R v Steven William Montila and Others

JurisdictionEngland & Wales
CourtHouse of Lords
Judgment Date25 November 2004
Neutral Citation[2004] UKHL 50
Date25 November 2004

[2004] UKHL 50

HOUSE OF LORDS

Regina
and
Montila

and others

(Appellants)

(On Appeal from the Court of Appeal (Criminal Division))

ORDERED TO REPORT

The Committee (Lord Bingham of Cornhill, Lord Steyn, Lord Hope of Craighead, Baroness Hale of Richmond and Lord Carswell) have met and considered the cause Regina v. Montila and others (Appellants) (On Appeal from the Court of Appeal (Criminal Division)). We have heard counsel on behalf of the appellants and respondents.

1

This is the considered opinion of the Committee.

2

This appeal concerns the meaning of words in legislation which was introduced to combat that aspect of criminal conduct which is popularly known as money laundering.

3

In its typical form money laundering occurs when criminals who profit from their criminal enterprises seek to bring their profits within the legitimate financial sector with a view to disguising their true origin. Their aim is to avoid prosecution for the offences that they committed and confiscation of the proceeds of their offences. Various measures have been taken both internationally and in domestic law aimed at detecting and deterring this activity. They include much closer regulation of the financial sector and the introduction of measures requiring known or suspected money laundering to be reported to the authorities. They also include the enactment of a series of offences to bring the activities of third parties within the reach of the criminal law.

The issue

4

The appellants, who are nine in number, are awaiting trial in the Crown Court at Canterbury. They were arraigned on 18 December 2002 on three indictments. Each of the three indictments has been laid against three of the appellants. Each of them contains counts laid in pairs against those named in the indictment. Each pair comprises one count of converting the proceeds of drug trafficking, contrary to section 49(2)(b) of the Drug Trafficking Act 1994, and one count of converting the proceeds of criminal conduct, contrary to section 93C(2) of the Criminal Justice Act 1988. The particulars of dates, places and sums of money are identical within each pair of counts. It is alleged that between 17 March 2000 and 20 September 2001 in 34 separate transactions the appellants used the services of one or another of two bureaux de change in London to convert a total of over £3m in sterling banknotes into Dutch guilders.

5

A preparatory hearing took place before Judge van der Bijl at Canterbury under section 29 of the Criminal Procedure and Investigations Act 1996. It was held to resolve a point of law which had been raised about the elements within each of the twin offences that the prosecution must prove to establish guilt. The question is whether it is necessary for the Crown to prove that the property being converted was in fact the proceeds, in the case of the 1994 Act, of drug trafficking and, in the case of the 1988 Act, of crime. The argument for the Crown was that, while it had to prove that the defendants knew or had reasonable grounds to suspect that the property being converted was the proceeds of drug trafficking or of criminal conduct, it did not have to prove that the property was in fact those proceeds.

6

On 19 December 2002 Judge van der Bijl held that the clear and unambiguous implication of the words used by the relevant subsections was that the foundation stone of the offences which they created was that the alleged offenders were dealing with the proceeds of drug trafficking or of criminal conduct. So it was for the Crown to prove that the property being converted was in fact the proceeds of that activity. The prosecutor appealed to the Court of Appeal by way of an interlocutory appeal under section 35(1) of the 1996 Act. On 3 November 2003 the Court of Appeal (Scott Baker LJ, Jackson and Hunt JJ) [2003] EWCA Crim 3082, [2004] 1 WLR 624, allowed the appeal by the Crown. It held that it was not necessary, to prove an offence under subsection (2) of either section 49 of the 1994 Act or section 93C of the 1988 Act, that the property was in the case of the former the proceeds of drug trafficking or in the case of the latter the proceeds of crime: [2004] 1 WLR 624, 633, para 35.

7

The Court of Appeal certified under section 33(2) of the Criminal Appeal Act 1968 that a point of law of general public importance was involved in its decision, namely:

"In a prosecution under section 93C(2) of the Criminal Justice Act 1988 or under section 49(2) of the Drug Trafficking Act 1994 is it necessary for the Crown to prove that the property was, in the case of the 1988 Act, the proceeds of crime and, in the case of the 1994 Act, the proceeds of drug trafficking?"

The statutory background

8

The offences with which the appellants have been charged found their way into domestic law in response to international initiatives. This forms an important part of the background. A brief review of the history will help to put the offences into their context. An understanding of the context in which the draftsman was working when describing the offences sets the scene for the words that were used to describe them.

9

On 19 December 1988 the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Cm 804) was adopted in Vienna. It was noted in the preamble that the parties to the Convention were deeply concerned by the magnitude of a rising trend in the illicit production of and demand for and traffic in narcotic drugs and psychotropic substances, and that they were aware that illicit traffic generates large financial profits and wealth enabling transnational criminal organisations to penetrate, contaminate and corrupt the structure of government, legitimate commercial and financial business and society at all its levels. The purpose of the Convention was to promote co-operation among the parties so that they might address more effectively the various aspects of illicit traffic having an international dimension.

10

Article 3 of the Vienna Convention provided that each party was to adopt such measures as might be necessary to establish as criminal offences under its domestic law, when committed intentionally, a variety of activities in connection with narcotic drugs and psychotropic substances. The activities listed in paragraph (a) include their production, offering for sale, transportation and importation. The following activities were listed in paragraph (b):

"(b) (i) The conversion or transfer of property, knowing that such property is derived from any offence or offences established in accordance with sub-paragraph (a) of this paragraph, or from an act of participation in such offence or offences, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an offence or offences to evade the legal consequences of his actions;

(ii) The concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from an offence or offences established in accordance with subparagraph (a) of this paragraph or from an act of participation in such an offence or offences."

Paragraph (c) contains a further list of activities, subject to each party's constitutional principles and the basic concepts of its legal system, among which are the following:

"(i) The acquisition, possession or use of property, knowing, at the time of receipt, that such property was derived from an offence or offences established in accordance with subparagraph (a) of this paragraph or from an act of participation in such offence or offences."

11

The Criminal Justice (International Co-operation) Act 1990 was enacted to enable the United Kingdom to join with other countries in implementing the Convention. Part II of the Act was headed "The Vienna Convention". The first group of sections in this Part, comprising sections 12 and 13, was headed "Substances useful for manufacture of controlled drugs". The second group, comprising sections 14 to 17, was headed "Proceeds of drug trafficking". Section 14 was accompanied by the side note "Concealing or transferring proceeds of drug trafficking."

12

The first three subsections of section 14 of the 1990 Act were in these terms:

"14. (1) A person is guilty of an offence if he –

  • (a) conceals or disguises any property which is, or in whole or in part directly or indirectly represents, his proceeds of drug trafficking; or

  • (b) converts or transfers that property or removes it from the jurisdiction,

for the purpose of avoiding prosecution for a drug trafficking offence or the making or enforcement in his case of a confiscation order.

(2) A person is guilty of an offence if, knowing or having reasonable grounds to suspect that any property is, or in whole or in part directly or indirectly represents, another person's proceeds of drug trafficking, he –

  • (a) conceals or disguises that property; or

  • (b) converts or transfers that property or removes it from the jurisdiction,

for the purpose of assisting any person to avoid prosecution for a drug trafficking offence or the making or enforcement of a confiscation order.

(3) A person is guilty of an offence if, knowing or having reasonable grounds to suspect that any property is, or in whole or in part directly or indirectly represents, another person's proceeds of drug trafficking, he acquires that property for no, or for inadequate, consideration."

13

Section 14 of the 1990 Act was repealed in its application to England and Wales, but not to Scotland, by section 67(1) of and Schedule 3 to the Drug Trafficking Act 1994. The offences which had been created by section 14(1) and (2) of the...

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