17 June 2016
3 min read
Two men have just been acquitted in a major money laundering trial. Here we look at the scope defence teams have in such cases to rebut prosecution claims.
The Hong Kong-based co-defendants had been accused by the Serious Fraud Office (SFO) of knowingly channelling money through Zetland Fiduciary Services; a company providing transaction services to companies and wealthy individuals. Prosecutors alleged that 67-year-old Mr Sutherland, Zetland’s owner and chairman, had received £3.7M for laundering for an Australian high-pressure share salesman and his associates, who had already been convicted and jailed.
But Mr Sutherland’s defence demonstrated, using documents entered in evidence by the SFO itself, that he did not receive such an illegal payment. The defence successfully argued that the prosecution had not followed the money trails, understood the services that Zetland provided or analysed the evidence available.
The SFO had clearly believed it could gain prosecutions against the two men – and yet they failed. So what scope is there for a strong and ultimately successful defence in a money laundering case?
Part 7 of the Proceeds of Crime Act 2002 (POCA) contains three main money laundering offences; each carrying penalties of up to 14 years imprisonment.
Section 327 – concealing, disguising, converting or transferring criminal property, or removing it from the jurisdiction. This is the easiest way for the Crown to proceed when someone is suspected of laundering the proceeds of their own criminal activity.
Section 328 - entering into, or becoming concerned in an arrangement to facilitate the acquisition, retention, use or control by or on behalf of another person, of criminal property knowing or suspecting that the property is criminal property. This offence is used when the launderer is not the principal offender in the criminal conduct.
Section 329 - acquiring, using or having possession of criminal property.
This will often be used to prosecute an ‘end user’; someone who buys something, such as a car, from a criminal.
The prosecution must prove that the assets are ‘criminal property’. This is defined in s340(3) as property which represents a benefit from criminal conduct, either directly or indirectly, in whole or in part, so long as the launderer knows or suspects that the property represents such a benefit.
To prove any of the three POCA offences mentioned above, the Crown must show, therefore, that the money derived from crime and that the suspect knew or suspected that it did.
Where the prosecution is unable to show or explain to the jury what the exact underlying criminal offence was, it will have to rely on circumstantial evidence to try and prove that the money is ‘criminal property’. In R v Anwoir  2 Cr. App. R 36 the Court of Appeal found that in that sort of case the prosecution had two ways of proving that the property was ‘criminal property’. It could show that it derived from a specific crime or it could argue that, from the circumstances, the “irresistible inference” could be drawn by the jury that it could only be derived from crime.
In R v Da Silva  EWCA Crim 1654, 11/7/06 the Court of Appeal considered a trial Judge’s direction to the jury on the word ‘suspicion’. Generally there should be no jury direction on what it means but in law ‘suspecting’ means that “there is a possibility, which is more than fanciful that the relevant facts exist. A vague feeling of unease would not suffice.”
Circumstantial evidence produced by the prosecution can initially appear conclusive. But a defence can, either through cross-examination or evidence from the defendant or an expert witness, show that there are other ‘co-existing circumstances’ which weaken the prosecution’s inference.
Rebutting inferences in such cases can be a major part of defending. An expert witness, for example a forensic accountant, can explain why a cash flow or certain losses can have an innocent explanation rather than be a sign of wrongdoing. Seeking disclosure of all available evidence – including that seized and then discarded by prosecutors – can also be a major weapon when it comes to building a strong case and challenging prosecution claims.
Section 328 has produced some interesting case-law. But in a nutshell, it usually comes down to common sense and whether the prosecution has departed from it in order to seek a conviction.
In R v Geary  1 WLR 1634 the Court of Appeal considered that the natural and ordinary meaning of ‘arrangement’ - to which it referred must be one which related to property which was ‘criminal property’ at the time the arrangement began to operate upon it. It did not extend to property which was originally legitimate but became ‘criminal’ only as a result of the carrying out of the arrangement. In that case G was handling money which was going to be hidden from a spouse in a divorce case and could, at that point, have become criminal property. The case was more recently approved in the Supreme Court in R v GH  2 Cr. App. R. 12.
Such a case indicates the extent to which prosecutors will try to adapt the legislation to suit their case. This can lead to defence teams having to devote plenty of time to challenging the assumptions and claims of prosecutors. But the legislation and the relevant case law does offer defence teams plenty of opportunities to challenge and ultimately demolish prosecution arguments.
The Zetland case may have been a major, high-profile case. But it is a reminder to everyone facing money laundering accusations of all sizes that there is always scope for a “switched on’’ defence to take apart prosecution allegations.