Well, the NCA certainly put the cat amongst the pigeons recently at The Law Society’s Anti Money Laundering Conference.
This is something I’ve been talking to clients about for about 5 years. In that time there have been some misunderstandings, both on the part of practitioners and law enforcement.
The issue surrounds the foreign exchange controls on money leaving China. Individuals in China are generally prohibited from removing more than $50,000 from China a year (“Notice of the State Administration of Foreign Exchange for Further Improving the Management of Personal Settlement and Sale of Foreign Exchange” and they are further prohibited from using the funds to purchase property.
If there are exceptional circumstances where a Chinese citizen needs to transfer funds in excess of the annual USD 50,000 limit e.g. due to permanent emigration and need to buy a house, they are required to do so through an authorised bank where additional documentation would need to be submitted.
You will, no doubt, be aware that in the UK we don’t have foreign exchange controls.
Some have assumed that because of that, the funds cannot meet the test of criminal property, that test being that the funds are the proceeds of an offence in a foreign jurisdiction, an offence which is also a offence in the UK.
However, there is a school of thought and I agree with them, that the funds could become the proceeds of crime due to fraud, which is certainly an offence in both jurisdictions. When money in transferred the remitter may need to make a declaration about the providence of the funds and the purpose of the transfer.
If the remitter lies in that declaration (about the ownership or future use of the funds) then a fraud may be committed and the funds tainted.
There are some ways in funds can be moved without breaching the controls, for example, we understand if the money is moved to Hong Kong first, it is unlikely to trigger the exchange controls.
I come across firms quite frequently who are grappling with this issue, and whilst every case will depend on the facts, what is clear is that it is critical to identify how the funds have left China as early as possible, because if a SARs is needed the NCA may well take the full 7 working days to process it.