Posted: 23 / 06 / 2011
Although the Proceeds of Crime Act 2002 has been a part of UK legislation for nearly ten years now it is still throwing up intriguing technical arguments. One of these concerns an apparent anomaly between Part 5 PoCA 2002 dealing with civil recovery and Part 7 dealing with the criminal offence of money laundering. The issue is, in order to demonstrate that property is derived from crime does the Crown have to identify at least the kind or kinds of unlawful conduct from which the property has been obtained?
It is clear that it is not necessary for the Crown to specify a particular offence, or to identify a particular offender, in order to satisfy the court that property has been obtained by criminal conduct.
But beyond that there appears to be a divergence between what is to be proved (i) to the civil standard (the balance of probabilities) in civil recovery proceedings under Part 5, and (ii) to the criminal standard (beyond reasonable doubt) in criminal prosecutions for money laundering under Part 7.
In short, under Part 5 the Crown does have to identify a kind or kinds of unlawful conduct from which the property was obtained, under Part 7 it does not.
The requirements under Part 5 (civil recovery)
The general purpose of Part 5 PoCA 2002 is to enable the Crown, by civil proceedings, to appropriate property obtained by unlawful conduct. That may be by action in the High Court to ‘recover’ the property, or, in the case of cash, action in the Magistrates’ Court to have the cash forfeit to the Crown. The powers may be used whether or not any proceedings have been brought for a criminal offence in connection with the property, s240.
Part 5 also extends to property which represents other property which had been obtained by unlawful conduct and, in the case of cash, money intended for use in future unlawful conduct.
Conduct occurring in the UK is unlawful conduct if it is unlawful under the criminal law where it occurred. Conduct occurring outside the UK is unlawful conduct if it is unlawful under the criminal law where it occurred and would also be unlawful under the criminal law in any part of the UK, s241.
Section 241(3) provides that the court must decide on a balance of probabilities (i.e. the civil standard) whether it is proved “that any matters alleged to constitute unlawful conduct have occurred”.
In layman’s terms Part 5 enables the authorities to seize and retain the proceeds of crime whether or not anyone has been, or can be, convicted of that crime. Indeed it is not necessary for the Crown to be able to identify a specific offender or a specific offence in order to succeed under Part 5.
It is not necessary even for the Crown to show that the property was obtained by a particular kind of crime. But the Crown does have to satisfy the court, on the balance of probabilities, “that the property was obtained through conduct of one of a number of kinds, each of which would have been unlawful conduct”, s242.
But the Crown will not succeed under Part 5 if all it can say is that the property must have come from crime of some sort but it has no idea what sort of crime that might have been.
So, for example, in the case of a man who has wealth which cannot be explained as having been obtained from any legitimate source, that fact in isolation will not be sufficient as a basis for civil recovery. That was confirmed in the case of R (Director of Assets Recovery Agency) v Green  EWHC 3168 (Admin).
Of course the lack of any identifiable source of known wealth together with other evidence of crime of one sort or another may be sufficient to satisfy the requirements for Part 5.
In the Court of Appeal judgment in Assets Recovery Agency Director v Szepietowski & others  EWCA Civ 766 at para 107 Lord Justice Moore-Bick put it this way, “it is sufficient, in my view, for the Director to prove that a criminal offence was committed, even if it is impossible to identify precisely when or by whom or in what circumstances, and that the property was obtained by or in return for it. In my view Sullivan J. was right, therefore, to hold that in order to succeed the Director need not prove the commission of any specific criminal offence, in the sense of proving that a particular person committed a particular offence on a particular occasion. Nonetheless, I think it is necessary for her to prove that specific property was obtained by or in return for a criminal offence of an identifiable kind (robbery, theft, fraud or whatever) or, if she relies on section 242(2), by or in return for one or other of a number of offences of an identifiable kind”.
The requirements under Part 7 (criminal money laundering)
Part 7 of PoCA on the other hand is concerned with the prosecution of an individual for money laundering.
The principal money laundering offences are set out in sections 327 – 329. These cover the possession, acquisition, use, concealment, conversion, transfer and removal from the jurisdiction of ‘criminal property’ as well as entering into an arrangement concerning ‘criminal property’. In effect almost any involvement with ‘criminal property’ is likely to comprise a money laundering offence.
‘Criminal property’ is defined by s340(3). Property is ‘criminal property’ if it constitutes or represents a person’s benefit from criminal conduct and the alleged money launderer knows or suspects this to be the case.
Of course in a criminal prosecution the offence must be proved to the criminal standard (beyond reasonable doubt).
However there is no reference in Part 7 to a need to identify the offence from which the criminal property was initially obtained (sometimes referred to as the ‘predicate offence’). Nor indeed, for the purposes of Part 7 is it necessary for the Crown to identify even the kind or kinds of predicate offence.
So that in the case of R v Anwoir  EWCA Crim 1354 the Court of Appeal held, at para 21, “We consider that in the present case the Crown are correct in their submission that there are two ways in which the Crown can prove the property derives from crime, a) by showing that it derives from conduct of a specific kind or kinds and that conduct of that kind or those kinds is unlawful, or b) by evidence of the circumstances in which the property is handled which are such as to give rise to the irresistible inference that it can only be derived from crime”.
This approach was followed in the case of R v F & B  EWCA Crim 1868 concerning two people whose luggage was searched at Heathrow Airport in January 2008. Their bags were found to contain £1,184,670 in cash. They were charged with money laundering although at their trial the Crown gave no indication of the kind or kinds of predicate offence from which the cash had been derived. The Court of Appeal confirmed that the prosecution was under no obligation to do so.
A back door route to satisfy the Part 5 requirements?
This arguably opens a back door route which might be available for use in civil proceedings under Part 5.
It may be open to the Crown in civil proceedings to specify “money laundering” as the kind of unlawful conduct from which the property was ‘obtained’ in order to satisfy s242.
In the author’s view this may be appropriate where the predicate offence was committed by someone other than the present holder of the property in question, because it may then be said that the present holder obtained it by acquisition of criminal property or by becoming concerned in an arrangement involving criminal property. However it would not be appropriate where the predicate offence was committed by the person presently holding the property.
To take an example, if John steals and retains a valuable painting then he has committed theft, the predicate offence, and money laundering (by possession of the stolen painting). However it could not be said that he ‘obtained’ the painting by money laundering because the painting did not become ‘criminal property’ until he had stolen it. His obtaining of the painting was by theft (only his retaining of it was a money laundering offence).
In contrast if John steals the painting and passes it to his friend Jane and asks her to keep it so it will not be discovered if the police search his home, then Jane has obtained the painting by money laundering (by entering into an arrangement to facilitate John’s retention of the stolen painting). So it would be reasonable to describe money laundering as the kind of unlawful conduct by which Jane obtained the painting.
So I would suggest that an allegation of money laundering does not in reality represent an easy and universal option for the Crown in civil recovery cases under Part 5.
It has been argued however that, in the case of cash, the Crown could be on stronger ground (see “Seized up?” by David Allan, barrister of 23 Essex Street Chambers – Criminal Law & Justice Weekly, 28 May 2011). This is because any transfer or use or export of the cash by a person who knows or suspects it to be derived from crime would itself be a money laundering offence. Therefore the Crown could argue that the cash was intended for use in unlawful conduct. This would satisfy the requirement for cash forfeiture in s298(2)(b) without any need to specify the kind of predicate offence from which the cash was derived.
That was not the outcome in the recent civil recovery case of Angus v United Kingdom Border Agency  EWHC 461 (Admin) but argument in that case did not centre on s298(2)(b) even though it would appear that Ms Angus, who was stopped at Gatwick Airport, had intended to leave England with the cash which was found in her possession.
There is an argument on that issue to be had on another day!
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