Is There A Requirement To Prove Property Derived From Crime To Prosecute An Offence Of Money Laundering?

R v MONTILA AND OTHERS (HOUSE OF LORDS) (2004)

1. This case has brought to the fore a very interesting question in the field of money laundering. The issue at stake was the following: in relation to the laundering offence contained in section 93C(2) of the Criminal Justice Act 1988 and section 49(2) of the Drug Trafficking Act 1994 (the "Acts"), is there a requirement for the prosecution to prove that the property being converted is in fact the proceeds of crime? The Court of Appeal and the House of Lords have taken directly opposite views, illustrating the difficulty of identifying an answer for an apparently simple question.

   BACKGROUND

2. Nine defendants were charged with offences under the aforementioned sections of the Acts. It was alleged that they had concealed, disguised, converted or transferred property knowing, or having reason to suspect, that the property represented another person's proceeds of criminal conduct or drug trafficking. At a preparatory hearing the judge ruled that in a prosecution under either of these sections it was necessary for the Crown to prove that the property being converted was in fact the proceeds of crime or drug trafficking.

   COURT OF APPEAL RULING

3. The Court of Appeal (Criminal Division) held that where a person was charged, under these sections, with assisting another to avoid prosecution by concealing, disguising, converting or transferring property which he knew or had reasonable grounds to suspect was property representing that person's proceeds of crime or drug trafficking, it was not necessary for the Crown to prove that the property was in fact the proceeds of crime or drug trafficking.

4. The Court of Appeal had considered the judge's six reasons for his conclusion that it was necessary for the Crown to prove that the property was the proceeds of drug trafficking or of criminal activity. These were (i) the decision in R v El- Kurd [2001] Crim L R 234, in which the Crown accepted that it had to establish that the money had come from drug trafficking or other criminal conduct, (ii) the terms of the Proceeds of Crime Act 2002, (iii) the fact that almost invariably third party money laundering cases include directly or indirectly evidence as to the provenance of the money, (iv) the reference in the subsection to assisting a person to avoid a prosecution, (v) relative unfairness between a principal subject to subsection (1) and a third party subject to subsection (2), and (vi) analysis of international treaties and conventions leading to the passing of the two Acts.

5. The Court of Appeal had not been...