Khanani, R. v

An arrangement which began lawfully may nevertheless become a money-laundering arrangement when all elements of the offence under section 328 of the Proceeds of Crime Act 2002 are present. The prosecution must prove criminal property, an arrangement facilitating its acquisition, retention, use or control, and the defendant’s knowledge or suspicion of its criminal character.

Where the charge period is material, proof that those elements existed during that period is sufficient. The prosecution need not disprove the possibility that criminal property was processed before it. An earlier lawful arrangement does not itself establish earlier criminal conduct or make a later conviction retrospective.

The appellant and his son were convicted at Kingston-upon-Thames Crown Court of entering into a money-laundering arrangement contrary to section 328 of the Proceeds of Crime Act 2002. The prosecution alleged that they operated the United Kingdom side of a Hawala network and collected large cash sums in a manner concealing the identity of those providing the money.

The son did not pursue his appeal. The appellant contended that his arrangement with a principal in Karachi had begun in 2001 or 2002, before the indictment period of 23 February 2003 to 1 September 2004. He argued that conviction would therefore impose retrospective criminal liability. The central issue was whether the prosecution had to prove that no criminal property had been processed before the indictment period.

1. Appeal dismissed. The appellant’s conviction was not retrospective. The fact that an arrangement between an agent and a principal began before the indictment period did not mean that an offence under section 328 of the Proceeds of Crime Act 2002 had then been committed.
2. The offence required proof of three matters: that the money was, wholly or partly and directly or indirectly, criminal property; that the defendant entered into or became concerned in an arrangement which he knew or suspected would facilitate its acquisition, retention, use or control; and that he knew or suspected its criminal character. No offence arose until all three ingredients were established.
3. An arrangement may be lawful when made and may remain lawful in the principal’s mind. The agent can nonetheless become concerned in a prohibited arrangement when he uses it to facilitate the principal’s acquisition of criminal property while knowing or suspecting that character. The prosecution did not have to prove any mens rea on the part of the principal.
4. The evidence of ledgers and surveillance was capable of proving that criminal property was processed during the indictment period. There was no equivalent evidence for the earlier period. The appellant’s assertion that the arrangement had always operated in the same way did not establish that criminal property had previously been processed. Disbelief of his account could not supply affirmative evidence of such earlier conduct.
5. The prosecution was not required to prove that the appellant had not dealt with criminal property before the indictment period. That proposed burden was wrong in principle and would be practically impossible to discharge. The criticism of the summing-up therefore failed.

• Court of Appeal (Criminal Division). The appellant’s appeal against conviction was dismissed: [2009] EWCA Crim 276.
• Kingston-upon-Thames Crown Court. On 23 November 2007, the appellant and his son were convicted of entering into a money-laundering arrangement contrary to section 328 of the Proceeds of Crime Act 2002.