Supreme Court of United Kingdom- Deciding the appeal filed by the prosecution in a money laundering case wherein the respondents were charged with breach of Section 328(1) of the Proceeds of Crime Act, 2002 (POCA), four main issues were raised, namely, whether Section 328 POCA requires property to constitute “criminal property” prior to the arrangement operating, whether “criminal property” has to exist when the defendant enters or becomes concerned with the arrangement, whether the sums received into the bank accounts constituted “criminal property” before being paid into the account, whether the actus reus of Section 328 POCA offence was committed. The Court in order to reach a decision explained and interpreted various provisions of POCA, Council Directives 91/308/EEC and 2005/60/EC as well as referred to cases on “criminal property”.
As per the facts, a fraudster, B, established 4 “ghost” websites falsely pretending to offer cut-price motor insurance. He also recruited associates to open bank accounts for channeling the proceeds. H was one such associate. One website was named AM Insurance, which operated from 1 September 2011 to January 2012. Shortly before the website went live, H opened two bank accounts, one with Lloyds Bank and one with Barclays Bank. Subsequently, B took control of these accounts and the related bank cards. In total, members of the public were duped into paying £417,709 into the Lloyds’ account and £176,434 into the Barclays’ account for non-existent insurance cover. B pleaded guilty while H stood trial.
The Court unanimously allowed the petition and held with regard to the first issue that the “criminal property” in Sections 327-329 POCA refer to property which already has the quality of being “criminal property” by reason of prior criminal conduct distinct from the conduct alleged to constitute the commission of the money laundering offence itself, with regard to the second issue that it does not matter whether criminal property existed when the arrangement was first made but what matters is that the property should be criminal when the arrangement operates on it. The Court further observed that if Section 328 did not require property to constitute criminal property before an arrangement came into operation, it would have serious potential consequences in relation to banks and other financial institutions that are already under onerous obligations to report known, suspected or reasonably suspected money laundering.
Lord Toulson, answering the third and fourth issue stated that the sums received did not constitute “criminal property” before being paid into the bank accounts and the property of victims turned into criminal property not by the arrangement but by the fact that it was obtained from the victims by deception making the said arrangement between B and the respondent for its retention capable of constituting an offence under Section 328, respectively. [R v. GH, [2015] UKSC 24, decided on 22.4.2015]
Article referred: http://blog.scconline.com/post/2015/05/14/criminal-property-mentioned-in-the-proceeds-of-crime-act-2002-interpreted.aspx
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