Money Laundering: The Disappearing Predicate

Article by David McCluskey, Partner in the Fraud and Regulatory Department, Peters & Peters Solicitors

This material was first published by Thomson Legal & Regulatory Limited in the Criminal Law Review, "Money laundering: the disappearing predicate" [2009] Crim. L.R. 719 and is reproduced by agreement with the Publishers.

Money laundering as a criminal offence has traditionally had a "dark twin", a predicate offence which generates the funds to be laundered. Cases decided on the law before the Proceeds of Crime Act (POCA) 2002 required proof that such predicate criminal conduct had in fact generated the money being laundered.1 Not without some doubt,2 recent cases decided under the POCA 2002 have gradually undermined the significance of the actual source of the funds. The Court of Appeal in Anwoir 3 found (at [21]) that there are two ways in which the Crown can prove the property is criminal property,

"(a) by showing that it derives from conduct of a particular kind or kinds and that conduct of that kind or those kinds is unlawful; or (b) by evidence of the circumstances in which the property is handled which is such as to give rise to the irresistible inference that it can only be derived from crime" .

Thus the Crown is not required to allege and prove the specific criminality or even the class of criminality which it says generated the funds which the defendant is now accused of laundering. It must simply lead enough evidence so that the jury can draw an inference that the property concerned is "criminal property" .4

Comment has been made that this position is far from satisfactory, because (1) further clarification of what " type" of conduct qualifies under (a) above is required, (2) part (b) arguably involves a lesser burden of proof than the Crown bears in POCA 2002 Pt V (civil recovery) cases, and (3) the potential unfairness to an accused is magnified because "without identifying the crime or type of crime alleged, D cannot know the case against him in adequate detail to meet it".5 The effect of the Anwoir line of decisions on our jurisprudence is that the concept of, or indeed requirement for consideration of, a specific predicate offence as underlying a money laundering offence is slowly but steadily being eroded. Instead, money laundering is becoming a primary offence in its own right.6

This is further underlined by the fact that POCA is arguably drawn widely enough that it does incorporate predicate offences: s.328 criminalises an arrangement which facilitates, amongst others, the "acquisition" of criminal property. The section does not contain the word "creation", but in the vast majority of acquisitive criminal cases (particularly fraud), criminal property only becomes such at the moment it is "acquired". In other cases criminal property is created before it is acquired by the criminal, such as when a transfer goes awry or is stopped by the bank or by agency intervention. Nonetheless, the degree of overlap between the predicate offence (fraud, conspiracy to defraud) and the "laundering" offence (an arrangement which...