Anti-money laundering
Solicitors are subject to a strict anti-money laundering regime. The Proceeds of Crime Act 2002 and the Money Laundering Regulations impose obligations to detect, prevent and report money laundering, backed by criminal offences.
What "Anti-money laundering" covers
- The principal money laundering offences are under POCA 2002 ss.327 (concealing), 328 (arrangements) and 329 (acquisition, use and possession).
- Failure to disclose in the regulated sector is an offence under POCA 2002 s.330 where there are reasonable grounds to know or suspect money laundering.
- Tipping off (s.333A) and prejudicing an investigation (s.342) are separate offences - a solicitor must not alert the client that a disclosure has been or may be made.
- A Suspicious Activity Report (SAR) is made to the National Crime Agency; where consent to proceed is needed, a Defence Against Money Laundering (DAML) request is submitted.
- The Money Laundering Regulations 2017 (as amended) require firms to carry out customer due diligence (CDD), ongoing monitoring, and enhanced due diligence for higher-risk situations.
- Firms must have a risk assessment, policies and controls, and appoint a Money Laundering Reporting Officer (MLRO) / nominated officer.
- Legal professional privilege can provide a defence to non-disclosure, but not where communications are made to further a criminal purpose (the crime/fraud exception).
Key cases & statutes
The authorities and provisions most likely to matter for this subtopic:
How it's tested in SQE1
SQE1 uses single best answer questions: a short factual scenario, one precise question, and five options of which only one is the best answer on the law applied to the facts. For anti-money laundering, expect to be asked what the correct legal position is, what a party may or must do, or which outcome follows — with more than one option looking arguable. Reading the facts carefully and eliminating the near-misses is the skill that earns the mark.
Where candidates lose marks
- Confusing the s.330 failure-to-disclose offence (regulated sector, objective test) with the principal ss.327-329 offences.
- Warning a client about a report and thereby committing tipping off.
- Assuming privilege always defeats disclosure - the crime/fraud exception removes protection.
- Overlooking the need to obtain appropriate consent (DAML) before proceeding with a suspicious transaction.
Learn this subtopic in the course
A video lesson, notes and exam-style practice on anti-money laundering.
FAQ
Is anti-money laundering tested on SQE1?
Yes — anti-money laundering is part of the SQE1 Legal Services & Professional Conduct syllabus (FLK1) and can appear in single best answer questions.
How is anti-money laundering examined in SQE1?
SQE1 tests it by application: you're given a realistic scenario and choose the single best answer from five options. The focus is on using the law correctly, not reciting it — knowing the leading authorities (Proceeds of Crime Act 2002 ss.327, 328, 329, POCA 2002 s.330 (failure to disclose - regulated sector)) helps.