Our County Council's Principal Solicitor has shown me a draft guidance that he wants to send to all staff including social workers and WROs about the anti-money laundering rules and benefit fraud. Benfit fraud is identified as one of many ways in which criminals launder their ill-gotten gains and this raises a potential problem if anyone currently being overpaid is viewed as comitting fraud by a member of staff.

The advice states that "if suspicions arise then officers must not tell the individual concerned. Government regards it as a very serious offence to tip-off a potential criminal." It goes on to say "Telling a senior officer, Director of Finance or making a direct report to the national Criminal Intelligence Service is acceptable and will give the person making the report statutory protection."

My concern is this is at odds with established welfare rights practice, within social security legislation, to notify the client that they must report the fact to DWP before we can continue to advise on that issue. I assume this is broadly what most advisers do?

I don't see that we have a duty to report benefit overpayments to the NCIS which could be what someone might feel they need to do to protect themselves.

Please tell me if similar guidance/advice is being circulated or discussed in other areas.

I must be being very dim this afternoon, but I don't understand. The implication of the first para. is that money obtained from other illegal activities is somehow being laundered via benefit fraud. If someone is committing benefit fraud they are receiving money. Yes, this is "ill-gotten gains" but what is the connection with money laundering? I've always considered that to be processing money from drugs and other illegal activities so it becomes "clean". Is the concern that the money received from benefit fraud is itself the money being laundered? If so, surely the fraud would have to be on a very large scale for laundering to be a worthwhile activity?

I know the money laundering regs. include provisions (which affect solicitors, accountants, banks etc.) that they must report to NCIS suspicions of laundering and must not tip off the person(s) suspected. But at the moment I cannot see how this could be applied to suspected benefit fraud - laundering is disposing of money (eg using it to buy a house, or move through bank accounts) not receiving it. Could someone please explain, or is this an example of over-zealous mis-interpretation of legislation?

I'm glad this makes someone else feel as dim as I did when I first saw this, but our solicitor seems convinced he must circulate this guidance and include potential benefit fraud to protect the LA.

Re: the last line of your post - you might say that but I couldn't possibly comment.

Keith

It would be interesting to have your solicitor's answers to the questions in my post - with the exception of the last line of course!

you might find the 'what is money laundering?' info in this link to the inland revenue's anti-money laundering strategy of interest.
it's not necessarily what you think it is.

http://www.hmrc.gov.uk/specialist/antimoneylaunder-strat.pdf

there's quite a list of lead organisations and authorities involved in enforcement, and if you add local authorities, solicitors and accountants and uncle tom cobbley, it would be interesting to know what proportion of public money actually gets spent on policing civil society...and how much it leaves...but i guess it would just be too complicated and expensive to get an annual report...crikey...

still it would be nice if society could make informed decisions about the desirability of social policy priorities predicated on the belief in the existence of essential and endemic criminality potentialities or propensities pervasive of all non-exempted social strata and groupings, against the predations of whom society must be protected.

just in case there's more macarthyite hysteria than substance to it.

of course, i grew up during the cold war, and good government money was spent on conditioning me against the grim and sinister police states of the old eastern bloc and soviet russia.

how can i forget the joy of self-liberated roumania in sacking the headquarters of the hated 'Securitate'? and my understanding is that Coucescu's head was mainly severed from its corpse because they believe in vampires - it's a time honoured alternative to the stake through the heart method. we do things differently here, of course.

your council's principle solicitor's priority is to watch its back and cover its ass - would that councils cared as much for the citizens they <cough> serve, and we all know solicitors are trained to be cautious, and to produce, when called for, fluent gibberish.
no kiddies' paddling pools in my local parks, not any more...

who is not a potential criminal, especially in the heightened 'fraud awareness' culture of benefit services? if the effects of overzealousness are less dramatic than abuse of anti-terror laws against 80 year olds or public order laws against protestors in parliament square ("we never intended it to be used in that way...") the sheer _volume_ of claims involved in the civil administration system means that encroaching criminalisation of the system makes this potentially a ground of major social injustice. this is a civil rights argument, not a defence of crime - so i think the elected council members have an interest in risk assessment if council employees are going to be reporting members of the public to the NCIS or the Director of Finance (seriously? chortle!) because they suspect them...

i do not suspect fraud if i discover that a client may be being overpaid because of an unreported change in circumstances - i would need a reason to suspect fraud. i advise clients of their obligations to report changes of circumstances and that it is an offence not to report it, but it is not my practice to make provision of advice conditional on the report having been made.

good luck with your consultation.

jj

Yikes, thanks for that link jj
This is the alarming bit
" ... the Proceeds of Crime Act 2002 updates, expands and unifies the money laundering offences. The predicate offences, which trigger other money laundering offences, include all criminal acts, irrespective of where in the world they occur.
It is also a money laundering offence to make arrangements to facilitate the use, acquisition or retention of criminal property on behalf of another person. And the definition is extended so that in certain circumstances no process is needed at all to trigger a money
laundering offence. All that is needed is the acquisition, use or even possession of criminal property for money laundering offences to apply. So the mere possession of the proceeds of tax evasion in someone’s wallet is sufficient for money laundering to have taken place."

Reading on, the duties imposed by the Proceeds of Crime Act (to report 'suspicions or knowledge' of money laundering to the National Criminal Intelligence Service, and an offence of 'tipping off' a client who you suspect) only apply to accountants and tax advisors the 'regulated sector'.

So even being in possession of (or spending) money obtained through a criminal activity (eg fraudulent claim) is 'money laundering'. I suppose money laundering is how you use the proceeds of crime whereas in this view benefit fraud is the offence itself ...

Duties when advising on benefits are set out in section 112 (1D) of Admin Act 1992 - it's an offence to 'cause or allow' a claimant not to notify DWP of a relevant change of circs (as you say common welfare rights practice is to tell the client to tell DWP and record that on our case note). Doesn't your county council's new policy possibly put you in breach of these obligations?

alban

No longer Advice Centres now "Centres of Infection" eh?
Our policy is to advise disclosure but not to continue as advisers if the cl doesn't disclose and we are aware of it.

Ours too Margie - as far as i'm aware things haven't changed - however i stand to be corrected!

Thank you all for your comments.

Derek - I will be feeding your questions and comments, along with everyone else's, to the council solicitor. He is aware I'm raising this issue in welfare rights circles and hopes that someone out there in rightsnet land knows what, if anything, is happening in other LAs.

JJ - another great post. Thanks for the link. You've hit the nail on the head about back/ass covering but as far as I am aware this is advice from an officer to other officers and not council policy. The other key point you make is that an overpayment is just an overpayment unless something else suggests fraud, despite the insidious campaign to persuade the public that people on benefits are at best scroungers. (Unless of course you are aged 60 or over in which case you are obviously honest and please, please, please claim Pension Credit so the Pension Service can hit their targets.)

alban - interesting point, although I suspect our solicitor would prefer to fall foul of social security legislation than this seemingly over riding anti-money laundering stuff.


When I discussed this with the solicitor he was more concerned with situations where council staff may be involved in setting up small enterprises and social firms which would be far more likely to be used for money laundering. Unfortunately the inherent caution that goes with the role means benefits law is referred to as well as tax law in his draft memo.

I'll be back with the solicitor's comments on this discussion.

thanks keith. i bet the social workers also have some very interesting feedback to give. : )

perhaps i should clarify my practice, before the black helicoptors are sent for me - i cannot see that an act of providing advice on the law would ordinarily be construed as 'causing or allowing' a person to commit the offence of not reporting etc, and i would complete it. if that advised person requires me to represent him, it follows that i cannot properly do that without getting the claim put in order.

point being i suppose, that the offence created in the admin act has had no significant impact on the way i, and i expect most reps. conduct their cases.

jj