money laundering

Accused of Money Laundering?

December 10, 2018

Cunninghams Solicitors specialise in the defence of people accused of serious fraud offences. In this article we briefly consider the offence of money laundering, defences to money laundering and will discuss a recent case in which we argued that there was no case to answer against our client.

Money Laundering Solicitors – Offence of Money Laundering

The offences of money laundering arise from section 327, section 328 and section 329 of the Proceeds of Crime Act 2002. s327 involves concealing, disguising, converting, transferring or removing criminal property. s328 involves entering into arrangements concerning criminal property. S329 involves the acquisition, use and possession of criminal property.

The offences can technically result in prison sentences of up to 14 years imprisonment, although in practice sentences of this magnitude are extremely rare and in many cases the risk of a custodial sentence can be ruled out completely at an early stage as discussed further below.

Money Laundering – What do the prosecution have to prove? The elements of the offence.

1. Money Laundering – the Actus Reus of the offence.

Money Laundering may be charged under s327 of the Proceeds of Crime Act. In this scenario the Prosecution must first of all prove that you have either concealed, disguised, converted, transferred or removed the relevant property. If charged under s328 of the Act, the Prosecution must first prove that you entered into an arrangement which facilitated the acquisition, retention, use or control of the property. If alternatively the criminal offence of money laundering is charged under s329 of the Act, the Prosecution would have to prove that you had acquired or used the relevant property.

In most cases that result in a money laundering charge, summons or postal requisition, the Prosecution will have evidence to prove that the first element of the offence is established, although it is still vital that the defence solicitors carefully consider this aspect of the case. This is because there will usually be a paper trail whether that be chain of emails, bank transfers evidenced on banking statements or perhaps a series of business transactions which led to the initial arrest / investigation, which will usually establish that property has been at the very least held in the possession of the individual charged with money laundering.

If this cannot be proven, then the individual should not have been charged in the first place and the case should be dismissed or “kicked out” which is how this process if often colloquially referred to by our clients. If you have been wrongly accused of fraud or money laundering it is vital that your instructed solicitors consider making an application to dismiss when there is insufficient evidence to support the charging decision.

If the Prosecution can overcome the first hurdle and establish that property has been possessed, transferred etc by the suspect, then they must also prove that the property that has been acquired, possessed, transferred etc was in fact criminal property. This is quite often much more difficult for the prosecution to prove and this aspect of the offence regularly results in a successful defence to the money laundering charge, as is addressed in more detail  below.

2. Money Laundering – What constitutes criminal property? Was the property a benefit from criminal conduct?

The prosecution will have to prove that the property they refer to is indeed “criminal” property. The Prosecution may believe that a large deposit of hundreds of thousands of pounds into a bank account reflects a criminal benefit, but their suspicion is insufficient – they must prove it.

In a recent case involving one of our clients charged with money laundering, discussed in more detail below, the Prosecution were unable to prove this aspect of the case, resulting in our client being found to be not guilty.

Quite often the Prosecution will rely upon a previous fraud conviction, perhaps involving separate individuals, to establish that the same property now in the possession of the person accused of money laundering exists further to the criminal conduct. The earlier convictions may have been for any criminal offences, but would commonly involve drug supply, drug trafficking, fraud or trading standards allegations. This will often require the Prosecution to produce evidence of a paper trial. It is important that the defence careful scrutinise such evidence as if there is any problem with the continuity of the Prosecution evidence and it cannot be established that the property is criminal property, the case against the accused will collapse.

Where there have not been any prior convictions to establish that the property in question is in fact “criminal property,” the prosecution often face a very difficult task when charging an individual with money laundering as they will first have to satisfy a jury that earlier criminal offences were committed (which for some reason did not result in convictions) and then they will then have to go on to prove the other elements of the money laundering offence.

Even in cases where the Prosecution can prove that a) the suspect “possessed” the relevant property and b) that the property in question is criminal property, they still have to prove the mens rea element of the offence, namely, that the accused knew or believed that they possessed criminal property.

3. Money Laundering – knowledge or belief

The suspect must know or believe that the property in question is “criminal” property.  

This aspect of the offence provides the opportunity to advance what is the most commonly advanced defence to money laundering.

In many cases, a suspect will accept when presented with the relevant evidence that it appears that they were in possession of property which appears to have resulted from the proceeds of crime. However this does not make them guilty of a criminal offence and to the contrary it may in fact mean that they were duped by others and are themselves a victim. If the individual in question denies knowing or believing that the property in question was the benefit from criminal conduct, then if the prosecution cannot prove this at trial they will be found not guilty. It is of course often difficult for the Prosecution to prove this aspect of the offence as it involves satisfying a jury, so that they are sure, as to the precise state of mind of the suspect at the material time. Of course you may consider that the only person who knows what was in their mind at any given time is the individual in question.

Money Laundering – how will the Prosecution try to prove knowledge or belief?

The Prosecution, whether that be HMRC, the Serious Fraud Office, National Crime Agency, Police or other agency, will use all of the tools at their disposal to try to persuade a jury that the individual simply must have known or believed that the property was “criminal property.”

The Prosecution may have what they claim is direct evidence of the suspects’ state of mind. For example a text message or an email sent by the accused to another person which refers to the property in question and makes it clear that the suspect believes it is illegitimate. For example, a message may exist which is similar to the following:

“You’re not paying me enough for looking after this. I should be getting double for the risk I’m taking”

Whilst the accused may have an explanation for this type of evidence, if the Prosecution can prove that the accused person sent a message such as this it is clearly problematic and something that requires careful consideration by the defence. However more often than not this type of direct evidence will not exist and so the Prosecution will seek to rely upon indirect evidence in an attempt to prove knowledge or belief. Quite often, this will involve an argument by the Prosecution that the circumstances in which the suspect received the property, perhaps due to a very high value, means that the suspect must have believed that property had arisen further to criminal conduct. This is much easier to challenge by the defence.  Again using money as an example, the Prosecution may simply argue that there is no other explanation for the source of the monies into a bank account controlled by the suspect aside from criminal activity and that on this basis, the suspect must have known or believed that criminal activity was the source of the property. Of course this leaves the defendant with an opportunity to explain why they believed that the source of the property was legitimate and the defence will often need to call as much evidence as possible to demonstrate to a jury that there was no reason for the defendant to be suspicious, due to the particular circumstances as they found them to be at the relevant time. It may also be prudent to instruct experts, including for example a forensic accountant to examine the assertions being made by the Prosecution and perhaps also to consider other financial records which may reveal facts that lend support to the accused person’s version of events.

Money Laundering Offence – An application to dismiss the charge / case against the defendant

In cases where the Prosecution have charged a suspect with a criminal offence but have failed to present evidence to prove each and every element of the criminal offence, then the defence can apply to the Court to dismiss the case against their client at an early stage in proceedings. If that application succeeds the case against the accused is dismissed.

If the Prosecution case proceeds to trial, a similar application can be made by the defence at the close of the Prosecution case. This is often referred to as a submission of “no case to answer” or as a “half time submission.” The precedent dealing with how applications at the close of the Prosecution case are to be made by the defence and considered by the Court is to be found in the case of Regina -v- Galbraith [1981] 2 All ER 1060 which is one of many cases regularly relied upon by defence lawyers.

Making an application to dismiss the case against the accused

The procedure to be followed when making an application to dismiss a case which was sent for trial to the Crown Court is set out at paragraph 2, schedule 3 of the Crime and Disorder Act 1998. The application must be made after the evidence has been served but before arraignment. The term arraignment simply refers to the point at which the defendant is asked to confirm whether they plead guilty or not guilty for the first time before the Crown Court.

It is therefore often essential to delay arraignment if there is the possibility of making an application to dismiss but more time is required by the defence, perhaps due to further information being required. An application to dismiss should not be rushed and if there appears to be merit in the application being considered then Crown Court Judges would ordinarily be happy to adjourn the Plea hearing to allow sufficient time for skeleton arguments to be prepared.

The test that is ultimately to be applied is whether the evidence that has been served would be sufficient to allow a Jury to convict.

The defence will therefore present an argument attacking one or more of the elements of the offence charged. For example in a case involving an allegation of money laundering, the application to dismiss may first highlight that there is no evidence or insufficient evidence to prove that the property is “criminal property” and also that there is insufficient evidence, whether direct or circumstantial, to prove that the defendant knew or believed that the property was criminal property. The Judge would dismiss the charge if it appeared to him that the evidence against the accused would not be sufficient for him to be properly convicted. The Judge would only have to agree with one of the two arguments advanced in this example to dismiss the charge.

Making a half time submission of no case to answer

The test to be applied by the Judge upon hearing an application by the defence that there is no case to answer is essentially the same as that discussed above. The difference between the application to dismiss and the submission of no case (aka the Galbraith application) is that the former takes place prior to arraignment at an early stage in proceedings whereas the latter only takes place half way through the trial process, at the end of the Prosecution case.

At this stage you may be wondering why there should ever be any need for a half time submission – as the test to be applied is the same you may consider that in any case where the half time submission succeeds that the same argument ought to have been made earlier and the case dismissed prior to arraignment. However the reason why this is not correct is due to the fact that the evidence which is heard at trial is often very different to the evidence that one might expect to be given upon a reading of the prosecution evidence at an earlier stage.

For example, the contents of the written witness statement of a key prosecution witness might provide what appears to be a very strong case against a defendant, making an application to dismiss at the earliest stage unlikely to succeed. However if that same witness, upon being cross examined by the defence barrister, admits for example that they may be mistaken about certain details then the overall picture may be very different and allow for a successful submission of no case during the trial process at the close of the Prosecution case.

In large complex fraud cases then an application of no case may be incredibly detailed and complicated and is unlikely to rest upon the testimony of a single witness. It may be that a large number of witnesses deviate only very slightly from their original accounts and that together with additional points uncovered by the defence at trial that the overall position changes fundamentally as a result, allowing a half time submission to succeed when an earlier application to dismiss may not have done. The Prosecution are likely to vigorously oppose any such application so the best applications of this nature will be as concise and logical as possible which when argued persuasively leave the Judge with no option but to stop the case.  

A recent example of an application to dismiss

We were recently instructed to represent an individual charged with Money Laundering. The case was listed for trial before Mold Crown Court. The Prosecution case was that hundreds of thousands of pounds had been transferred into fraudulent business accounts managed by our client. There were a large number of transfers to various business accounts, some involving hundreds of thousands of pounds to accounts in Latvia, England and Wales. The Prosecution had witnesses who could confirm that they were the victims of a fine wine fraud and that large sums of money that had been transferred could be linked to the fraudulent business accounts. The Prosecution argued that there was strong evidence to demonstrate that our client was in control of at least one of the fraudulent business bank accounts. They relied upon text messages, payments to our client and financial records to argue that our client must have known that the large deposits were illegitimate.

Cunninghams Solicitors provided representation during the interviews with police and immediately noted that the Prosecution did not appear to have sufficient evidence with respect to one of the key elements of the offence. The police had not arrested the other suspects who they advised were being investigated by other departments as part of what they described as the ‘wider fraud.’ This meant that there were no earlier convictions for fraud. As far as establishing that the monies were the benefit of criminal conduct was concerned, the Prosecution could only rely upon the account of witnesses claiming to have been duped into transferring money to another account as part of a wine investment scam. However the police had not arrested those they believed were responsible for that fraud. In these circumstances the Prosecution would first have to prove to a jury that a wine fraud took place. It was clear that the Prosecution would struggle to prove the original fraud on the basis of the evidence presented. Key statements were missing and the police had not bothered to attempt to speak with the alleged key members of the original fraud conspiracy.

Offences of Money Laundering are predicated on the basis that another offence has been committed. In this case it was an offence of fraud. The Prosecution therefore had to prove to the required standard that a fraud had been committed. Ordinarily this would be by way of proving a conviction against another party. Frequently money laundering cases are tried on the same indictment as the underlying offence. However this was a “stand alone” money laundering prosecution. Consequently, the prosecution had to be in a position, as a minimum, to be able to produce sufficient circumstantial evidence or other evidence from which inferences could be drawn to the required standard that the property in question had a criminal origin. We were able to rely upon case law to support this application, with R-v- Anwoir [2009] 4 ALL ER being of particular relevance. The Prosecution would have to demonstrate that circumstances in which the property was handled created an “irresistible inference” that it could only have been derived from crime. The Prosecution would be permitted to rely upon accomplice evidence, forensic evidence, proof of an absence of any legitimate explanation for possessing the property, evidence of complex audit trails etc but it was submitted that there was no proof, circumstantial or otherwise that the proposed sale of wine constituted a criminal act. The police investigation into this matter had not been completed. It was for example, entirely possible that the wine supply has not been completed due to unknown commercial reasons. The other suspects, if spoken to, may have provided a legitimate explanation.

We were therefore in a position to make a pre-trial application to dismiss. The Judge carefully considered the argument and commented that he had enormous sympathy with the defence submissions but did not on this occasion dismiss the case at the earlier stage due in some part to additional evidence served by the Prosecution in response to our application. This did not deter us from making the same arguments at trial.

The same argument was advanced at trial and the case against our client, who remains of good character, was later dismissed.  

Money Laundering – what is the likely sentence if convicted?

In a large number of cases, an offence of money laundering would not attract a prison sentence and may instead result in a community order. In other cases an offence of money laundering may result a suspended prison sentence. In the more serious examples of money laundering where there is a risk of a prison sentence being imposed then the length of the sentence will depend largely upon the value of the alleged fraud or the loss to the alleged victim. As an example, if the value of the offence is between £100,000 – £500,000 then in a ‘medium culpability’ case (someone found to have played a significant role) the sentencing guidelines recommend a starting point of three years imprisonment. An individual pleading guilty to this offence would be eligible for one third discount, referred to as credit for a guilty plea, which would reduce the starting point to two years imprisonment. Of course any additional mitigating features which include but are not limited to previous good character and remorse will also be taken into account and may reduce the starting point prior to the credit for the guilty plea resulting in a further reduction. Any prison sentence of two years or less can be suspended, which means that the individual would not be sent to prison provided they do not commit any further offences within a specified period and comply with any orders made by the sentencing Judge, such as to complete hours of unpaid work.

If you are facing an allegation of money laundering involving millions of pounds then the sentencing guidelines would recommend a lengthier prison sentence. It is therefore vital that your defence is thoroughly prepared and defence advanced on the strongest possible terms at trial. An individual will only serve half  of any immediate prison sentence imposed prior to being released on license. If the sentence is less than four years imprisonment, then the individual may be eligible for a further reduction in sentence via the home detention curfew scheme.

Fraud and Money Laundering – Defence Lawyers

In conclusion, if you are charged with a serious fraud offence or money laundering offence then you should instruct defence lawyers to carefully consider the evidence to establish whether there is a case to answer. If there is not, then an application can be made to the Court to dismiss the case against you. Even if that is not possible, your defence legal team should always keep in mind the opportunity to make a similar application of no case to answer at the close of the Prosecution case. The Prosecution often have a huge amount of work to do to prove each of the elements of the offence charged and often wrongly accuse individuals of fraud or money laundering when there is no evidence to support one of the points they must prove to the high criminal standard of proof.

In cases where there is evidence to support each of the elements of the offence which is denied, then it remains vital that the defence case is put forward at trial as comprehensively and robustly as possible because if the jury are less than sure with respect to any of the elements of the offence then they must find the suspect not guilty of the fraud or money laundering offence.