ICAEW BL Criminal law and business: practice questions with answers

Answer: A. POCA 2002 s 330 (failure to disclose: regulated sector): a person commits an offence if, in the course of business in the regulated sector (which includes accountancy and audit), he knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in money laundering, and does not make the required disclosure to the nominated officer (MLRO) or the NCA as soon as practicable. The test includes an objective element, so a person cannot escape liability by ignoring obvious signs. The maximum penalty is 5 years.

The proceeds of tax evasion are criminal property. The MLRO has a separate duty to pass reports on to the NCA (s 331).

Answer: A. Under the Money Laundering Regulations 2017 a firm must apply customer due diligence (CDD): identify and verify the client and any beneficial owner, and understand the purpose of the relationship. Enhanced due diligence (EDD) is required in higher-risk cases, including where the client is a politically exposed person (PEP), such as a government minister (reg 33).

For a PEP the firm must (reg 35):
- obtain senior management approval to establish or continue the relationship;
- take adequate measures to establish the source of wealth and source of funds; and
- conduct enhanced ongoing monitoring.

Records of CDD must be kept for at least five years after the relationship ends.

Answer: B. Bribery Act 2010:

- s 6: a person who offers, promises or gives a financial or other advantage to a foreign public official, intending to influence the official and to obtain or retain business or a business advantage, commits an offence. Payments to speed up routine actions (facilitation payments) are bribes; there is no exemption.
- s 1: the general offence of bribing another person can also cover the same payment, but s 6 is the offence aimed specifically at foreign public officials and does not require proof of an intention to induce improper performance.
- s 12: the offence covers acts outside the UK by a person with a close connection to the UK, such as a British citizen.
- s 7: a relevant commercial organisation is guilty if a person associated with it (such as an employee) bribes another intending to obtain or retain business or an advantage for it. Its only defence is that it had adequate procedures designed to prevent such conduct.

Individuals face up to 10 years' imprisonment and/or an unlimited fine; organisations face an unlimited fine.

Answer: B. Bribery Act 2010 s 7: a relevant commercial organisation (incorporated or formed in the UK, or carrying on part of its business here) is guilty of an offence if a person associated with it (anyone performing services for or on its behalf, such as an employee, agent or subsidiary, s 8) bribes another person intending to obtain or retain business, or a business advantage, for the organisation.

- It is a strict liability offence: no knowledge or involvement by senior management is required.
- The only defence is that the organisation had adequate procedures designed to prevent associated persons from bribing (s 7(2)). The Ministry of Justice guidance sets out six principles: proportionate procedures, top-level commitment, risk assessment, due diligence, communication (including training), and monitoring and review.
- The penalty is an unlimited fine.

Answer: D. Computer Misuse Act 1990:

| Section | Offence | Maximum |
|---|---|---|
| s 1 | Unauthorised access to computer material | 2 years |
| s 2 | Unauthorised access with intent to commit or facilitate further offences | 5 years |
| s 3 | Unauthorised acts with intent to impair, or recklessness as to impairing, the operation of a computer (for example malware or deleting data) | 10 years |
| s 3A | Making, adapting, supplying or offering to supply, or obtaining, any article (including a program) intending or believing it is likely to be used to commit an offence under s 1, 3 or 3ZA | 2 years |

Marek supplies a hacking tool intending buyers to use it for unauthorised access, so s 3A applies. Any buyer who uses it to get into a system would commit s 1.

Answer: B. s 993 CA 2006 (criminal fraudulent trading): if any business of a company is carried on with intent to defraud creditors of the company or of any other person, or for any fraudulent purpose, every person who is knowingly a party to it commits an offence. It applies whether or not the company has been, or is in the course of being, wound up. The maximum penalty on indictment is 10 years' imprisonment and/or a fine.

Compare:
- IA 1986 s 213 (civil fraudulent trading): the court may order persons knowingly party to the fraud to contribute to the company's assets, but only in a winding up (or administration, s 246ZA);
- IA 1986 s 214 (wrongful trading): a civil claim against directors that needs no dishonesty.