District Judge Roger Bird looks at The Proceeds of Crime Act 2002 and how to conduct an ancillary relief case without being in breach

The Proceeds of Crime Act 2002 has recently come into force.

A person commits an offence if he conceals, disguises, converts, transfers or removes criminal property from England and Wales (section 327); enters into an arrangement which he knows, or suspects, assists someone to acquire, retain, use or control criminal property by or for another person (section 328); acquires, uses or has possession of criminal property (section 329); fails to disclose a known or suspected money laundering offence (section 330); fails to disclose a money laundering offence (section 331) or fails to disclose a money laundering offence as soon as practicable after the information comes to him; or 'tips off' after a section 337/8 disclosure has been made so as to prejudice an investigation (section 333).

The potential pitfalls for family lawyers are clear, and these uncertainties led to a prompt application to the High Court.

In P v P [2003] EWHC (Fam) 2260, [2003] All ER (D) 14 (Oct) the President of the Family Division handed down her judgment on 8 October 2003, which contains valuable guidance.

The judgment and the Act should be studied in detail, but a summary follows:

- As to whether a legal professional is permitted to act in relation to an arrangement, the offence under section 328 can be committed other than at the point of execution of the arrangement.

The act of negotiating an arrangement would equally amount to being 'concerned in' the arrangement.

- There is nothing in section 328 to prevent a solicitor or barrister from taking instructions from a client.

However, if having taken instructions the solicitor or barrister knows or suspects they or their client will become involved in an arrangement that might involve the acquisition, retention, use or control of criminal property, then an authorised disclosure should be made and the appropriate consent sought under section 335.

- Issues of legal professional privilege do not seem to arise under sections 327, 328 or 329 and there is no professional privilege exemption in these sections.

- By section 335, a person may make a disclosure to the National Criminal Intelligence Service (NCIS), seeking consent to continue taking steps in relation to an arrangement.

He must not take any additional steps in relation to the arrangement, until he either: receives from the NCIS notice of consent within seven working days, in which case he may resume acting in relation to the arrangement (by virtue of section 335(3)); or hears nothing from the NCIS within the notice period, in which case he is treated as having deemed consent to resume acting in relation to the arrangement; or receives from the NCIS notice of refusal of consent within the notice period, in which case he must not act in relation to the arrangement for the duration of the moratorium period of 31 days, starting with the day on which he receives the refusal notice.

Once the moratorium period has expired, he may resume acting in relation to the arrangement.

- In practice, the longest possible time for which a person could be prevented from taking steps in relation to an arrangement, after sending a notice to the NCIS, will be 31 days plus seven working days.

- The consent procedures in sections 335 and 338 apply to those persons who make the authorised disclosure.

- The Act makes no distinction between degrees of criminal property.

An illegally obtained sum of 10 is no less susceptible to the definition of 'criminal property' than a sum of 1 million.

- As to tipping off, by analogy with section 93D of the Criminal Justice Act 1988 (now repealed) and Governor and Company of the Bank of Scotland v A Ltd [2001] EWCA Civ 52, [2001] 1 WLR 754, it would seem that members of the legal profession carrying out their duties to their clients are protected.

- All legal professionals are bound by professional ethics that require openness and disclosure of relevant information to both the client and the opponent.

There is an enhanced duty of full and frank disclosure on legal professionals acting in family proceedings, particularly in ancillary relief proceedings.

Here, details of family assets and debts are crucial to the attempts to settle and to the Financial Dispute Resolution (FDR) process.

If financial irregularities are discovered and investigated, it may diminish the value of the assets, the subject of the ancillary relief proceedings.

The purpose of the FDR would be frustrated if the judge did not have the true facts and the parties were unable to negotiate a genuine settlement in the absence of the requisite knowledge as to the true value of the assets.

The professional duties in family proceedings appear to attract the protection of section 333(3) and 342(4) to permit a legal adviser to inform, for instance, the other side that a disclosure either will be, or has been, made to the NCIS.

- Sections 333 and 342 specifically recognise a legal adviser's duty in ordinary circumstances to make the relevant disclosures, even where the result would be to tip off their client, where to do so would fall within the ambit of being in connection with the giving of legal advice or with legal proceedings actual or contemplated.

A central element of advising and representing a client must be the duty to keep one's client informed and not to withhold information from him/her.

The exemption is lost if a disclosure to a client is made 'with the intention of furthering a criminal purpose'.

- Where a solicitor's disclosure to a client is in breach of section 333(4) or section 342(5), because the solicitor makes the disclosure with an improper purpose, the legal professional exemption would be lost.

- As a matter of good practice, the investigation authorities should be permitted time to do their job without frustration.

In most cases a delay of, at most, seven working days before informing a client would not generally cause particular difficulty to the solicitor's obligations to his client or his opponent.

Where appropriate, consent is refused and a 31-day moratorium is imposed, best practice would suggest that the legal adviser and the NCIS try to agree on the degree of information that can be disclosed during the moratorium period without harming the investigation.

In the absence of agreement, or in other urgent circumstances where even a short delay in disclosure would be unacceptable the guidance of the court may be sought.

District Judge Roger Bird sits at Bristol Combined Court Centre