R v GH
| Jurisdiction | England & Wales |
| Judge | Lord Toulson,Lord Reed,Lord Neuberger,Lord Hughes,Lord Kerr |
| Judgment Date | 22 April 2015 |
| Neutral Citation | [2015] UKSC 24 |
| Date | 22 April 2015 |
| Court | Supreme Court |
[2015] UKSC 24
Lord Neuberger, President
Lord Kerr
Lord Reed
Lord Hughes
Lord Toulson
Appellant
Kennedy Talbot Will Hays
(Instructed by CPS Appeals and Review Unit)
Respondent
Tim Owen QC Mark Summers QC
(Instructed by Lound Mulrenan Jefferies Solicitors)
Heard on 24 February 2015
(with whom Lord Neuberger, Lord Kerr, Lord Reed and Lord Hughes agree)
The respondent stood trial at the Central Criminal Court on a charge of entering into or becoming concerned in a money-laundering arrangement, contrary to section 328(1) of the Proceeds of Crime Act 2002. The particulars of the offence were that he and another
"between the first day of August 2011 and the 13 th day of January 2012 entered into or became concerned in an arrangement which they knew or suspected would facilitate the retention, use or control of criminal property, namely money received into a Lloyds Bank account … and a Barclays bank account … from the sale of motor insurance through the [AM Insurance] website, by or on behalf of [B]."
At the close of the evidence, the respondent submitted that there was no case to answer because at the time that the respondent entered into the arrangement no criminal property was yet in existence.
The trial judge, Recorder Greenberg QC, upheld the submission. The prosecution appealed against her ruling pursuant to section 58 of the Criminal Justice Act 2003. The appeal was dismissed. The Court of Appeal (Lloyd Jones LJ and Irwin and Green JJ) held in summary that under section 328 it is not necessary for criminal property to exist at the moment when parties come to a prohibited arrangement, but that the arrangement must relate to property which is criminal property at the time when the arrangement begins to operate on it; and that on the facts of this case the property had not become criminal property at the time when the arrangement began to operate on it.
The court certified that the case involves the following point of law of general public importance:
"Where, by deception, A induces the payment of money to a bank account opened for that purpose by B (pursuant to an arrangement with A to receive and retain that money, then may B commit an offence contrary to section 328 of the Proceeds of Crime Act 2002, on the basis that the arrangement to receive and retain the money in that bank account can be treated as both rendering the property 'criminal property' and facilitating its retention, use or control?"
The prosecution was given leave to appeal by this court.
In order to avoid the possibility of prejudice in the event of a new trial, I will avoid using the names of the parties involved. The case arose from the activities of a fraudster, B, who pleaded guilty to a number of offences. He established four "ghost" websites falsely pretending to offer cut-price motor insurance and recruited associates to open bank accounts for channelling the proceeds.
One of the websites was established in the name of AM Insurance. It operated from 1 September 2011 to January 2012. Shortly before the website went live, H opened two bank accounts, one with Lloyds Bank and the other with Barclays. B took control of the documentation and bank cards relating to them. During the short active lifetime of the website, unsuspecting members of the public were duped into paying a total of £417,709 into the Lloyds Bank account and £176,434 into the Barclays account for non-existent insurance cover. The prosecution opened the case to the jury on the basis that H may not have known the details of B's fraud, but that the circumstances in which the accounts were opened were such that H must have known or at least suspected that B had some criminal purpose.
Part 7 of the Proceeds of Crime Act (" POCA") is concerned with "money laundering" as defined in section 340(11). The expression includes any act which constitutes an offence under sections 327, 328 or 329. Those sections criminalise various forms of dealing with "criminal property", as defined in section 340.
Section 340(3) provides that property is criminal property if
"(a) 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
(b) the alleged offender knows or suspects that it constitutes or represents such a benefit."
Section 340(5) provides that a person benefits from conduct "if he obtains property as a result of or in connection with the conduct".
"Criminal conduct" is defined in section 340(2) as conduct which
"(a) constitutes an offence in any part of the United Kingdom, or
(b) would constitute an offence in any part of the United Kingdom if it occurred there."
Section 340(4) provides that
"It is immaterial
(a) who carried out the conduct;
(b) who benefited from it;
(c) whether the conduct occurred before or after the passing of the Act."
The respondent relies on the use of the past tense, for the purposes of an argument to which I will come.
Section 340(9) provides that property includes money; all forms of property, real or personal, heritable or moveable; and things in action and other intangible or incorporeal property.
Section 329 deals with acquisition, use and possession of criminal property. Section 327 deals with concealing or transferring criminal property and the like. Section 328, with which we are directly concerned, deals with arrangements facilitating the acquisition, retention, use or control of criminal property by or on behalf of another person.
Together, sections 327, 328 and 329 form the principal money-laundering offences and they cover a wide range of conduct. There are supplementary offences relating to tipping off and to businesses operating in the regulated financial sector (who have positive reporting duties if they have cause to suspect money laundering).
The material words of section 328 for present purposes are in subsection (1). This states:
"A person commits an offence if he enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person."
Although on a literal interpretation these words could be read as creating criminal liability if the defendant suspects that the effect of the arrangement is to facilitate the acquisition, etc, of criminal property, even where his suspicions are misplaced and the property concerned is not criminal, that is not its accepted or correct interpretation. The actus reus of the offence is entering or being concerned in an arrangement which in fact facilitates the acquisition etc of criminal property, and the mens rea required is knowledge or suspicion. (See R v Montila [2004] UKHL 50, [2004] 1 WLR 3141, a decision of the House of Lords regarding different but analogous wording in earlier legislation.)
The present case arises under section 328 but the arguments advanced on either side effect also sections 327 and 329. Subject to immaterial exceptions, a person commits an offence under section 327 if he
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"(a) conceals criminal property;
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(b) disguises criminal property;
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(c) converts criminal property;
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(d) transfers criminal property;
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(e) removes criminal property from England and Wales or from Scotland or from Northern Ireland."
Subject to similar exceptions, a person commits an offence under section 329 if he
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"(a) acquires criminal property;
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(b) uses criminal property;
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(c) has possession of criminal property."
As the Court of Appeal explained in Bowman v Fels (Bar Council intervening) [2005] EWCA Civ 226, [2005] 1 WLR 3083, POCA gave effect to Council Directive 91/308/EEC on prevention of the use of the financial system for the purpose of money laundering (as amended by Council Directive 2001/97/EC), but the Directive set minimum requirements and in some respects POCA was more stringent. For example, money laundering as defined in POCA includes dealing with property known "or suspected" to constitute or represent a benefit from criminal conduct; by contrast, the definition in the Directive required knowledge. The current version of the Directive is 2005/60/EC. This repealed and replaced 91/308/EEC.
There is an unbroken line of Court of Appeal authority that it is a prerequisite of the offences created by sections 327, 328 and 329 that the property alleged to be criminal property should have that quality or status at the time of the alleged offence. It is that pre-existing quality which makes it an offence for a person to deal with the property, or to arrange for it to be dealt with, in any of the prohibited ways. To put it in other words, criminal property for the purposes of sections 327, 328 and 329 means property obtained as a result of or in connection with criminal activity separate from that which is the subject of the charge itself. In everyday language, the sections are aimed at various forms of dealing with dirty money (or other property). They are not aimed at the use of clean money for the purposes of a criminal offence, which is a matter for the substantive law relating to that offence.
The first authority was the decision of the Court of Appeal Criminal Division (Clarke LJ, Hughes and Dobbs JJ) in R v Loizou [2005] 2 Cr App R 618.
The defendants were charged under section 327 with transferring a large quantity of cash, knowing or suspecting that it constituted a person's benefit from criminal conduct. The defendants were under police surveillance and the transfer took place in the car park of a hotel. The prosecution put its case in alternative ways. The first was that the money...
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