Jurisdiction(s):
United Kingdom

UK AML reform: ECCTA 2023 s183 permits regulated firms to ring-fence mixed funds, mitigating POCA liability and curbing whole-account freezes

Published on: 23 January 2024

Published by a Law360 reporter

Legal News

Article summary

But what happens when the criminal property is only a fraction of the sums held in an account?

Case law has meant that, even where only a small portion of an account is tainted, the entire balance had to be frozen, an outcome widely seen as unfair. Parliament has now remedied this through the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023). Section 183 of the ECCTA 2023, 'Money laundering: exemptions for mixed-property transactions', took effect on 15 January 2024. It revises the POCA 2002 provisions that set out the principal money laundering offences. The change introduces an exemption for regulated firms that maintain a client account or hold client funds while knowing or suspecting that only part of the funds or property is criminal. In those circumstances, the regulated firm may carry out transactions on the account or property provided that, once those transactions are completed, the funds left in the account, or the value of the property, exceed the amount known or suspected to be criminal property. In short, clean funds can now be dealt with without fear of a money-laundering prosecution...

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