Hussain R. v

For a statutory conspiracy to commit money laundering, where the substantive offence requires that property is in fact criminal proceeds, suspicion is insufficient. Under section 1(2) of the Criminal Law Act 1977, the accused and at least one other conspirator must know that the property is, or will be, such proceeds when the agreed conduct occurs.

A prior conviction of a non-defendant may be admitted under the Police and Criminal Evidence Act 1984 where it is relevant to an issue. Evidence may identify the factual basis of that conviction, subject to fairness and clear limiting directions. Banknote-contamination evidence may give limited support to an inference about the origin of cash, despite not relating directly to the cash charged.

The appellants operated, or were associated with, Hawala money-transfer businesses. They were convicted at separate trials of conspiracies to launder banknotes said to be the proceeds of drug trafficking or other criminal conduct.

The Crown alleged that substantial cash deposits lacked the records expected of ordinary Hawala transactions. At the second and third trials the judge admitted evidence of convictions of couriers in an earlier trial and expert evidence that some banknotes passing through Watan Travel were unusually contaminated with drugs.

The jury were directed that they could convict if the defendants knew or suspected that the money was criminal proceeds. The central issue on appeal was whether that direction satisfied section 1 of the Criminal Law Act 1977 after Montila [2004] UKHL 50.

1. The appeals were allowed. The jury had been wrongly directed that suspicion of the criminal provenance of the money could suffice for conspiracy. The error rendered the convictions unsafe.

2. Section 1(1)(a) of the Criminal Law Act 1977 was satisfied on the jury’s findings that at least part of the money was in fact the proceeds of drug trafficking. If the agreed course of conduct had been carried out, it would necessarily have involved the substantive offence. The appellants’ first argument therefore failed.

3. The decisive point was section 1(2). Following Montila [2004] UKHL 50, the fact that the property was criminal proceeds was necessary for offences under section 49(2) of the Drug Trafficking Act 1994 and section 93C(2) of the Criminal Justice Act 1988. In a conspiracy, the accused and at least one other party had to know that fact would exist when the agreed conduct occurred. Mere suspicion did not meet that requirement. The court held that Harmer [2005] EWCA Crim 01 reflected the law after Montila, while the relevant reasoning in Rizvi and Chisti and Singh could not survive it.

4. The court nevertheless rejected the challenges to the evidential rulings. Under sections 74 and 75 of the Police and Criminal Evidence Act 1984, the earlier convictions of Malik and Carr were relevant to whether money delivered through Watan Travel was drug-trafficking proceeds. The prior jury direction could in principle identify the factual basis of those convictions. The judge’s limiting directions and exclusion of Ramzan’s conviction meant that admission was not unfair under section 78.

5. The contamination evidence was logically relevant, although of limited weight. It could support an inference that heavily contaminated cash passing through Watan Travel was non-Hawala cash. The judge’s detailed repetition of the charts was unfortunate, but did not independently make the convictions unsafe.

6. The court also observed, without deciding the appeals on this basis, that conspiracy counts may create an additional mens rea burden where substantive money-laundering counts would otherwise be numerous. It invited consideration of procedural solutions to the rule against duplicity.

• Court of Appeal (Criminal Division): Allowed the appeals against convictions from the Crown Court at Leeds and quashed the conspiracy convictions: [2005] EWCA Crim 87.
• Crown Court at Leeds: HHJ Wolstenholme convicted Ali, Hussain and Khan in June 2003, and Shahid Bhatti in October 2004, of conspiracy offences involving alleged money laundering.