Proceeds of Crime Act 2002, section 338

Authorised disclosures

Part 7 Money Laundering

(1)For the purposes of this Part a disclosure is authorised if—

(a)it is a disclosure to a constable, a customs officer or a nominated officer by the alleged offender that property is criminal property,

(b)F1197... and

(c)the first [F1198, second or thirdF1198] condition set out below is satisfied.

(2)The first condition is that the disclosure is made before the alleged offender does the prohibited act.

[F1199 (2A)The second condition is that—

(a)the disclosure is made while the alleged offender is doing the prohibited act,

(b)he began to do the act at a time when, because he did not then know or suspect that the property constituted or represented a person's benefit from criminal conduct, the act was not a prohibited act, and

(c)the disclosure is made on his own initiative and as soon as is practicable after he first knows or suspects that the property constitutes or represents a person's benefit from criminal conduct.F1199]

(3)The [F1200 third F1200] condition is that—

(a)the disclosure is made after the alleged offender does the prohibited act,

(b)[F1201 he has a reasonable excuseF1201] for his failure to make the disclosure before he did the act, and

(c)the disclosure is made on his own initiative and as soon as it is practicable for him to make it.

(4)An authorised disclosure is not to be taken to breach any restriction on the disclosure of information (however imposed).

[F1202 (4A)Where an authorised disclosure is made in good faith, no civil liability arises in respect of the disclosure on the part of the person by or on whose behalf it is made.F1202]

(5)A disclosure to a nominated officer is a disclosure which—

(a)is made to a person nominated by the alleged offender’s employer to receive authorised disclosures, and

(b)F1203is made in the course of the alleged offender’s employment ....

(6)References to the prohibited act are to an act mentioned in section 327(1), 328(1) or 329(1) (as the case may be).

Cases considering section 338 18

The National Crime Agency v N & Anor (Rev 1)

[2017] EWCA Civ 253 · 7 April 2017Defines

The section defines an authorised disclosure. Such disclosure, combined with appropriate consent, supplies statutory protection against the principal money-laundering offences. (see paras [16]–[20]) The subsection permits a post-act disclosure where there was good reason for not disclosing earlier and disclosure followed as soon as practicable. (see para [17])

Shah & Anor v HSBC Private Bank (UK) Ltd

[2010] EWCA Civ 31 · 4 February 2010Defines

The court treats an authorised disclosure under this provision, together with appropriate consent, as the statutory route by which a person avoids liability for a prohibited act. (see paras [14]-[15]) The court identifies the required recipient and content of an authorised disclosure: disclosure to a constable, customs officer or nominated officer that property is criminal property. (see para [14]) The court records that an authorised disclosure requires satisfaction of one of the statutory conditions. (see para [14]) The court identifies the first condition as disclosure before the alleged offender does the prohibited act. (see para [14])

UMBS Online Ltd., R (on the application of) v Serious Organised Crime Agency Rev 2

[2007] EWCA Civ 406 · 2 May 2007Limits

The court applied section 338 to hold that disclosure of information likely to prejudice an investigation could not be required, constraining judicial review of SOCA’s decision. (see paras [37]-[39])

What each judgment says about section 338 is in the case-law panel in the full Act.

Explanatory note

493.Section 338 sets out the circumstances in which a disclosure will be ‘authorised’ for the purposes of affording a defence to the principal money laundering offences in sections 327 to329. Where a disclosure is ‘authorised’ for these purposes, then it is not to be taken to breach any rule which would otherwise restrict that disclosure.

494.This is necessary because, in the course of their business, those working inside or outside the regulated sector may need to complete a transaction that they know or suspect could constitute one of the three principal money laundering offences. This section gives them the means of obtaining the authorisation necessary to complete the transaction, if the disclosure is made before a transaction is completed; or provides a defence against the failure to disclose offence if the disclosure is made as soon as possible after the transaction has taken place and there was a good reason not to make it before.

All the explanatory notes for the Act

Amendments and notes

8 notes from legislation.gov.uk

Amendments

  1. F1197S. 338(1)(b) repealed (1.7.2005) by virtue of Serious Organised Crime and Police Act 2005 (c. 15), ss. 105(4), 178(8), Sch. 17 Pt. 2; S.I. 2005/1521, art. 3(1)(c)(ee)
  2. F1198Words in s. 338(1)(c) substituted (1.7.2005) by Serious Organised Crime and Police Act 2005 (c. 15), ss. 106(4), 178(8); S.I. 2005/1521, art. 3(1)(c)
  3. F1199S. 338(2A) inserted (1.7.2005) by Serious Organised Crime and Police Act 2005 (c. 15), ss. 106(5), 178(8); S.I. 2005/1521, art. 3(1)(c)
  4. F1200Word in s. 338(3) substituted (1.7.2005) by Serious Organised Crime and Police Act 2005 (c. 15), ss. 106(6), 178(8); S.I. 2005/1521, art. 3(1)(c)
  5. F1201Words in s. 338(3)(b) substituted (26.12.2007) by Terrorism Act 2000 and Proceeds of Crime Act 2002 (Amendment) Regulations 2007 (S.I. 2007/3398), reg. 1(2), Sch. 2 para. 6
  6. F1202S. 338(4A) inserted (1.6.2015) by Serious Crime Act 2015 (c. 9), ss. 37, 88(1); S.I. 2015/820, reg. 3(k)
  7. F1203Words in s. 338(5)(b) repealed (1.7.2005) by virtue of Serious Organised Crime and Police Act 2005 (c. 15), ss. 105(2), 178(8), Sch. 17 Pt. 2; S.I. 2005/1521, art. 3(1)(c)(ee)

Commencement

  1. I293S. 338 in force at 24.2.2003 by S.I. 2003/120, art. 2, Sch. (with arts. 3, 4) (as amended (20.2.2003) by S.I. 2003/333, art. 14)