into effect on 1st April, 1994. The CJA 1993 introduces and defines the ambit of the new money‐laundering offences, whilst the Regulations clarify the procedures which must be adopted by anyone carrying on ‘relevant financial business’. For the sake of brevity the focus has been only on the position in England and Wales, since Scotland and Northern Ireland are governed by different statutes.