However, the problem does not just apply to banking, insurers or lawyers because the Proceeds of Crime Act 2002 applies to all aspects of industry. The regulations invariably require client identification to be obtained, complicated in the shipping industry because of the use of one ship companies to limit liability and/or the use of bearer shares makes it difficult to identify the true owners.

Reporting requirements are also extensive, as in the recent case of a Spanish matador wishing to purchase a flat in London with £1.5 million in cash. The transaction was reportable to the National Criminal Intelligence Service on the basis that bullfighting is illegal in the UK.

A similar example might be saving costs on a ship by undermanning. Because this is illegal in the UK, the resulting increased profits from that ship may also be illegal. Also, proceeds of crime might include benefits in the form of saved costs arising from the failure to comply with regulatory requirements such as SOLAS, ISM and ISPS, together with, for example, load line requirements.

The shipping industry is famously secretive and to enquire of a particular ship owner where he gets his funds from can be considered unreasonably intrusive. Similarly, providing identification in some jurisdictions is extremely difficult and often dangerous.

For example, in one Eastern European country it is illegal to photocopy a passport. Another issue concerns tensions that must inevitably occur when a transaction is deemed to be suspicious and must therefore be reported to the National Criminal Intelligence Service, as it is an offence to tip off anyone that any such transaction has been reported.

These and other issues are being investigated by the UK Courts and a recent Court of Appeal decision may assist the industry. In the meantime, there is no doubt whatsoever that everyone in the industry must be very much on their guard.

MJInformation No: 20521