What’s the definition of criminal property?

While the UK’s Money Laundering Regulations 2017 (as amended) (MLRs) focus on prevention of money laundering through systems, controls and due diligence, the legal meaning of criminal property comes from the Proceeds of Crime Act 2002 (POCA). POCA defines criminal property as property that:

• constitutes or represents a person’s benefit from criminal conduct, whether directly or indirectly, and
• is known or suspected by the person dealing with it to constitute or represent such a benefit.

Both elements must be present. The property must derive from criminal conduct and there must be knowledge or suspicion that this is the case.

The concept of criminal property underpins the UK’s anti-money laundering (AML) framework. It determines when money laundering offences arise and when regulated professionals must consider making suspicious activity reports.

What is meant by criminal conduct?

Criminal conduct is defined broadly. It includes:

• conduct that constitutes an offence in any part of the UK, and
• conduct that occurs outside the UK and would constitute an offence if it took place here.

A conviction is not required. The definition does not depend on criminal proceedings having concluded or even begun. Property can meet the definition of criminal property even where the underlying conduct has not been proven in court.

What counts as property?

POCA takes a wide view of what constitutes property. Property includes money and all other forms of property, whether real or personal, tangible or intangible, and wherever situated. In practice, this could be:

• funds held in accounts;
• land and buildings;
• shares and other investments;
• cryptoassets and digital assets; or
• goods or other items of value.

Property doesn’t lose its status as criminal property simply because it changes form. Conversion, transfer or investment of criminal proceeds doesn’t break the link to the original criminal conduct.

Direct and indirect benefit

The definition captures both direct and indirect benefit from criminal conduct.

Direct benefit might involve property obtained immediately from an offence, such as fraud proceeds.

Indirect benefit covers property that can be traced back to criminal conduct through transactions, transfers or conversions. This reflects how criminal proceeds are often layered or integrated into the legitimate economy.

The legislation doesn’t require the benefit to be current or obvious. The test is whether the property represents the benefit of criminal conduct, even indirectly.

Knowledge and suspicion

POCA doesn’t require certainty or proof. Suspicion is sufficient. This places emphasis on professional judgement rather than evidential thresholds.

Suspicion may arise from information obtained during due diligence, ongoing monitoring or the course of providing services. If information doesn’t align with what’s known about a client, their activities or their financial position, this could give rise to suspicion.

How the UK Money Laundering Regulations fit in

The MLRs establish preventative obligations designed to reduce the likelihood that regulated businesses become involved with criminal property.

The MLRs require firms to complete a set of steps including:

• carry out a customised business-wide risk assessment;
• document detailed policies, controls and procedures;
• apply customer due diligence and ongoing monitoring;
• identify and verify the beneficial owner(s);
• understand source of funds and, where relevant, source of wealth; and
• apply enhanced due diligence where risk is higher.

In this way, the MLRs support POCA by helping firms recognise situations where property may represent the proceeds of crime.

Why the definition matters for regulated professionals

The definition of criminal property determines when the principal money laundering offences apply. These offences include:

• concealing, disguising, converting or transferring criminal property;
• entering into arrangements that facilitate the acquisition, retention, use or control of criminal property; and
• acquiring, using or possessing criminal property.

In professional services, these risks can arise through routine activities, such as handling client funds, completing transactions, distributing proceeds or receiving fees.

Once suspicion exists, continuing with a specific activity may itself constitute an offence unless a statutory defence applies.

Criminal property and reporting obligations

Where criminal property is known or suspected, POCA imposes reporting obligations on regulated professionals. In practice:

• concerns must be raised internally to the MLRO through an internal SAR (suspicious activity report), and
• the MLRO must then consider whether an external SAR should be submitted.

The obligation is triggered by suspicion, not confirmation. Failure to report where required is itself a criminal offence.

Clear records of how suspicion was assessed and how decisions were reached form an important part of compliance.

Final thoughts

The definition of criminal property under POCA reflects how the proceeds of crime are often mixed into legitimate transactions, assets and professional services, rather than appearing in obvious or isolated forms.

For regulated professionals, the practical test is whether property represents the benefit of criminal conduct and whether there is knowledge or suspicion of that fact. That threshold doesn’t depend on proof, certainty or a criminal finding.

Where suspicion arises in the course of business, POCA requires it to be considered and, where appropriate, reported through your firm’s internal reporting process. 

Clear records of how suspicion was identified, assessed and handled form an essential part of compliance and provide the context needed if decisions are later scrutinised.