England and Wales Court of Appeal (Criminal Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM THE CROWN COURT
Insert Lower Court Judge Name here
Insert Lower Court NC Number Here

		Royal Courts of Justice Strand, London, WC2A 2LL
		27/10/2006

Lord Justice Hughes :

1. We have before us four further applications and appeals in money laundering cases which were decided in the Crown Court before the House of Lords decision in Saik. We have heard them together in view of the common factors which they share. They raise, however, different individual issues.
2. For the general considerations in cases of this kind we do not attempt to restate what was said in Ramzan and others [2006] EWCA Crim 1974, heard recently in July 2006. This judgment should be read as incorporating the first 40 paragraphs of the judgment in that case.
3. None of the present cases involves a reference to the Court by the CCRC.
4. In none of the present cases have we been invited to consider the substitution of convictions under s 3 or 3A Criminal Appeal Act 1968.

Suchedina

5. Suchedina ran a foreign exchange business which had substantial legitimate trade. Over a period of six months between January and June 2001 approximately £3.5 million in cash was collected either by him or his employees from an intermediary called Hafedh who was indicted with him but absconded before trial. Hafedh had been observed meeting persons involved in drug dealing. The money was collected in supermarket plastic bags, holdalls and similar containers and delivered to Suchedina by anonymous persons. It was then mixed with legitimate money, paid into a bank account, and transferred outside the jurisdiction. The business records were falsified to conceal the movement of the Hafedh money. Whereas Suchedina notified NCIS of his legitimate customers, he did not tell them about any of the Hafedh transactions. He charged four times his ordinary market rate for handling this money.
6. Suchedina's case was that he believed the money to be legitimate. He did not give evidence.
7. The indictment contained three conspiracy counts advanced as alternatives. The first two were single Act conspiracy counts, alleging respectively agreement to contravene s 49(2) Drug Trafficking Act and s 93C(2) Criminal Justice Act 1988. The third count (as left to the jury) was as follows:

"Statement of Offence:

Conspiracy to convert or transfer the proceeds of drug trafficking or relevant criminal conduct, contrary to s 1(1) of the Criminal Law Act 1977.

Particulars of Offence:

[The Defendant and others] between 1.1.01 and 5.6.01…conspired together and with others to convert property, namely banknotes, knowing or having reasonable grounds to suspect that, in whole or in part, directly or indirectly, that property represented another person's proceeds either of drug trafficking or of an offence to which Part VI of the Criminal Justice Act 1988 applies, for the purpose of assisting any person to avoid prosecution for such an offence or the making of a confiscation order, in contravention of section 49(2)(b) of the Drug Trafficking Act 1994 or section 93C(2) of the Criminal Justice Act 1988."

8. For both of those substantive offences referred to, the mens rea is either knowledge or suspicion of illicit origin. In accordance with the law as it was understood at the time, the trial Judge directed the jury that this offence was made out, as to mens rea, by proof either of knowledge or of reasonable grounds for suspicion that money to be handled was at least in part of illicit origin of one kind or the other. For the reasons now explained in Saik that was a misdirection in two ways. First, even for the substantive offences, what matters is actual suspicion, rather than objectively seen reasonable grounds for it. More importantly, for conspiracy, only intention or knowledge will suffice, and suspicion will not.
9. The single judge granted Suchedina leave to appeal. The misdirections to which we have referred are sufficient to require us to allow his appeal and quash his conviction. The Crown so concedes.
10. Mr Bodnar makes, however, further submissions.
11. It was conceded at the trial that Hafedh was dishonest, that the money was from one or other illicit source and that some of it was from drugs. It is clear, given the way the trial proceeded, that the jury must have been satisfied that it came from one illicit source or another.
12. Mr Bodnar's further submission is twofold:

(i) that an either/or conspiracy is not known to the law, at any rate when what is in question is past conduct, rather than a plan looking to the future; and in any event,

(ii) that in order to be convicted a defendant charged with such a conspiracy must be proved to have known from which of the two possible illicit sources the money came; since Suchedina was acquitted by the jury of the single Act conspiracies the jury cannot have been satisfied that he suspected, let alone knew, from which illicit source the money came..

13. We do not allow the appeal of Suchedina on the basis of either of these submissions, neither of which appears to us to be well founded.
14. Where a count is framed as an either/or conspiracy such as count 3 in this case, the allegation is of an agreement to launder money which is of illicit origin and irrespective of which kind of illicit origin. That amounts to an allegation that the Defendant is agreeing to launder money of either or both origins, that is to say an allegation that he intends to launder illicit money irrespective of which of the two types of crime generated it. Such an agreement, if proved, is an offence. Section 1(1) of the Criminal Law Act 1977 expressly provides that a conspiracy is an agreement to a course of conduct which if carried out will necessarily lead to the commission of an offence or offences. The agreement, if carried out, will necessarily lead to the commission of the offence contrary to the Drug Trafficking Act and/or to the offence contrary to the Criminal Justice Act. Such a count is not bad for duplicity; it alleges one agreement.
15. Those propositions, as well as representing our own independent conclusions, are supported by a line of authority. The possibility of such an either/or count was raised, obiter, by this court in El Kurd 199901848/Z3 (26.7.2000); noted in [2001] Crim LR 234. It was expressly upheld in Hussain & Bhatti [2002] EWCA Crim 6; 2 Cr App R 26 at 363. In the case of this very defendant, this Court held in Attorney General's reference No 4 of 2003 [2004] EWCA Crim 1944 that conviction upon this count triggered the confiscation provisions of the Drug Trafficking Act precisely because it was an allegation of agreement to commit offences under both Acts, that is to say to launder the money whichever its illicit provenance; indeed it must follow that it triggered the confiscation provisions of both Acts.
16. The correctness of that conclusion is not altered by the later decision of the House of Lords in Montila [2004] UKHL 50; [2005] 1 Cr App R 26 at 425. The House there held that where either of the substantive offences referred to in this count is charged, the Crown must prove not only that the Defendant had the necessary mens rea, but that the money was actually the product of drug trafficking or criminal conduct, as the case may be. But that does not mean that an agreement to launder money whichever its illicit origin ceases to be an agreement to launder money which is intended actually to be from drug trafficking and/or to launder money which is intended actually to be from criminal conduct. On the contrary, that is precisely the agreement which is charged by a count such as count 3. The cases of El Kurd, Hussain & Bhatti and AG ref 4 of 2003 were all considered by their Lordships in Montila. At paragraph 44 of the sole speech, Lord Hope said this:

"Or it might have been open to the Crown, if there was a problem about proving origin, to charge the defendants with a conspiracy to launder money which had been obtained illicitly whether by way of drug trafficking or other criminal activity, as Latham LJ said in R v El Kurd."

And that was cited as one reason why the decision in Montila would not necessarily cause impossible difficulties where a defendant must have been guilty of laundering money of one illicit origin or the other, but it was not capable of proof which.

17. We recognize that in Liaquat Ali at paragraph 147, Hooper LJ said this:

"It seems to us that R v Singh [2003] EWCA Crim 3712 does not survive R v Montila. An intention to launder illicitly obtained money is not enough. The money must be proved to have been the proceeds of drug trafficking or other criminal conduct. On to that requirement, section 1(2) of the 1977 Act bites."

18. Singh had held that an allegation in a conspiracy count that the defendant had reasonable grounds for believing the money to be illicit was an immaterial averment. Since the jury may have convicted on the basis of suspicion, the case cannot survive Saik. The proposition which mattered to the decision in Liaquat Ali was that section 1(2) of the 1977 Act bites on the origin of the money and thus that intention or knowledge must be proved for conspiracy, rather than suspicion. In that, Liaquat Ali crucially formulates for the first time the correct analysis of conspiracy which the House of Lords upheld in Saik. But Saik itself now makes clear that where a conspiracy count looks to future transactions there can be no question of having to prove that the money is of illicit origin, for ex hypothesi it is as yet unidentified: see Lord Nicholls at paragraph 24. Lord Nicholls there held that paragraph 147 of Liaquat Ali "should not be read as applying in this type of case." Although at paragraph 74 Lord Hope, after citing parts of the judgment in Liaquat Ali which included paragraph 147, observed that there was much in the reasoning of that decision with which he agreed, that cannot be read as undermining the specific qualification of one small part of the reasoning which had been made by Lord Nicholls at paragraph 24. On the contrary, it is clear that the ratio decidendi of Liaquat Ali, namely that because of section 1(2) Criminal Law Act 1977 suspicion was not sufficient for conspiracy, was indeed upheld in Saik, thus amply justifying Lord Hope's approval of the decision.
19. Where therefore such an either/or conspiracy count is charged, the Defendant must be proved to have agreed, at some stage, to launder money which he intends shall be of one or other illicit origin, or of both. It is not enough that he has agreed to launder money which he only suspects may be of illicit origin: Saik. Nor is it enough that he is prepared to take the risk that it may be of illicit origin. He must intend to launder money which is of illicit origin of one kind or the other, or both. But if he does intend to launder it whichever its illicit origin, he is still intending to launder money intended to be illicit, and he is entering an agreement to a course of conduct which will, if carried out in accordance with his intention, necessarily amount to or involve the commission of one or other or both of the two substantive offences referred to.
20. If such an agreement is proved, the offence is constituted by the agreement. As with any other conspiracy, it matters not that only one of the substantive offences is in the end committed, because the money is in fact from one only of the two possible kinds of illicit source. Indeed, as with any other conspiracy, it matters not if neither substantive offence is in the end committed. No money at all may in the end, despite the agreement, be handled. Or such money as is handled may turn out to be of innocent origin. It is therefore not necessarily essential in every case for conviction of conspiracy that money which is handled subsequent to the agreement be proved to be in fact of illicit origin. The shorthand proposition sometimes encountered that Montila applies equally to conspiracy as to substantive charges is therefore not accurate.
21. In many cases the Crown invites the jury to infer agreement from one or more overt acts said to amount to substantive offences. In some of those cases there may be no basis for inferring an agreement antecedent to the first transaction; the proper inference may be limited to such agreement as was constituted merely by participation in that transaction. That will probably not be particularly common in money laundering cases. In most of them it will be open to the jury to infer an antecedent agreement from the fact that the overt acts took place; that is especially so in the type of case where very large sums of cash are handed over at surreptitious meetings in anonymous locations, or are otherwise attended by suspicious circumstances – it will usually be at any rate open to the jury to conclude that the parties would not have met at a motorway service station or similar place and given and received hundreds of thousands of pounds in cash without some antecedent agreement to do so. But there may well be some cases in the category we have mentioned. As Saik makes clear, in the case of a single transaction relating to identified property, where there is no basis for inferring an agreement to continue to further as yet unidentified transactions, it is appropriate to speak of knowledge of origin as the mens rea of the conspiracy although that does not differ, as it seems to us, from intention that the identified money be of illicit origin. And in such a case it may well be that there is no basis for inferring any knowledge/intention of illicit origin unless it be proved that the money is in fact of such origin. In such a case the Judge will so direct the jury. In other cases it may be open to the jury to infer even from one or more overt acts an agreement to launder future as yet unidentified money. If that is the case, then as Lord Nicholls made clear at paragraph 24 of Saik, there can be no question of the actual origins of future unidentified money being proved. All this will depend on the facts of each individual case.
22. The Crown seeks a re-trial of Suchedina. Mr Bodnar submits that there should be no re-trial. We have already given our reasons why the acquittals on counts 1 and 2 do not carry the consequence that the appellant cannot be convicted on count 3. There is moreover in this case powerful evidence, if the jury accepts it, of an agreement which ante-dated the first transaction. Suchedina wrote a letter in anticipation of the deliveries in which he said that he could start receiving parcels next week and he would then be in a position to 'do the needful and add to what has to be added to it', which appears to be a reference to mixing the money to avoid tracing. But even if there were not, it would be open to the jury to convict of the either/or count provided that it was satisfied that the Defendant agreed at some stage to launder future money intending that it should be of one or other kind of illicit origin or of both.
23. Mr Bodnar referred us to Suchedina's personal circumstances. He is a middle aged man of no previous convictions who has served his sentence. Whilst that is so, the very important matter of the confiscation order made hangs on whether he be proved guilty or not. The criminal conduct alleged, if proved, is by no means small-scale. There are of course larger scale money-launderers still, but he nevertheless processed £3.5m. He lives now in Dubai, and has written a letter suggesting he may find it difficult to return, either because of his immigration position or because his family circumstances are complex, involving a transnational marriage. We cannot see that personal family difficulties in returning are such as to prevail against a re-trial, although we should say that of course if he were to be refused entry there should be no question of the Crown seeking to proceed in his absence; we understood Mr Walbank to agree.
24. We are satisfied that the interests of public justice require a re-trial in this case. We direct that it take place at the Crown Court at Inner London unless otherwise directed by the Presiding Judges of the SE Circuit; he is to be arraigned within 2 months of today unless there is further order of this Court. In the meantime he should have unconditional bail.

Hosier and Lehaney

25. These two applicants were convicted at Canterbury Crown Court on 15 November 2004 of one count of either/or conspiracy to convert or transfer; the relevant substantive offences were once again those under s 49(2) DTA 1994 and s 93C(2) CJA 1988.
26. Between mid April and mid August 2002 the Defendants, who lived in the Medway towns, took just over £500,000 in cash into three different exchange dealers in central London and converted it into Euros, again in cash. Hosier was concerned from the outset. Lehaney was recruited by him to assist. The sterling cash taken to the bureaux was in shopping bags or in one instance a cardboard box. On one occasion Lehaney made a telephone call on the bureau telephone to Hosier's number and asked for the number called to be deleted. In August Hosier was arrested leaving Dover for France with €387,500 (viz £230,000 or thereabouts) in cash. Some of it was concealed strapped to his legs. When asked if he was taking money abroad he told a series of lies; the money was found bit by bit in the face of his denials. He also said that he was going to Calais for a few hours, but had an overnight bag and had telephoned a number in the Netherlands that morning. At trial, Hosier gave evidence that he was working as a bodyguard or security man for an Indian jeweller who had asked him to convert the cash; he said that he believed it to be the legitimate proceeds of the jewellery trade. He refused to name the employer. Lehaney did not give evidence, but in his interviews with the investigators had raised a similar defence that he believed the money legitimate, having been told by Hosier that it was from the jewellery trade. Those defences the jury disbelieved.
27. This was not a case in which the Judge directed the jury that either suspicion, or reasonable grounds for suspicion, as to the source of the money would suffice. He told the jury that the defendants must be proved to have known that there was a scheme to launder money which came from one or other type of illicit source, and that they were joining that scheme. A little later he told them that it must be shown that the Defendants knew or believed that the money was illicit. He also directed them that the money must be shown in fact to have come from one or other illicit source, and that the Defendants must be proved to have had the criminal purpose referred to in the two statutes.
28. Whether or not there is in ordinary language and on the facts of any individual money laundering case any significant difference between belief and intention it is unnecessary for us in this case to decide. We have observed the differences of expression (all obiter) between on the one hand Hooper LJ in Liaquat Ali at paragraph 98 and Lord Brown in Saik at paragraph 119, and on the other Lord Nicholls in Saik at paragraphs 25-26. We have no doubt that the correct direction is that the jury must be satisfied of intention, or in some cases knowledge; those are the words which appear in s 1(2) Criminal Law Act 1977.
29. However that may be, the Defendants' notices of appeal are, respectively, 7 and 10 months out of time. The question arises whether the court should exercise its discretion to grant a substantial extension of time and leave to appeal in each case. The basis of the request to do so is that it is said that until the decision in Liaquat Ali there existed no grounds of appeal. The notices of appeal were given promptly after that. Further, Mr Gower QC submits that the notices of appeal were launched at a time when Hosier was still serving his sentence and the time for payment of confiscation which had been ordered had not yet arrived; that means, he submits, that to grant leave in this case would not be taken to be opening the way to old cases generally.
30. We have reviewed in Ramzan (paras 30-40) the law relating to the grant of leave to appeal out of time in cases such as this. We ask ourselves whether the Defendants will have suffered substantial injustice if leave be refused. They must both, on the verdicts of the jury, have committed one or other substantive offence involving large sums of money. We are satisfied that neither can be said to suffer substantial injustice. Indeed the evidence of criminal intent for conspiracy was very strong. In both cases we refuse leave to appeal.

Hadley

31. Over a period in 2001 Harmer and Hadley were observed making a number of meetings at places such as Motorway service stations either with each other or, in the case of Hadley, with a variety of other people. The Crown case, which the jury must have accepted, was that packages of money were collected by Hadley from others and passed on to Harmer. Harmer had a number of company bank accounts, some at least of which may well have had legitimate, if undocumented, business transactions. He made payments into these accounts which included around £850,000 in cash, generally paid in in smallish amounts and at different branches even on the same day. The cash deposited was thus mixed with other money and then that much and more was transferred to bogus accounts in Spain which had been opened in false or 'borrowed' identities. Neither Defendant gave any evidence at the trial. Harmer called evidence of his legitimate, if undocumented, business supplying construction industry labour, but this did not account for the receipt of cash. In interview Harmer said that any cash he handled was money given to him by unnamed and unrecorded investors for property investment in Spain, but no evidence of this was presented. Hadley said in interview that he had a job as a contact-chaser for an engineering company and needed to meet people at places which would include service stations, and he called evidence to support that assertion, but he declined to answer any other questions. His case seems to have involved standing on the proposition that it had not been established that he handled any cash or had any involvement in the money banked and moved out of the jurisdiction by Harmer. However faxes found at Harmer's home which concerned the overseas transfers to bogus accounts were shown to have been sent from a fax machine in Hadley's home.
32. Hadley absconded before sentence and remains at large. We are told, and accept, that he has nevertheless remained in contact with his solicitors and has given authority for this application for leave to appeal to be made. In those circumstances we consider it on its merits in accordance with R v Charles and Tucker [2001] EWCA Crim 129.
33. Both defendants were convicted upon the sole count left to the jury. It was an either/or conspiracy count alleging agreement to convert or transfer money which they had reasonable grounds to believe were the proceeds either of drug trafficking or criminal conduct by another.
34. As is now clear from Saik and other cases, the count thus framed misstated the mens rea of conspiracy to commit the substantive offences under s 49(2) or 93C(2). The error is underlined by the fact that the Crown assented to the deletion of the words "knew or" which had previously appeared in the particulars of offence before the words "had reasonable ground to suspect.....".
35. Secondly, this trial proceeded on the basis that reasonable grounds for suspicion were sufficient, whether or not the Defendants actually suspected illicit origins.
36. Harmer appealed in time, and was granted leave by the single Judge on grounds which were in the end rejected by this court. By the time his appeal came on for hearing Montila had been decided in the House of Lords. This court allowed his appeal on two grounds.

i) Since the charge was conspiracy, knowledge or intention that the money be illicit had to be proved and this was exactly what the Crown accepted it could not prove. That ground for the decision foreshadowed Liaquat Ali and Saik.

ii) It was understood that the Crown had conceded at trial that not only could it not prove which of the two kinds of illicit origin the money had, but it could not prove that it had any illicit origin. Since the agreement charged was proved only by inference from overt acts, proof of actual illicit origin was required by Montila. That ground needs to be viewed now in the light of the decision in Saik that there can be no question of proof of actual illicit origin where agreements for the future are concerned.

37. Hadley did not appeal after the trial. He launched the present application only after the decision on Harmer's appeal, and he did so promptly after that.
38. We apply the principles which are set out in Ramzan paragraphs 30-40 to the question whether Hadley should now be granted the indulgence of an extension of time for leave to appeal following the change in the law.
39. We were at first concerned that this might be a case in which it could not confidently be said that any money laundering offence at all had been committed. If that had been so, it would have been a material, although not necessarily a decisive, factor. Our doubt arose from the apparent agreement of the Crown in the appeal of Harmer that it could not prove any illicit origin of the money actually handled. We have had the advantage of a fuller examination of what happened at the trial than this court in Harmer would have had any occasion to undertake. It is clear from a transcript of the Crown's closing speech that it was being contended to the jury that the circumstances in which the money was received in clandestine locations, and banked in small tranches, as well as the manner in which it was subsequently sent abroad to bogus accounts, carried the inference that it came from illicit conduct of some kind. It is also clear that at the time of the trial the decision of this court in Montila (which was then the operative decision) meant that the Crown did not in any money laundering case have to show any actual illicit origins, so the question of actual source would have been regarded as immaterial. Exactly how this court in Harmer came to have the understanding which it plainly did we cannot resolve. But the factual position was that there was ample evidence from which illicit sources of one kind or the other could be inferred. The jury must have found, contrary to the denial advanced on his behalf, that Hadley participated in the handling of this money, and it must have found that he at least had reasonable grounds to suspect that it was illicit. The difference between an objective test and the correct subjective test is in principle an important one, but the evidence that he in fact suspected it was overwhelming given the circumstances in which he received it in clandestine locations and the fax link to its disposal to bogus accounts abroad, particularly in the absence of any explanation from him. Moreover, the circumstances clearly justify the inference both of antecedent agreement and of agreement to future transactions. We are accordingly satisfied that this applicant must have committed money laundering offences. We are not satisfied that refusal of leave will occasion him any let alone substantial injustice. In those circumstances we are not prepared to grant leave to appeal.