Regina v. Montila and others (Appellants) (On Appeal from the Court of Appeal (Criminal Division))

For the third-party money-laundering offences under section 49(2) of the Drug Trafficking Act 1994 and section 93C(2) of the Criminal Justice Act 1988, the prosecution must prove that the property was in fact another person's proceeds of drug trafficking or criminal conduct. Knowledge or reasonable grounds for suspicion supplies the required state of mind but does not replace that element of the actus reus.

Statutory headings and side notes may be considered as part of an enactment's context. Their unamendable character reduces their weight but does not require courts to disregard them.

Nine appellants awaiting trial faced paired counts of converting the proceeds of drug trafficking, contrary to section 49(2)(b) of the Drug Trafficking Act 1994, and converting the proceeds of criminal conduct, contrary to section 93C(2) of the Criminal Justice Act 1988. The allegations concerned 34 transactions in which more than £3 million in sterling banknotes was converted into Dutch guilders.

At a preparatory hearing, the Crown Court held that the prosecution had to prove the property's criminal origin. On the prosecutor's interlocutory appeal, the Court of Appeal allowed the appeal: [2003] EWCA Crim 3082; [2004] 1 WLR 624. It held that proof of actual criminal origin was unnecessary under subsection (2) of either provision.

The certified question was whether the Crown must prove that the property was the proceeds of crime under the 1988 Act or the proceeds of drug trafficking under the 1994 Act.

Appeal allowed unanimously. The Appellate Committee, comprising Lord Bingham of Cornhill, Lord Steyn, Lord Hope of Craighead, Baroness Hale of Richmond and Lord Carswell, delivered a single considered opinion. The Crown Court judge's decision was restored and the certified question was answered affirmatively.

1. The opening words of each subsection strongly indicated that the offence concerned property which was in fact another person's proceeds of drug trafficking or criminal conduct. A person may reasonably suspect something which is untrue, but cannot know a fact which is untrue. The property's specified character was therefore the starting point, followed by the question whether the defendant knew it or had reasonable grounds to suspect it.

2. The surrounding statutory scheme confirmed that construction. Subsection (1) plainly required proof that the property was the defendant's own proceeds. The materially identical wording used for the third-party offence in section 14(2) of the Criminal Justice (International Co-operation) Act 1990 retained the same meaning when re-enacted. Section 14(3) would also produce an irrational result if a person could commit money laundering by acquiring innocent property merely because there were reasonable grounds to suspect a criminal origin.

3. Headings and side notes could be considered as part of the enacted context. They appeared in the Bill throughout its passage and guided the reader, although their unamendable character meant that they carried less weight than provisions open to parliamentary debate. Here, the headings and side notes identified the subject matter as actual proceeds and supported treating criminal origin as an essential part of the actus reus.

4. The international instruments forming the statutory background contemplated property which was in fact criminal proceeds. Domestic legislation could go further by permitting proof through reasonable suspicion, but removing the need to prove criminal origin would have been a significant further departure for which Parliament received no indication.

5. Practical difficulty in proving origin could not displace the statutory meaning. Evidence establishing knowledge or reasonable grounds to suspect would often also support an inference about origin. Depending on the facts, attempt or conspiracy charges could address uncertainty about whether the suspected source was drug trafficking or other crime.

1. House of Lords: Allowed the appellants' appeal, restored the Crown Court's ruling and answered the certified question affirmatively: [2004] UKHL 50.
2. Court of Appeal (Criminal Division): Allowed the prosecutor's interlocutory appeal and held that actual criminal origin need not be proved under subsection (2) of either provision: [2003] EWCA Crim 3082; [2004] 1 WLR 624.
3. Crown Court at Canterbury: At a preparatory hearing, Judge van der Bijl held that the prosecution had to prove that the property was in fact the proceeds of drug trafficking or criminal conduct.