JSC BTA Bank v Ablyazov & Ors

An offence under section 328 of the Proceeds of Crime Act 2002 is a “related offence” for section 13(4)(b) of the Fraud Act 2006. The relevant question is whether the offence necessarily involves conduct with a fraudulent quality. An arrangement facilitating another person’s retention, use or control of criminal property necessarily conceals its criminal source. That concealment is deceptive and therefore fraudulent, even where the property derived from non-fraudulent crime and the alleged offender had only suspicion rather than a fraudulent purpose. Section 13 consequently removes the privilege against self-incrimination in respect of a potential section 328 offence.

The fourth defendant, Drey Associates Ltd, appealed against an order requiring it to provide information. It claimed the privilege against self-incrimination, contending that compliance could found a charge under section 328 of the Proceeds of Crime Act 2002.

The appeal arose from an order of Teare J. The judgment records that Flaux J had held on 11 September 2009 that the defendant could not claim the privilege because section 328 was a “related offence” within section 13(4) of the Fraud Act 2006. The central issue was whether an offence under section 328 necessarily involved fraudulent conduct or purpose.

1. Appeal dismissed. Moses LJ, with whom Sedley and Pill LJJ agreed, held that an offence under section 328 of the Proceeds of Crime Act 2002 was a related offence for section 13(4)(b) of the Fraud Act 2006. The statutory removal of the privilege against self-incrimination therefore applied.
2. For the purpose of the appeal, the court accepted the approach in Kensington International Ltd v Republic of Congo [2007] EWCA Civ 1128: the question was to be judged by the essential character of the offence, rather than by a particular factual way in which it might be committed. The court also accepted that fraud requires deception, rather than dishonesty as its critical distinguishing feature.
3. The conduct criminalised by section 328(1) is entering into, or becoming concerned in, an arrangement facilitating another person’s acquisition, retention, use or control of criminal property. Such an arrangement enables the beneficiary to retain criminal proceeds while concealing their true source. Section 13(4)(b) directs attention to that quality of the conduct, not merely to the alleged offender’s purpose or state of mind.
4. It did not matter that the property might have resulted from crime not itself involving fraud, such as drug dealing. Nor did it matter that the alleged offender might have acted on suspicion rather than knowledge or dishonest intention. The concealment inherent in the arrangement was nevertheless deceptive and fraudulent.
5. Moses LJ was prepared to accept that Flaux J had erred by looking beyond the technical ingredients of section 328 to the facts of the potential offence. That error did not affect the result. Kensington had not decided whether section 328 was a related offence because that question had not been necessary there.

• Court of Appeal (Civil Division): Dismissed the fourth defendant’s appeal and upheld the conclusion that section 328 of the Proceeds of Crime Act 2002 was a related offence under section 13(4) of the Fraud Act 2006.
• High Court, Queen’s Bench Division: The appeal arose from an order of Teare J. The judgment records that Flaux J had concluded on 11 September 2009 that the fourth defendant could not rely on the privilege against self-incrimination. No citation for either decision is stated.