Fulton & Anor, R. v

For sentencing a money-laundering offence under section 327 of the Proceeds of Crime Act 2002, harm is initially assessed by the full value of the laundering activity. It is not confined to the amount of criminal proceeds within the funds, nor to the loss caused by the underlying crime. The harm caused by an identifiable underlying offence may justify an upward adjustment, but it does not replace the initial assessment. Where the conviction is for conspiracy, the overall scale is assessed by reference to the conspiracy. A participant’s lesser involvement is instead reflected in culpability and the sentence selected within the applicable range.

The appellants were convicted at the Crown Court in Manchester of conspiracy to disguise, convert or transfer criminal property. The laundering was connected with an MTIC VAT fraud and involved transactions totalling about £30 million through a money service bureau.

They appealed their sentences on the sole ground that the judge had wrongly placed the harm in Category 1 of the Sentencing Council guideline. They contended that harm should instead be limited to the foreign VAT loss attributable to the funds passing through the bureau, and that Fulton’s figure should be further reduced to reflect the transactions he personally handled.

The central issue was whether sentencing harm for the laundering conspiracy was measured by the total funds laundered or by the underlying tax loss.

1. The appeals were dismissed. The sentencing judge was entitled to assess harm by reference to approximately £30 million, being the total value of the laundering activity, and to place the offending in Category 1.

2. Section 327 of the Proceeds of Crime Act 2002 creates a separate offence of money laundering. The criminality to be sentenced is therefore the nature and scale of the laundering operation, rather than the nature and scale of the underlying offence. Laundering by transfer, disguise or conversion commonly mixes criminal property with other funds. The harm to the financial system is caused by the full sums employed in that activity, not merely by the part identifiable as criminal proceeds.

3. The Sentencing Council guideline accords with that approach. Harm A requires an initial assessment by the value of the money laundered. Harm B permits the court to take account of the harm caused by an identifiable underlying offence when deciding whether to adjust the sentence. It does not substitute the underlying tax loss for the amount laundered.

4. R v Ahmad [2012] EWCA Crim. 391 was distinguishable. It concerned confiscation following an offence of cheating the Revenue and determined the defendants’ benefit for that purpose. It did not govern sentencing for a separate money-laundering offence.

5. Fulton’s direct involvement in only some transactions did not reduce the scale of the conspiracy of which he was convicted. It was relevant instead to his role, culpability category and position within the sentencing range. The judge had properly reflected that lesser role by treating him as Category B and selecting a starting point below the guideline figure.

• Court of Appeal (Criminal Division): Dismissed both appeals against sentence: [2017] EWCA Crim 308.
• Crown Court in Manchester: Convicted both appellants on 25 April 2016 of conspiracy to disguise, convert or transfer criminal property, and sentenced them on 13 June 2016.