Smith, R. v

For a money-laundering charge under Proceeds of Crime Act 2002, criminal property need not be proved by identifying a particular offence or a specific class of criminal conduct. It may be established by evidence of specified unlawful conduct, or by handling circumstances which permit only the inference that the property derived from crime.

Property may represent a benefit from criminal conduct indirectly and in part. It is not enough that legitimate capital was used to facilitate crime. However, a jury may find that money is criminal property where the evidence shows that it derived from, or represented, the benefit of criminal conduct.

Following a jury trial at Kingston upon Thames Crown Court, the appellant was convicted of conspiracy to cheat the public revenue and of entering into or becoming concerned in a money-laundering arrangement. He appealed only against the money-laundering conviction.

The prosecution alleged that an apparent £8 million loan to Amber Communications Management Ltd was a sham. The money was said to have passed from third-party payments connected with MTIC fraud, through offshore accounts, before being advanced to the company and promptly recycled through further accounts.

The central issue was whether there was sufficient evidence that the loan funds were criminal property within section 340(3)(a) of the Proceeds of Crime Act 2002, so that the money-laundering count should have been left to the jury.

1. Appeal dismissed. Applying the no-case-to-answer test, the judge had to decide whether the evidence viewed as a whole was capable of permitting a properly directed jury to convict. There was ample evidence capable of doing so.

2. Under section 340(3)(a) of the Proceeds of Crime Act 2002, the prosecution did not have to prove that the funds included a particular successful fraudulent VAT repayment. Nor did it have to identify a particular crime or type of criminal conduct. Criminal property could be proved either by evidence of specified unlawful conduct or by circumstances which admitted only the inference that the property derived from crime.

3. The evidence went beyond a bare assertion that third-party payments had occurred. It permitted the jury to conclude that the payments to Juleo were tainted by criminality, represented benefits obtained through MTIC fraud, and passed indirectly through Padani and Seaside to ACM. The circular and rapid movement of the funds, their links with defaulting traders and their use to maintain the fraudulent trading operation were capable of supporting that conclusion.

4. The court accepted the trial judge’s distinction between money which was already criminal property and legitimately earned working capital merely used to facilitate a fraud. The prosecution case was that these loan funds were already criminal property before the alleged arrangement. The observations in R v Ahmad and R v Khan did not require a different result because they concerned different issues and facts.

5. The case was therefore properly left to the jury on the money-laundering count, and the conviction stood.

• Court of Appeal (Criminal Division) — appeal against the money-laundering conviction dismissed: [2015] EWCA Crim 333.
• Crown Court at Kingston upon Thames — after a jury trial, the appellant was convicted on 20 February 2014 of conspiracy to cheat the public revenue and of a money-laundering offence. He was sentenced on 10 April 2014. No lower-court citation was stated.