Money Laundering Proceeds from Crimes against Animals




Edie Bowles and Sam March


Advocates for Animals, the UK’s first animal protection law firm, has found that crimes against animals can take many forms and can, unfortunately, be a lucrative business for offenders. This is true for a wide variety of animal and wildlife offending, including: puppy farms, illegal wildlife trade, unlawful agricultural practices, dog theft, food fraud and property developers cutting corners and destroying habitats.


Unfortunately, despite being widespread and often shockingly brutal, animal and wildlife crime is often overlooked or undetected, and enforcement is piecemeal at best. For instance only one in 100 dog theft cases in 2019 resulted in the thief being charged and prosecuted, according to figures obtained in a Freedom of Information Act request. Wild animals fare little better: of 1,300 reported crimes involving bats, marine mammals, badgers and raptors in 2016, only 22 were successfully prosecuted.


In 2020, Advocates for Animals was pleased to see the Solicitors Regulation Authority’s (SRA) showing its interest in animal and wildlife crime by exploring how proceeds may be laundered. Given solicitors’ legal and professional duties in respect of reporting suspected proceeds of crime, it is important that solicitors working across a wide range of sectors are aware of, and able to identify potential proceeds from crimes against animals. It is hoped that increased awareness amongst regulated professionals would lead to more disclosures and better monitoring. This would disincentivize criminal activity involving and harming animals and hopefully decrease the prevalence of these offences.

Money Laundering and Proceeds of Crime


Money laundering is the process by which criminal property (i.e the proceeds of crime) is given the appearance of legitimate funds, making “dirty” money indistinguishable from “clean”, with no evident criminal origins.

The principal money laundering offences in Part 7 of the Proceeds of Crime Act 2002 (“the Act”) involve someone doing something with criminal property (i.e. proceeds of crime). These principle offences are

  • the concealing offence, which involves a person concealing, disguising, converting or transferring what they or suspect to be criminal property or removing what they know or suspect to be criminal property from the jurisdiction (s.327);

  • the arranging offence, which involves a person entering into or becoming concerned in an arrangement that they know or suspect facilitates (by whatever means) the acquisition, retention, use or control of criminal property, by or on behalf of another person (s.328); and

  • the acquisition, use or possession offence, which involves a person acquiring, using, or possessing what they know or suspect to be criminal property (s.329).

As defined in s.340, property is criminal property if—

  • it constitutes a person’s benefit from criminal conduct, or it represents such a benefit (in whole or part and whether directly or indirectly), and

  • the alleged offender knows or suspects that it constitutes or represents such a benefit.

Notably, it is immaterial who carried out the criminal conduct and who benefited from it (s.340(4)). Solicitors will therefore be at real risk of committing offences if they deal with client assets that they know, or suspect constitutes the proceeds of crime (unless one of the limited s.338 defences applies). S.330 also creates an obligation on persons operating in the regulated sector, which includes relevant law firms, to report to the appropriate authorities suspicions of money laundering of criminal proceeds. Unlike the principle offences, which are only made out if subjective knowledge or suspicion is established, the s.330 offence requires only objectively “reasonable grounds” for knowing or suspecting that another person was engaged in money laundering. It is not enough for a regulated person to turn a blind eye; they should ask questions and consider where the money has come from as part of their due diligence. SRA-regulated firms who are subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 ("the Regulations") are also required to take steps to identify the risks of money laundering.


In short, solicitors need to be alert to signs of money laundering and watchful of attempts by clients to use their legitimate services to conceal or convert the proceeds of crime. Law firms are an attractive way for clients to launder money, this could be done, for instance, by setting up sham litigation by paying money into a firm to fund it and then asking to withdraw the funds claiming the matter is resolved. Conveyancing Solicitors need to be particularly vigilant, as the purchase of property is a common way to launder the proceeds of crime. It may also be the case that the client is simply using proceeds from a crime to pay for ostensibly legitimate legal activities, which may also constitute money laundering (see the acquisition, use or possession offence).



The Proceeds of Animal and Wildlife Crime


The laws of England and Wales criminalise many forms of animal and wildlife mistreatment. Some of the most common forms of animal offending are widespread and highly profitable on a commercial scale. Just like with any other profitable offence, the proceeds of crimes against animals will constitute criminal property for the purposes of the concealing, arranging and acquisition, use or possession offences. Further, in the circumstances discussed above, a solicitor or a law firm will be committing an offence if they fail to take the requisite steps.

In order to fulfil their obligations in respect of proceeds of animal and wildlife crimes, solicitors will benefit from being aware of some common and profitable offences to look out for, and the kinds of questions to ask. This is by no means an exhaustive list.



Farming


The value of total farmed animal output in 2019 was £14 billion. Animal farming is a fiercely competitive industry, with at least 73% of animals now reared on intensive farms to supply our major retailers and supermarkets. The Animal Welfare Act 2006 makes it illegal to cause “unnecessary suffering” to domesticated or captive animals and supporting regulations set minimum species-specific standards, prohibiting cruel practices such as crates for pigs or keeping hens in barren cages. However, ensuring even these minimum legal welfare standards can be expensive and, in a competitive marketplace, there are vast sums of money to be made by cutting corners or making dishonest claims about standards or origins. Unlawful activity tends to be detected by undercover investigations, which are sometimes published by the media.



Entertainment


Dog fighting has been illegal for over 180 years; however, animal protection groups still investigate and prosecute dog fighting offences, with fights often arranged for profit by organised criminal gangs. In 2019, The League Against Cruel Sports reportedly received nearly 100 calls about dogfighting to a confidential hotline it runs.

But such obviously criminal practices are not the only way animal offences are committed for entertainment. On a much wider, more profitable scale, horse racing and greyhound racing businesses may also be fruitful sources of criminal profits. These industries are self-regulated, making it harder to spot unlawful activity as there is not a public run licensing and monitoring system. This does not mean unlawful activity is not taking place though. It is therefore important to consider whether any money made from such industries could be linked directly or indirectly to criminal activity, such as welfare violations or misuse of drugs offences.



Companion Animals


2020 was a record year for pet theft. Results of a BBC freedom of information request showed that five policing areas saw a double-digit increase in the number of dog thefts reported between January and July 2020, compared with the previous year. Most of the dogs being stolen are female and are used for breeding, so that criminal gangs can maximise their profits.

Although third party selling of dogs was made unlawful in 2020, essentially outlawing puppy farming, it regrettably remains a lucrative business. In February 2020, a mother and daughter who bred dogs without a licence, rearing at least 193 litters, were ordered to pay back more than £600,000 following a prosecution brought by Winchester City Council. Something to look out for if someone is making money through puppy sales is whether they are a licensed breeder and, if they are advertising online, whether they appear to be selling an excessive number of animals. Illegal puppy farms will likely be advertising several litters of different breeds at any one time.

Another area to stay watchful of is the exotic pet trade, where again any profit from unlawful sales will be proceeds of crime. ‘Hobby breeders’ are exempt from requiring a pet shop licence to sell surplus animals; however, individuals and organisations in the exotic pet trade have been known to hide behind this exemption when they are in fact operating a business and as such should be licensed. Just because someone claims to be a hobby breeder (as they often hide behind) does not mean they are one. Furthermore, even if someone is a hobby breeder it does not mean they will not also be carrying out a licensable activity. The test will come down to whether it is a commercial activity.

Ways to spot unlicensed and therefore illegal activity is to see if the sellers advertise online, the relevant questions as to whether it is commercial will be:


Is there a fixed fee? How many animals are sold? How often are animals sold? How much do the animals cost? How much advertising is used? How many sites are used for animals? Are different species sold? Is there any evidence that it is a hobby? Are they registered with Companies House?



Wildlife


There are many examples of wildlife crimes, from illegal hunting to disrupting habitats. The ways individuals and organisations benefit from such activities range from charging for participation in illegal hunting activities to profiting from corner-cutting building works. For instance, building developer Bellway Homes was recently convicted and fined £600,000 for damaging and destroying a breeding and resting place for bats at a construction site in Greenwich. Although the actual proceeds of crime recovered in that case were agreed at a comparatively meagre £5,000, it is possible to envision a case in which any profit made as a result of such works could be considered criminal proceeds. Other potential proceeds from wildlife crimes can be very high, for example the value of rhino horn is currently estimated at £40,000 per kilo, and a single 20kg carp can fetch £12,000 or more.



Other Regulated Persons


Law firms and solicitors are not the only regulated sectors, others that should be considering and asking the same questions as above are:

  • Banks and credit institutions

  • Stock brokers and investment firms

  • Insurance companies and insurance intermediaries

  • Auditors, accounts, book-keepers, tax advisers

  • Property dealers and estate agents

  • Trust or company formation and management

  • Legal services

  • Those trading in goods for cash of at least £13,000

  • Casinos

  • Auction platforms

It is crucial that regulated sectors are considering whether a client or customer is involved in money laundering. Indicators will include unexplained wealth, a history or coverage of criminal activity or suspicion that criminal activity is taking place. If you would like any more information on crimes against animals and their proceeds please contact info@advocates-for-animals.com.



Getting Advice


This blog post is not legal advice. If you’re an animal advocate, organisation or charity and think that private prosecutions might help achieve your objectives, it is vital to seek expert advice at the earliest possible stage. This will help ensure you comply with your obligations, maximise your prospects of success and avoid disappointment and wasted costs. For more information on the services Advocates for Animals offers please contact info@advocates-for-animals.com

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