UKSC 24
On appeal from:  EWCA Crim 2237
R v GH (Respondent)
Lord Neuberger, President
JUDGMENT GIVEN ON
Heard on 24 February 2015
(Instructed by CPS Appeals and Review Unit)
Tim Owen QC
Mark Summers QC
(Instructed by Lound Mulrenan Jefferies Solicitors)
LORD TOULSON: (with whom Lord Neuberger, Lord Kerr, Lord Reed and Lord Hughes agree)
"between the first day of August 2011 and the 13th 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]."
"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.
POCA money laundering offences
"(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."
"(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."
"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.
"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."
"(a) conceals criminal property;
(b) disguises criminal property;
(c) converts criminal property;
(d) transfers criminal property;
(e) removes criminal property from England and Wales or from Scotland or from Northern Ireland."
"(a) acquires criminal property;
(b) uses criminal property;
(c) has possession of criminal property."
Case law on criminal property
"I accept that section 328 is of broad application, but in my view that seeks to stretch its scope too far. As section 340(3)(b) makes clear, the mental element of the offence includes knowledge or suspicion on the part of the defendant that the property in question is criminal property, but that cannot be the case until it has been acquired by means of criminal conduct. In order for an offence under section 328 to be committed, therefore, the arrangement into which the defendant enters, or in which he becomes involved, must be one which facilitates the acquisition, retention, use or control by another of property which has already become criminal property at the time when it becomes operative. That requirement is not satisfied if the only arrangement into which he enters is one by which the property in question first acquires its criminal character."
"In our view the natural and ordinary meaning of section 328(1) is that the arrangement to which it refers must be one which relates to property which is criminal property at the time when the arrangement begins to operate on it. To say that it extends to property which was originally legitimate but became criminal only as a result of carrying out the arrangement is to stretch the language of the section beyond its proper limits. An arrangement relating to property which has an independent criminal object may, when carried out, render the subject matter criminal property, but it cannot properly be said that the arrangement applied to property that was already criminal property at the time it began to operate on it. Moreover, we do not accept that an arrangement of the kind under consideration in the present case can be separated into its component parts, each of which is then to be viewed as a separate arrangement. In this case there was but one arrangement, namely, that the appellant would receive money, hold it for a period and return it. To treat the holding and return as separate arrangements relating to property that had previously been received is artificial."
"On his analysis an offence is committed where a defendant becomes concerned in an arrangement which facilitates the criminal acquisition of property. The statute requires an arrangement facilitating the acquisition of criminal property. There is a material distinction."
He also rejected the argument that the funds had the character of being criminal property at the time when the arrangement began to operate.
(1) Does the commission of an offence under section 328 require the property to constitute criminal property prior to the arrangement coming into operation?
(2) Does the property have to exist at the time when the defendant enters into or becomes concerned in the arrangement?
(3) Did the sums received into the respondent's accounts constitute criminal property before being paid into those accounts?
(4) Was the actus reus of the offence committed by reason of the arrangement facilitating the retention, use or control of the money paid into the respondent's accounts?
Does the commission of an offence under section 328 require the property to constitute criminal property prior to the arrangement coming into operation?
"Section 327 creates one of three principal money laundering offences. The other two are to be found in sections 328 and 329. Because of the definition of criminal property at section 340, all three principal money laundering offences now apply to the laundering of an offender's own proceeds as well as those of someone else."
The reference to proceeds of crime is clearly a reference to the proceeds of an earlier offence.
"the conversion or transfer of property, knowing that such property is derived from criminal activity or from an act of participation in such activity, 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 activity to evade the legal consequences of his action;
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 criminal activity or from an act of participation in such activity;
the acquisition, possession or use of property, knowing, at the time of receipt, that such property was derived from criminal activity or from an act of participation in such activity;
participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the actions mentioned in the foregoing indents."
"(a) money or other property which is likely to be used for the purposes of terrorism (including any resources of a proscribed organisation),
(b) proceeds of the commission of acts of terrorism, and
(c) proceeds of acts carried out for the purposes of terrorism."
In para (a) the definition includes words which are forward looking, to use Mr Tim Owen QC's description, whereas the definition of criminal property in Part 7 of POCA looks backward.
"It is one thing to criminalise dealing with funds where the dealer knows or has reasonable grounds to believe that they are the proceeds of crime, it is quite a different matter to stigmatise as a money launderer, a lender dealing with its own 'clean' funds because of what the borrower does or intends to do with them."
However, that would be the consequence if property obtained "in connection with" criminal conduct (section 340(5)) bears the extended meaning for which the prosecution contends.
Does the property have to exist at the time when the defendant enters into or becomes concerned in the arrangement?
Did the sums received into the respondent's account constitute criminal property before being paid into those accounts?
Was the actus reus of the offence committed by reason of the arrangement facilitating the retention, use or control of the money paid into the accounts?
"Although the arrangement particularised in count two is limited to facilitation of the retention, use and control of criminal property, facilitation of the acquisition of the money via those accounts is, on the Crown's factual case, an integral part of that arrangement. It seems to us that in these circumstances it is both artificial and illegitimate to seek to sever one element of an integral arrangement (facilitation of acquisition) in order to leave other elements (facilitation of retention, use and control) which, if considered in isolation to constitute the arrangement, would relate to criminal property. Moreover, the position cannot be improved by artificially limiting the particulars of offence alleged in count two to certain elements of the wider arrangement which the Crown maintains was in fact entered into."