Table Of ContentTHE LAW RELATING TO
FINANCIAL CRIME IN THE
UNITED KINGDOM
Karen Harrison is Senior Lecturer in Law at the University of Hull. Her teaching
and research interests focus on criminal law, penology and the sentencing and man-
agement of dangerous offenders. She has published extensively across these topics.
Nicholas Ryder is Professor in Financial Crime at Bristol Law School, University of
the West of England, Bristol. He teaches and researches in the areas of commercial law,
financial crime and credit unions. He has published widely on these and related areas
Comments on the 1st edition:
‘It is well-written, well-researched and academically stimulating; it is one of those rare texts
which you could read in one go . . . a key text for anyone interested in the legal aspects of
financial crime in the UK.’
Student Law Journal
‘This is a much needed and most timely book. Financial crime is a subject of increasing impor-
tance which can no longer be ignored. The authors have produced an excellent text addressing
topics such as fraud, insider dealing and market abuse in a manner which combines thorough-
ness with accessibility. I unhesitatingly recommend the book to students as well as practitioners
who are beginning to develop an interest in the subject.’
Jonathan Fisher QC, London School of Economics, UK
‘Karen Harrison and Nicholas Ryder have made a major contribution to advancing our
knowledge of this increasingly important area of law by providing excellent ideas and recom-
mendations for the future. The authors are to be congratulated for their efforts and the book
deserves to be widely read.’
Roman Tomasic, University of South Australia
and Durham Law School, UK
‘This book comprehensively and from a practical perspective addresses financial crime in this
wider and more relevant context. It provides the reader with not only the substantive law, but sets
it within the relevant regulatory and enforcement environment. This work is a vital tool for any-
one concerned about protecting the integrity of their institution and bringing fraudsters to book!’
Barry Rider, Centre for International Documentation
on Organised and Economic Crime, UK
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THE LAW RELATING TO
FINANCIAL CRIME IN
THE UNITED KINGDOM
2nd edition
Karen Harrison and Nicholas Ryder
First published 2017
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2017 Karen Harrison and Nicholas Ryder
The right of Karen Harrison and Nicholas Ryder to be identified as authors
of this work has been asserted by them in accordance with sections 77 and
78 of the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.
Trademark notice : Product or corporate names may be trademarks or
registered trademarks, and are used only for identification and explanation
without intent to infringe.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
A catalog record for this book has been requested
ISBN: 978-1-4724-6422-4 (hbk)
ISBN: 978-1-4724-6425-5 (pbk)
ISBN: 978-1-3155-5623-9 (ebk)
Typeset in Bembo
by Apex CoVantage, LLC
CONTENTS
List of abbreviations viii
1 Introduction 1
Introduction 1
What is financial crime? 1
The extent of financial crime 5
The importance of financial crime regulation 8
Contents overview 9
2 Money laundering 11
Introduction 11
The money laundering process 11
What is the offence of money laundering? 13
The extent of money laundering 19
Policy background – where did the offence originate from? 21
Financial institutions and regulatory bodies 24
Financial intelligence 33
Sentencing and recovery 36
Future recommendations 46
Further reading 47
3 Terrorist financing 49
Introduction 49
What is the offence of terrorist financing? 50
The extent of terrorist financing 53
vi Contents
Policy background – where did the offence originate from? 58
Financial institutions and regulatory bodies 65
Financial intelligence 68
Sentencing and recovery 72
Future recommendations 81
Further reading 82
4 Fraud 84
Introduction 84
What is the offence of fraud? 84
Fraud and cybercrime 89
The extent of fraud 91
Policy background – where did the offence originate from? 94
Financial institutions and regulatory bodies 97
Financial intelligence 109
Sentencing and recovery 111
Future recommendations 121
Further reading 121
5 Insider dealing 123
Introduction 123
What is the offence of insider dealing? 124
The extent of insider dealing 129
Policy background 130
Financial institutions and regulatory bodies 133
Sentencing and recovery 138
Market manipulation 142
Future recommendations 146
Further reading 147
6 Market abuse 148
Introduction 148
What are the civil and criminal offences of market abuse? 148
The civil market abuse regime 153
Market abuse regulation 158
The extent of market abuse 159
Financial institutions and regulatory bodies 160
Reporting of suspicious transactions 160
Sentencing and recovery 163
Future recommendations 169
Further reading 169
Contents vii
7 Bribery and corruption 171
Introduction 171
What is the offence of bribery? 172
The extent of bribery 180
Policy background 182
Financial institutions and regulatory bodies 184
Financial intelligence 187
Sentencing and recovery 189
Future recommendations 198
Further reading 199
8 The avoidance and evasion of tax 200
Introduction 200
What are the offences? 201
The extent of tax evasion 203
Policy background 205
Financial institutions and regulatory bodies 209
Sentencing and recovery 210
Future recommendations 220
Further reading 222
9 Conclusions and recommendations 223
Money laundering 223
Terrorist financing 225
Fraud 227
Insider dealing 228
Market abuse 228
Bribery and corruption 228
Tax evasion/avoidance 229
Final thoughts 230
Bibliography 231
Index 259
ABBREVIATIONS
AML anti-money laundering
BEPS base erosion and profit shifting
CIOT Chartered Institute of Taxation
CJA Criminal Justice Act
CMA Competition and Markets Authority
CPS Crown Prosecution Service
CTF counter-terrorist financing
DPA Deferred Prosecution Agreement
DPP Director of Public Prosecutions
DTI Department of Trade and Industry
ECA Economic Crime Agency
ECHR European Convention on Human Rights
EEC European Economic Community
EU European Union
FATF Financial Action Task Force
FBI Federal Bureau of Investigation
FCA Financial Conduct Authority
FIU financial intelligence unit
FSA Financial Services Authority
FSMA Financial Services and Markets Act
FTT First-Tier Tribunal
GDP gross domestic product
HMRC HM Revenue and Customs
ICT information and communication technology
IMF International Monetary Fund
IRA Irish Republican Army
Abbreviations ix
ISA individual saving account
ISIL Islamic State of Iraq and the Levant
ISIS Islamic State of Iraq
JMLSG Joint Money laundering Steering Group
LIBOR London Interbank Offered Rate
MAD Market Abuse Directive
MAR Market Abuse Regulation
MIB Marketing of Investment Boards
MLRO Money Laundering Reporting Officer
NCA National Crime Agency
NFA National Fraud Authority
NFIB National Fraud Intelligence Bureau
OECD Organisation for Economic Co-operation and Development
OFT Office of Fair Trading
PCSU Public and Commercial Services Union
P&O Peninsular & Oriental Steam Navigation Company
POCA Proceeds of Crime Act
PRA Prudential Regulation Authority
SAR Suspicious Activity Report
SCPO Serious Crime Prevention Order
SEC Security & Exchange Commission
SFO Serious Fraud Office
SIB Securities and Investment Board
SOCA Serious Organised Crime Agency
SRO self-regulating organisation
STR suspicious transaction reporting
SYSC Senior Management Arrangements, Systems and Controls
UK United Kingdom
UN United Nations
UNODC United Nations Office on Drugs and Crime
US United States
USA United States of America
VAT Value Added Tax
