29 Oct 2019

In May this year, the Court of Appeal handed down judgement in the case of R v Haque ((2019) EWCA Crim 1028). 

The case was an appeal on the point of whether a person commits the offence under the Proceeds of Crime Act 2002 (POCA) of acquiring criminal property when it arrives into his bank account as a result of a fraudulent deception. In this article, Emma Radmore looks at how the Court viewed this narrow charge and its no doubt unintended consequences.

The facts

In this case, a conspiracy to defraud, targeting elderly and vulnerable people in West Yorkshire had operated from mid 2014 to late 2015. Fraudsters would ring victims, pretending to be police officers investigating allegations of bank fraud, and instructing them to withdraw and hand over, or transfer to specified bank accounts, large amounts of money. The money of 2 victims had been transferred to an account in the name of the appellant and his wife and subsequently most of it was withdrawn or transferred. 

As a result of the scheme, a number of individuals were accused of various offences, and a number pleaded guilty to conspiracy to defraud or to acquiring criminal property contrary to s329(1)(a) of POCA. Mr Haque was convicted of the POCA offence but found not guilty of conspiracy to defraud and was sentenced to imprisonment.

This hearing was solely about whether, by the transfers into the joint account, the appellant had acquired criminal property.

The first complainant had been told first to give cash to an individual who visited her address and then to transfer £22,000 into a bank account that had a balance of less than £10 at the time, and was an account jointly held in the names of Mr Haque and his wife. On the same day, two withdrawals totalling £17,000 were made, and the remaining £5,000 transferred to a limited liability partnership. It was presumed Mr Haque had made the cash withdrawals, but never expressly admitted or denied. 

A similar pattern applied to the second complainant – a cash payment and then £30,000 into the same joint account. £15,000 was transferred then to a company which appeared to be a company through which Mr Haque did business and which he controlled. There were some cash withdrawals and a payment to the same limited liability partnership as in the first complaint, followed by a transfer to Mr Haque's company's business account from which around £16,000 was subsequently withdrawn in cash.

The prosecution said that Mr Haque had acquired criminal property by the transfers to the joint account.

Mr Haque did not attend trial but stated in an interview that he did not know his co-accused nor did he know or suspect the monies were proceeds of crime. He accepted the payments had been made into the joint account and then in part to his company's account. He said the payments were for clothing and he had used the money to buy stock for his clothing business.

The judgment

The judge looked at previous cases and affirmed the principle that the conduct that is itself the subject of indictment cannot of itself render the property criminal property – the property had already to be criminal at the time of the transfer, that is, it had already to be property obtained as a result of or in connecting with criminal activity separate from that which is the subject of the charge itself. So a thief does not “acquire criminal property” by the act of stealing it, but of course can then be guilty of the possessing, using, transferring and other offences relating to it once he has it.

The question here was whether the money was (a) clean, as it was the lawful property of the complainants which the fraudsters had induced them to pay out (in which case the appeal should be allowed) or (b) dirty because it had been obtained as a result of fraudulent deception and therefore was criminal property by the time it reached the appellant’s bank account.

In this particular case, and on the narrow point of whether the appellant had committed an offence under s329(1)(a) of POCA (which deals only with acquiring criminal property, and not possessing or using it), the court concluded it had to allow the appeal, because the money was clean on arrival in the account. However, had Mr Haque been charged with other offences under s329 or s328 of POCA (possessing or using criminal property, or retaining, using or controlling it) the outcome may have been different. The court was invited to substitute these offences, and the judge agreed that no doubt a jury could and would have convicted on the basis of them. Unfortunately, however, it was not within the court's power to substitute an alternative verdict.  

The conclusion

The court clearly regretted that by law it had to allow the appeal. It sounded a cautionary and critical note about the importance of getting charges right in the first place.

This article was written for Money Laundering Bulletin.