Gabriel, R. v

For possession of criminal property, the prosecution must prove that the property represents a benefit from criminal conduct. Profits from legitimate trading do not become criminal property merely because they were not declared for income-tax or benefit purposes.

A failure to declare income may itself found an offence. Benefits obtained through a false declaration or a failure to disclose a relevant change may be a pecuniary advantage under section 340(6). The prosecution must, however, identify and prove that alleged criminal conduct. A direction referring generally to dishonesty is inadequate where it does not explain whose dishonesty is alleged and its connection with the property.

The appellant was convicted at Burnley Crown Court of two counts of possessing criminal property, contrary to section 329(1)(c) of the Proceeds of Crime Act 2002. Cash totalling £17,770 had been found at her home. The Crown alleged that it was the proceeds of crime; the defence said it derived from savings and gambling winnings.

During deliberations, the jury asked whether regularly buying and selling goods to supplement household income without declaring that income to the Department for Work and Pensions or Inland Revenue was a criminal offence. The Recorder answered that both matters could constitute an offence if dishonesty were proved. The appellant appealed against conviction on the ground that this direction wrongly allowed legitimate trading to be treated as generating criminal property.

1. Appeal allowed; convictions quashed. The direction rendered the verdicts unsafe. The prosecution had to prove that the cash was criminal property within sections 329 and 340 of the Proceeds of Crime Act 2002.

2. Profits from trading in legitimate goods cannot be converted into criminal property merely because they were not declared to the Inland Revenue or the Department for Work and Pensions. The failure to declare profits may itself give rise to an offence, but it does not make the legitimate trade criminal conduct. The Recorder’s answer failed to correct the assumption apparent in the jury’s question that non-declaration itself made the trading profits criminal property.

3. The reference to dishonesty did not cure the defect. It did not identify who had to act dishonestly, when, or in connection with which transaction. Benefits obtained through a false declaration or a failure to disclose a change of circumstances might amount to a pecuniary advantage under section 340(6). However, no such false declaration or non-disclosure had been alleged or proved at trial.

4. The Crown had presented the case as money laundering, not as income-tax or benefit fraud. The jury’s question introduced matters not supported by evidence or allegation. Since the identical direction covered both possible bases, the court could not know whether the jury convicted on the impermissible basis of undeclared profits from legitimate trade.

5. As general guidance, the court observed that the money-laundering provisions are wide and may tempt a jury to reverse the burden of proof. The prosecution should therefore give particulars, or explain in its opening, the facts and inferences relied on to establish that property is criminal property. This may properly limit the criminal conduct alleged.

• Court of Appeal (Criminal Division): appeal against conviction allowed and convictions quashed: [2006] EWCA Crim 229.
• Burnley Crown Court: the appellant was convicted on 28 October 2004 of two counts under section 329(1)(c) of the Proceeds of Crime Act 2002 and sentenced on 26 November 2004 to concurrent terms of six months’ imprisonment.