ECSH82840 | Sanctions for non-compliance: financial penalties: financial penalties framework: definition of knowingly concerned in a contravention of the regulations

'Knowingly concerned' is not defined in The Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017).

The definition is if the individual knew what they were supposed to do, or if they were expected to know what to do but failed to do it, then they are knowingly concerned in a contravention. Below is some case law.

In SIB v Scandex Capital Management [1998] 1WLR. 712, the Securities and Investment Board (a predecessor to the Financial Conduct Authority) sought a compensation order against a director on the basis that he had been ‘knowingly concerned’ in the contravention by Scandex of a regulatory requirement. Millett LJ (as he then was), endorsed an earlier dictum of Neville J in Burton v Bevan [1908] 2 Ch 240 at 246-247, which concerned whether the defendant had ‘knowingly contravened’ a particular statutory provision. Neville J said:

“I think that 'knowingly' means with knowledge of the facts upon which the contravention depends. I think it is immaterial whether the director had knowledge of the law or not. I think he is bound to know what the law is, and the only question is, did he know the facts which made the act complained of a contravention of the statute?”

Knowingly concerned therefore means the individual:

• Knew or should reasonably have known about the obligation within MLR 2017.

• Knew – or should reasonably have known – that the contravention was occurring and,

• Did not act to prevent the contravention from occurring.

The DM needs evidence that there is a contravention of the relevant requirements by the business and also have evidence the individual concerned was knowingly concerned in that contravention as defined in the three bullets above.