The Proceeds Of Crime Act 2002: Note To The Bar
Court of Appeal has today handed down judgment in the case of Bowman v Fels. This important decision brings clarity to the
interpretation of the Proceeds of Crime Act 2002, and in particular of s328 so
far as it affects the legal profession. It effectively overturns the decision
in P v P.
You should read the judgment which is now available on the Court Service website - click here. The following matters are central:
i) Section 328 does not affect the ordinary conduct of litigation by legal professionals. “That includes any step taken by them in litigation from the issue of proceedings and the securing of injunctive relief or a freezing order up to its final disposal by judgment.” (paragraph 83). Such steps do not come within the meaning of “becoming concerned in an arrangement which … facilitates the acquisition, retention, use or control of criminal property”
ii) Proceedings or steps taken by lawyers in order to determine or secure legal rights and remedies for their clients would not involve them in “becoming concerned in an arrangement which … facilitates the acquisition, retention, use or control of criminal property”, even if they suspected that the outcome of such proceedings might have such an effect (paragraph 84)
iii) S328 does not override legal professional privilege.
iv) S328 does not affect the terms upon which lawyers are permitted to have access to documents disclosed in the litigation process.
v) Settling litigation does not amount to becoming concerned in an arrangement which … facilitates the acquisition, retention, use or control of criminal property.
The Bar Council intervened in this case, with leave, together with the Law Society. Argument was heard in November of last year. NCIS unsuccessfully opposed the arguments advanced by the Bar Council and Law Society. As a result of the decision, which we welcome, the Bar Council guidance in this regard (last amended post P v P in December of 2003) should no longer be followed. The exclusion of litigation and proposed litigation from the ambit of s328 together with the express retention of LPP in respect of s328 means that most barristers do not need to seek consent to act from NCIS or to make disclosures about their clients or their opponents’ clients. The Court of Appeal expressed the hope that their approach to the construction of the statute will remove the difficulties which have impeded the orderly conduct of litigation ever since s328 became law (paragraph 107). We hope that is right. Should further guidance be considered necessary it will be issued in early course.
Regulated Sector/Money Laundering Regulations
The position here is broadly unaffected by the decision in Bowman v Fels. The initial guidance, which is on the Bar Council website, remains in place. It is under review.
Council of the Bar