Tracing criminal proceeds through fungible mixtures in money laundering cases
| DOI | https://doi.org/10.1108/JMLC-03-2020-0026 |
| Pages | 783-792 |
| Date | 06 June 2020 |
| Published date | 06 June 2020 |
| Author | Kenny Foo |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
Tracing criminal proceeds
through fungible mixtures in
money laundering cases
Kenny Foo
The Offices of Kenny Foo, Hong Kong, Hong Kong SAR
Abstract
Purpose –The purpose of this paper is to examine the problem of tracing criminal proceeds through
fungiblemixtures, in the context of money laundering prosecutionsand with a specific focus on whether clean
withdrawalscan be made from tainted mixtures.
Design/methodology/approach –The question of withdrawingclean funds from a tainted mixture is
framed as a problem of proof rather than a problemof impossibility. The tracing rules are then engaged to
overcome evidential difficulties,but the rules are shown to operate very differently incivil proceedings and
criminal proceedings. The proper application of the tracing rules incriminal proceedings is then illustrated
using the facts of Williamv R [2013] EWCA Crim 1262.
Findings –Because evidential uncertaintiesmust be resolved in favour of the accused person in criminal
proceedings, the tracing rules–properly applied –limit the range of situations in which the Prosecutioncan
successfullytrace criminal proceeds through fungible mixtures.
Originality/value –This paper may be useful to law enforcement, those involved in prosecuting or defending
money laundering casesand regulated persons assessing their money laundering risks and disclosure obligations.
Keywords Asset tracing, Money laundering, Proceeds of crime, Criminal evidence, Tax evasion
Paper type Research paper
Introduction
In prosecutions for money laundering, it must be proved beyond a reasonable doubt that the
property alleged to have been laundered actually is or represents property obtained as a result
of, or in connection with, criminal conduct [1]. Property is criminal property if it actually is or
represents property obtained as result of, or in connection with, unlawful conduct. In other
words, that which was laundered must be shown to be “criminal property”. The most direct
way [2] to satisfy this requirement is to identify the actual property that was obtained as a
result of, or in connection with, criminal conduct –the “original proceeds”thereof –and then
show that it was the original proceeds, or property into which the original proceeds can be
traced, that was laundered.
If the original proceeds are a sum of money –or are converted into a sum of money –and
that sum is mixed with clean funds, tracing the original proceeds into withdrawals from the
mixture is not straightforward. Money is fungible; once the funds are mixed, it is no longer
possible to identify the original proceeds by empirical observation, whether in a withdrawal
from the mixture or in the remainder thereof [3]. This creates uncertainty as to whether the
withdrawn sums –or the remainder –are criminal property, and hence whether dealings with
such sums constitute money laundering.
Can clean sums be withdrawn from tainted mixtures?
When the proceeds of criminalconduct are present in a mixed fund, the entirety of the mixed
fund is “criminal property”for purposes of the money laundering offences under the
Tracing
criminal
proceeds
783
Journalof Money Laundering
Control
Vol.23 No. 4, 2020
pp. 783-792
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-03-2020-0026
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