Proceeds of Crime Act 2002 - Proper Persons: code of practice

Chapter 1 - General

Purpose and Scope of the Code

1. This code is issued by the Scottish Ministers in accordance with section 410 of the Proceeds of Crime Act 2002 (POCA), and replaces the code issued in June 2009^[1].

2. It provides guidance on the exercise of functions by "proper persons" (defined at s.412 of POCA) in Scotland in relation to investigative orders and warrants under Chapter 3 of Part 8 of POCA (as amended).

3. The purpose of this code is to:

• set out the principles in accordance with which proper persons carry out their functions;
• ensure consistency in the exercise of those functions; and
• specify the information to be recorded in relation to the exercise of those functions.

4. This code applies to the functions undertaken by proper persons in relation to the following investigative orders and warrants under Chapter 3 of Part 8 of POCA:

• Production orders – section 380;
• Ancillary orders to grant entry – section 382;
• Search warrants – section 387;
• Customer information orders – section 397; and
• Account monitoring orders – section 404.

5. A summary of these investigatory powers is set out in the table in Annex A to this code. This details the purpose of each order or warrant, and who can apply for it.

Definition of "proper person"

6. Generally, a "proper person" is one charged with the function of executing investigative orders and warrants. The "proper person" in each particular case depends on the type of investigation being carried out, and the specific investigatory power being exercised. Under section 412 of POCA^[2], "proper person" means:

• in relation to a confiscation investigation^[3] or a money laundering investigation^[4] –

a) a constable of the Police Service of Scotland;

b) an officer of Revenue and Customs; or

c) an immigration officer;

• in relation to a civil recovery investigation^[5], a detained cash investigation^[6], a detained property investigation^[7] or a frozen funds investigation^[8] it means the Scottish Ministers or a person named by them.

Legal Privilege

7. Legal Privilege is a privilege against disclosure, ensuring clients know that certain documents and information provided to legal professionals cannot be disclosed at all. It recognises the client's fundamental human right to be candid with their legal adviser, without fear of later disclosure to their prejudice.

8. Section 412 of POCA defines "legal privilege" as:

"legal privilege" means protection in legal proceedings from disclosure, by virtue of any rule of law relating to the confidentiality of communications; and "items subject to legal privilege" are-

(a) communications between a professional legal adviser and his client, or

(b) communications made in connection with or in contemplation of legal proceedings and for the purposes of those proceedings,

which would be so protected.

9. Legal privilege is a matter to be asserted by a client. If legal privilege is capable of being asserted however, the seizure process must have within it a clear, detailed statement on how that assertion can effectively be raised and determined.^[9]

10. In a case where it is clear that what is to be searched is a solicitors office and that legal privilege is being asserted, any warrant ought to provide for independent supervision of the search by a Commissioner appointed by the court or to have contained a requirement that any material seized should be sealed unread and delivered to the court to enable the Sheriff to adjudicate upon the issue.^[10]

11. Proper persons are advised to become acquainted with the latest guidance on legal privilege in relation to money laundering cases. The guidance, which is not legally binding, can be found at: (https://www.lawsociety.org.uk/policy-campaigns/documents/legal-sector-affinity-group-anti-money-laundering-guidance/).^[11]

12. In particular, paragraph 7.4.5 in that guidance sets out the crime/fraud exception, namely that legal privilege protects advice given to a client on avoiding committing a crime or advice that warns against proposed actions that could attract prosecution. Legal privilege does not, however, extend to documents which themselves form part of a criminal or fraudulent act, or communications which take place in order to obtain advice with the intention of carrying out an offence. It is irrelevant whether or not a legal representative is aware that they are being used for that purpose.

13. For example, if a client has made a deliberate misrepresentation on their mortgage application, their solicitor should consider whether the crime/fraud exemption to legal professional privilege applies. Solicitors may also wish to consider sections 383(2), 402 and 407 of POCA which provide that production orders, customer information orders and account monitoring orders have effect in spite of any restriction on the disclosure of information (however imposed).

Definition of Premises

14. Where an order permits entry into or onto "premises," these are defined^[12] so as to include any place and, in particular, include:

• any vehicle, vessel, aircraft or hovercraft;
• any offshore installation within the meaning of section 1 of the Mineral Workings (Offshore Installations) Act 1971 (c. 61) and any tent or movable structure.

Status and accessibility of code

15. The code is not a statement of the law. Proper persons must ensure that, at all times, they act in accordance with the statutory requirements in Chapter 3 of Part 8 of POCA (as amended).

16. A failure by a proper person to comply with any of the code's provisions will not of itself give rise to any criminal or civil liability. However, the code is admissible in evidence in any criminal or civil proceedings, and a court may take account of any non-compliance in determining any question in those proceedings^[13].

17. The code must be available to view online^[14] and at all police stations in Scotland. It must also form part of the published guidance that is made available to officers of HM Revenue and Customs and immigration officers.