Money Laundering was
made illegal by the Proceeds of Crime Act (2002). If you are an
escort running an entirely legal business then you are unlikely to
be caught by it; if you run a brothel it definitely could affect
you. And since the punishment for money laundering is up to 14
years imprisonment plus an unlimited fine it's probably as well to
know something about it.
This section is all
about how the law affects you. If you want to know how it affects
your accountant there's a separate section on
Accountants & Money
Laundering.
The three Money
Laundering offences are straightforward enough. A person commits a
money laundering offence if he (or she):
conceals, disguises,
converts or transfers criminal property, or removes criminal
property from England and Wales, or from Scotland or from Northern
Ireland (section 327)
enters into or
becomes concerned in an arrangement which he or she knows or
suspects facilitates (by whatever means) the acquisition,
retention, use or control of criminal property by or on behalf of
another person (section 328)
acquires, uses or has
possession of criminal property except where adequate consideration
was given for the property (section 329)Criminal property is
any property that the alleged offender knows or suspects is the
benefit from a crime. And a crime for these purposes is any
criminal offence committed in the UK, as well as anything done
overseas that would have been a crime if it was taken place in the
UK.
So for you to be
caught by the money laundering offences there need to be three
things:
First there needs to
be a crime - prostitution is not a crime although some of the
activities surrounding it are
Secondly there needs
to be criminal property - most crimes (other than pure violence,
motoring offences and possibly bigamy) produce a benefit to the
criminal whether it's cash or property of some
kind
Finally, you need to
be involved in concealing, disguising, converting or removing
criminal property; or enter into an arrangement to help someone
else acquire, retain, use or control criminal property; or acquire,
use or possess criminal property yourself.
Some
examples
You are an
independent escort working on your own. Prostitution is not illegal
so there is no crime and any money you receive for your services
isn't criminal property. No problem.
You manage a brothel
and make money from the prostitutes who work there. Brothel
management is a crime and the money you receive is the proceeds of
crime. Big problem.
You work in a sauna
or brothel but are not involved in managing or controlling it. The
money you receive from your punters is not criminal property.
However when you pay over a percentage to the brothel-keeper are
you becoming involved in an arrangement that facilitates his
acquisition of criminal property? Possibly: it wasn't criminal
property when you had it but it is when the brothel-keeper gets his
hands on it.
You run an escort
agency. Is that a crime? I am not a lawyer, but there is some
suggestion that it is a crime, in which case you may be caught by
the money laundering offences.
You are an escort
getting work through an agency. Again there's no problem when you
get paid by your client but it's not at all clear whether paying
the agency their fee creates a problem. You might have a good case
for arguing that you did not 'know or suspect' it was criminal
property.
You fraudulently (as
opposed to negligently) evade tax. That is a crime and the tax you
haven't paid is classified as the proceeds of crime. In theory you
could be prosecuted for tax evasion and money laundering, but in
practice HMRC will generally use civil means to extract the lost
tax from you - with interest and penalties.
A client hands you
the envelope and then tells you he held up a petrol station at
knife point so he could pay you. You are clearly receiving the
proceeds of a crime. However you should be able to argue that you
are getting no more than adequate payment for your time and
companionship. So probably no problem. 
You run a perfectly
legal brothel in Australia and decide to retire to the UK bringing
with you your accumulated profits with which you buy a maisonette
in Rotherham. You are guilty of money laundering because the money
arose from activities carried out overseas which would have been a
crime if you had done them here.How the authorities
monitor money laundering
Sitting underneath the
Proceeds of Crime Act is a document called the Money Laundering
Regulations. They've recently been revised and a new version came
into force on 15 December 2007. The regulations apply to everybody
working in the 'regulated sector' which is principally lawyers,
banks, estate agents, casinos, bureau de change, High Value Dealers
(HVD's - businesses receiving more than 15,000 Euros in cash from
an individual) and accountants.
Incidentally even if
an escort receives over £10,000 in cash (which is roughly
€15,000) from a client she won't be treated as an HVD because
she is supplying services and not goods. Unless of course you get
lucky and a punter buys 10 grand's worth of used
panties.
The Money Laundering
Regulations require regulated businesses to have procedures for
verifying the identity of their customers. They also have to make a
report to SOCA (the Serious Organised Crime Agency) if they know or
suspect that money laundering has taken place. At least one
solicitor has already gone to prison for failing to report his
suspicions, so it's not something that regulated businesses can
afford to ignore.
How the Money
Laundering provisions are being used
There are increasing
signs that the authorities are charging people with money
laundering offences particularly in relation to drug and
immigration crime. There have also been a lot of raids on brothels,
particularly (and quite rightly in my opinion) on establishments
where they suspect drug dealing, human trafficking, forced
prostitution or underage girls.Flats where two girls
choose to work together for safety seem to be ignored unless they
are causing a nuisance.
There is also no sign
that HMRC are using the money laundering rules to combat tax
evasion: probably because they have much more effective ways of
dealing with that.
1. Do-it-Yourself
