Entering into an arrangement to create criminal property does not amount to an offence under s.328 of the Proceeds of Crime Act (POCA), so held the Court of Appeal in the recent case of R v Geary [R v Geary [2010] EWCA Crim 1925].
The Court held that to commit the offence of entering into an arrangement under s.328 of POCA, the arrangement must relate to property which is already criminal at the time the arrangement takes effect.
To say that it extends to property which was originally legitimate but became criminal only as a result of carrying out the arrangement is to stretch the language of the section beyond its proper limits. … Moreover, we do not accept that an arrangement of the kind under consideration in the present case can be separated into its component parts, each of which is then to be viewed as a separate arrangement. [at paragraph 19].
The facts of the case
Mr Geary was approached by Mr Harrington, a property developer friend, who advised that he was divorcing his wife and wanted to transfer some money to Mr Geary so that his wife would not be able to claim it.
Mr Geary agreed, appreciating in essence that he would be assisting Mr Harrington to pervert the course of justice in the divorce case, but believing that the money was Mr Harrington’s legitimate earnings.
In fact the money was the proceeds of an extensive bank fraud and Mr Harrington was one of the money mules being used to launder the funds.
The reasoning
The court held that Mr Geary did not know or suspect that the money was criminal property at the time he dealt with it, and so could not be charged with an offence under s.328.
The court also offered the view that on the basis of Mr Geary’s statement that he knew by taking the clean money, he would then help Mr Harrington commit a criminal offence:
- The arrangement could not be broken down into parts for the purpose of an offence under s.328 as he did not suspect the money to be criminal to start with; but
- Because he knew that it would become criminal property while in his hands, he would have had the requisite knowledge to commit an offence under s.327 when he transferred the money back to Mr Harrington.
One final point
- At paragraph 15 of the judgement, the Court stated that there are two aspects to the mental element of an offence under s.328. They listed the first of these as: the defendant must intentionally or recklessly enter into an arrangement of the requisite type.
The mental element of intention is included in the money laundering offences under international law, but was specifically removed in the drafting of the UK offences.
The existing approved guidance to the regulated sector does not include this element in discussions of the principal money laundering offences.
This inclusion of a further mental element in the offences by the courts may prove yet another interesting twist in the extensive jurisprudence surrounding this often difficult to apply law.