Money laundering: ambit of arrangement

In R v GH [2015] UKSC 24, somewhat unusually, the Supreme Court was considering an appeal by the Crown against the dismissal of its appeal by the Court of Appeal against a ruling that there was no case to answer against the Respondent at the conclusion of the prosecution case in a trial at the Central Criminal Court. The case was about money laundering and the Supreme Court was required to grapple with the ambit of section 328 Proceeds of Crime Act 2002, one of the triumvirate of money laundering offences created by that Act. A co-defendant had pleaded guilty to offences of fraud which arose out of a scheme whereby members of the public were defrauded under the auspices of buying discounted motor insurance online. The reality was that there was no motor insurance and the websites were simply a sham designed to extract money. The architect of the fraud had asked the Respondent to open two bank accounts in order to receive the proceeds of the fraudulently extracted money and he duly did so. The prosecution did not contend that he necessarily knew about the fraud but that he must have suspected that there was some criminal purpose and therefore the opening of the bank accounts contravened section 328 as an “arrangement which he knew or suspected would facilitate the retention, use or control of criminal property”. At the close of the prosecution case the Recorder upheld a defence submission that the offence was not made out as no criminal property existed at the time that the bank accounts were opened. The Court of Appeal rejected an appeal by the prosecution but on the basis that the funds were not criminal property at the time the arrangement operated upon it (ie that the money was not actually criminal property at the time it was paid into the account). The Supreme Court, having reviewed the relevant authorities rejected this finding and allowed the appeal. Lord Toulson said: “the character of the money did change on being paid into the respondent’s accounts. It was lawful property in the hands of the victims at the moment they paid it into the respondent’s accounts. It became criminal property in the hands of [the convicted defendant], not by reason of the arrangement made between [him] and the Respondent but by reason of the fact that it was obtained through fraud perpetrated on the victims. There is no artificiality in recognising that fact, and I do not see it as illegitimate to regard the respondent as participating in (or, in the language of section 328, entering into or becoming concerned in) an arrangement to retain criminal property for another”.