Keep your hands clean

Judge Thornton of the Technology and Construction Court recently warned, in an article in Building magazine (26/03/04), that the construction industry needs clear guidance soon in order to avoid falling foul of the Proceeds of Crime Act 2002 . Contravention of this Act can lead to custodial prison sentences of up to 14 years.

The Act is part of a raft of legislation implemented following the September 11 terrorist attacks in the USA. It adds to the UK's money laundering legislation and is aimed at rooting out crime and the laundering of the proceeds of crime. But the devil, as the saying goes, is in the detail. Certain clauses of the Act are so widely drafted that they will have widespread implications for society as a whole and certainly the construction industry.

One of the most important areas this act covers is money laundering – turning criminal gains into apparently legal income. As many in the construction industry already know, buying and selling property has often been used for this purpose.

Section 328 of the Act provides: "A person commits an offence if he enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person."

The words highlighted demonstrate just how wide the potential for committing an offence is. It really can be simply a matter of having a suspicion that someone you are concerned with professionally is involved with criminal property.

If you find yourself in this position and fail to act, theoretically you could be committing an offence under the Act and potentially facing a custodial prison sentence.

The definition of criminal property is widely defined as property 'which is or represents a person's benefit from criminal conduct'. Criminal conduct could be anything from drug trafficking to fraudulently over estimating an insurance claim. In his warning to the industry, Judge Thornton uses some examples of construction related situations that if not acted upon could constitute an offence, including:

• A contractor who employs illegal immigrant labour.
  
• Non compliance with health and safety legislation.
  
• A company not registered appropriately for tax purposes and being paid gross.

In these situations the criminal property could include the money that is saved in evaded tax or social security contributions or has been recovered as remuneration under the building contract in connection with excess profits, illegally worked hours or illegally employed labour.

Theoretically, a failure to act on suspicion of criminal property worth as little as £5 is still an offence under the Proceeds of Crime Act.

There is no minimum limit as to the value of any criminal property. Theoretically, a failure to act upon suspicion of criminal property worth only £5 is still an offence under the Act.

Thankfully, there is an easy way to protect yourself from any possibility of committing such an offence. All that is required is for you to report any suspicion to the National Criminal Intelligence Service (NCIS), which has been set up to receive and process any reports. More details of this body and how to report any suspicions can be found on their website www.ncis.gov.uk.

In addition to offences under the money laundering section of the Act, anyone with suspicions should ensure that they do nothing that might prejudice an investigation into the suspicious behaviour.

The Act provides that a person commits an offence if: '.. he makes a disclosure which is likely to prejudice any investigation which might be conducted following the disclosure…' Or, in simple terms, you tell the person about whom you have your suspicions that you are reporting them to the NCIS or the police or you simply confront them with your suspicions.