Acquisition of criminal property – Fraudulent dealing – Mens rea – Money laundering

R v Michael Geary: CA (Crim Div) (Lord Justice Moore-Bick, Mrs Justice Rafferty DBE, Judge Gilbert QC): 30 July 2010

The appellant (G) appealed against his sentence of 22 months’ imprisonment for offences contrary to section 328(1) of the Proceeds of Crime Act 2002.

G had pleaded guilty to being involved in an extensive fraud perpetrated by an employee at a bank. The basis of his guilty plea was that he had not knowingly participated in the fraud on the bank. The bank employee had carried out the fraud by diverting a large sum of money from one of the bank’s trading accounts to accounts operated by his accomplices. One of the accomplices (H) had passed various sums to others, including G. G had received more than £123,000, of which he retained over £5,000. In his defence statement, G said that H had told him that he was about to become involved in divorce proceedings and asked him to help hide money from his wife. G said that he agreed to help H by accepting the money into his account, spending some of it and then returning the balance together with the goods he had purchased, in order to reduce the amount that H would have to pay to his wife. G submitted that on a natural reading, section 328(1) was directed at arrangements which made it easier for someone else to acquire, retain, use or control the fruits of crime, and that if the facts had been as G believed them to be, the money that H asked him to look after would not have represented the fruits of crime and would not have been criminal property, because H would not have obtained it as a result of criminal conduct and G would have had no reason to suspect that he had and that, accordingly, the mental element necessary for an offence contrary to section 328(1) was not present. The Crown submitted that, on the facts as G understood them to be, the money in question was or became criminal property when it reached his hands, because it was transferred to him pursuant to an agreement whose object was to defraud H’s wife and mislead the court involving a conspiracy to pervert the course of justice, and that G obtained an interest in the money, and therefore a benefit, as a result of or in connection with criminal conduct. Alternatively, the Crown submitted that G committed the offence when he repaid the money to H.

Held: (1) The natural and ordinary meaning of section 328(1) was that the arrangement to which it referred must be one which related to property which was criminal property at the time when the arrangement began to operate on it. To say that it extended to property that was originally legitimate but became criminal only as a result of carrying out the arrangement was to stretch the language of the section beyond its proper limits. An arrangement relating to property which had an independent criminal object might, when carried out, render the subject matter criminal property, but it could not properly be said that the arrangement applied to property that was already criminal property at the time it began to operate on it. An arrangement of the instant kind could not be separated into its component parts, each of which was then to be viewed as a separate arrangement. In the instant case there was but one arrangement, namely that G would receive money, hold it for a period and return it. To treat the holding and return as separate arrangements relating to property that had previously been received was ­artificial.

(2) It was important in the interests of legal certainty that legislation should be interpreted in accordance with its natural and ordinary meaning. The Crown’s argument involved interpreting section 328(1) in an artificial way in order to encompass conduct to which it did not naturally refer.

(3) It was accepted that G did not believe that the money he received from H was the result of criminal activity so that it was difficult to see how G could have had the necessary mens rea. However, on the assumption that the purpose for which the money was transferred to G involved perverting the course of justice, so that it became criminal property in his hands, G, who knew the purpose for which it had been transferred to him, did know or suspect that he was then dealing with criminal property. Simply holding and returning the money to H was not sufficient to constitute the actus reus of a section 328 offence, but he could have been charged with an offence of converting or transferring criminal property contrary to section 327(1)(c) or (d). It was unnecessary to give a strained and unduly broad interpretation to section 328(1) in order to bring within it conduct that falls within other sections of this part of the act. The facts set out in G’s basis of plea did not disclose an offence contrary to section 328(1).

Appeal allowed.

Andrew Robertson QC, Andrew West (instructed by in-house solicitor) for the Crown; Dafydd Enoch QC (instructed by Clarion Ltd) for the appellant.