National Crime Agency v Khan & Ors

Under Part 5 of the Proceeds of Crime Act 2002, recoverable property may be established on the balance of probabilities without proving the precise offence from which each asset derives. Unexplained accumulation and movement of funds may support an irresistible inference of unlawful conduct, but acquisition and holding must be examined individually.

A recovery order is mandatory where property is recoverable, subject to the statutory good-faith and detriment exception. Recovery of criminal proceeds is not disproportionate merely because the property is a family home.

The National Crime Agency brought civil recovery proceedings under Part 5 of the Proceeds of Crime Act 2002 against members of the Khan family. The claim concerned six properties or bank accounts, including assets in Northern Ireland and England.

The court had to determine whether each asset was obtained through unlawful conduct, whether the statutory good-faith defence applied, whether it had jurisdiction over the Northern Irish properties, and whether recovery would be incompatible with Convention rights. The defendants relied on family lending, communal property arrangements and alleged gifts as lawful explanations.

1. The NCA bore the burden of proving its case on the balance of probabilities. It was unnecessary to identify the particular criminal offence producing each asset, but the unlawful kinds of conduct relied on had to be proved. Unexplained deposits and transfers inconsistent with declared income could support an irresistible inference of unlawful origin. The inference had to be assessed in relation to each property or account.
2. Properties 1, 2, 4, 6 and 15 were recoverable property. The unexplained deposits, successive nominee ownerships, false or unreliable accounts, mortgage fraud, undeclared rental income and extensive movement of money supported the conclusion that the assets represented drug dealing, money laundering or tax evasion. Property 14 was not recoverable because the explanation that its modest balance represented customary gifts was capable of being truthful and the transactions were not suspicious.
3. The court had jurisdiction over Properties 1 and 2 in Northern Ireland under section 282A of the Proceeds of Crime Act 2002. There was a sufficient connection with England and Wales because Aurang Khan was a British citizen, other recoverable properties were in Birmingham, and the unlawful conduct occurred partly in England.
4. The section 266 defence failed. The defendants had not established good faith, absence of notice, relevant detriment or an unjust and inequitable result. Lack of knowledge of a particular mortgage fraud did not overcome the tainted source of funds and knowledge of wider money laundering.
5. Applying National Crime Agency v Azam [2015] EWCA Civ 1234, recovery of criminal proceeds was not disproportionate in principle merely because it affected a family home. Recovery orders were made for Properties 1, 2, 4, 6 and 15.

First instance decision. The judgment records earlier freezing orders, summary judgment against other defendants and settlements with other defendants, but no appeal from the present decision.