APPEAL COURT, HIGH COURT OF JUSTICIARY
Lord Kingarth Lady Paton Lord Marnoch	[2009] HCJAC 60 Appeal No: XC261/06 OPINION OF THE COURT delivered by LORD KINGARTH in APPEAL AGAINST CONVICTION by MOHAMMAD AHMAD Appellant; against HER MAJESTY'S ADVOCATE Respondent: _______

Act: G. Bell Q.C., Lindhorst; Patterson Bell

Alt: Dr. A. Brown A.D.; Crown Agent

24 June 2009

[1] On 10 March 2006 at the High Court in Glasgow the appellant was found guilty by unanimous verdict on charge (1) and by majority verdicts on charges (2) and (3). The charges were in the following terms:

"(1) you ZOHAIB ASSAD and MOHAMMAD AHMAD, being engaged in a business in the regulated sector (namely transmission of money) and, as a result of information or other matter which came to you in the course of said business (namely repeated visits to you by WILLIAM ANTHONY GURIE to deposit large, unexplained quantities of cash for transmission to a jurisdiction with which he had no legitimate connection known to you) knowing, suspecting or having reasonable grounds for suspecting that WILLIAM ANTHONY GURIE was engaged in money laundering did, between 23 February 2003 and 26 September 2003, both dates inclusive, at the shop at 159 Kenmure Street, Glasgow, occupied by Makkah Travel Ltd, fail to make the disclosure required by Section 330(5) of the aftermentioned Act as soon as was practicable after the information or other matter came to you; CONTRARY to the Proceeds of Crime Act 2002, Section 330(1);

(2) you ZOHAIB ASSAD, MOHAMMAD AHMAD and WILLIAM ANTHONY GURIE did, between 23 February 2003 and 26 September 2003, both dates inclusive, at the shop at 159 Kenmure Street, Glasgow, occupied by Makkah Travel Ltd, at the premises at 14 Blythswood Square, occupied by National Westminster Bank plc and at the premises at 221 Albert Street, Glasgow occupied by Clydesdale Bank plc have possession of criminal property, namely quantities of cash amounting to £2,442,318.75 of money: CONTRARY to the Proceeds of Crime Act 2002, Section 329(1)(c);

(3) you ZOHAIB ASSAD, MOHAMMAD AHMAD and WILLIAM ANTHONY GURIE did, between 23 February 2003 and 26 September 2003, both dates inclusive, at the premises at 14 Blythswood Square, Glasgow, occupied by National Westminster Bank plc, Leslie Street, Glasgow and elsewhere in the United Kingdom, transfer and remove from Scotland criminal property namely quantities of cash amounting to £2,256,646.00 of money by paying said cash into said bank and transmitting its value to Pakistan, United Arab Emirates and China: CONTRARY to the Proceeds of Crime Act 2002, Section 327(1)(d) and (e)"

[2] The appellant was found not guilty on charge (4), which alleged a further contravention of s.329(1)(c) of the Proceeds of Crime Act 2002 ("the 2002 Act"). The appellant's co-accused Zohaib Assad ("Zohaib") was convicted of charges (1), (2), (3) and (4). The appellant's co-accused William Gurie ("Gurie") was acquitted by not proven verdicts on charges (2) and (4), and was found not guilty of charge (3).

[3] On 11 April 2006 the trial judge sentenced the appellant to two years' imprisonment in respect of charge (1), and six years' imprisonment in respect of each of charges (2) and (3), all periods to run concurrently and to date from 10 March 2006.

[4] Although Zohaib has also appealed against his conviction, he is, it appears, seriously ill, and by interlocutor of 18 September 2008 it was determined that the appellant's appeal should be heard separately. In addition, although the appellant has seven grounds of appeal (including in particular grounds 4 and 5 which challenge the sufficiency of evidence in respect of charges 1, 2 and 3), it was directed in the same interlocutor that grounds 6 and 7, which involve questions of statutory interpretation, should be determined first.

[5] As appears from the report of the trial judge the evidence related essentially to the activities of a company trading in Glasgow known as Makkah Travel. It was set up in about 2002 by a Pakistani citizen known as "Mr Bhatti", who was the father of Zohaib, who himself participated in the operation of the company shortly after it started to trade. The business was set up to operate as a travel agency (selling airline tickets, through a London agency, for flights to Pakistan) and a money services bureau (effecting money transfers from Asians employed in the United Kingdom to their relatives in Pakistan). It was a business in the regulated sector within the meaning of section 330, and Schedule 9, of the 2002 Act. The appellant was the secretary of the company, a director and a 50/50 shareholder with Mr Bhatti.

[6] Over a period of time suspicions were aroused in HM Customs about the company's activities. As a result surveillance was kept on the business from about April 2002. For present purposes it is enough to record that, as reported by the trial judge, the Crown case depended on evidence inter alia that on a number of occasions large heavy holdalls were seen to be taken from the boots of cars and taken into the premises. The carrier later left without the holdall. Sometimes the carrier was Gurie. In due course a sum of about £200,000 was found in the safe in the back shop of the company's premises, the said sum having been brought by Gurie. That sum had been given to him by a Mr William McDonald (described by the trial judge as a self confessed criminal) in two plastic carrier bags in the car park of a burger bar. On another occasion Gurie was seen to arrive at the premises in a car. Zohaib emerged from the premises. A large heavy holdall was transferred from the boot of Gurie's car and placed in the boot of Zohaib's car. Both cars drove off. Zohaib was followed to his home after the exchange of holdalls from boot to boot. Two holdalls were found in his wardrobe. Each was stuffed with cash amounting to £384, 760, as specified in charge 4 (of which charge the appellant was acquitted). During the period of surveillance the appellant and Zohaib were seen on numerous occasions taking large sums of money to the bank, usually the branch of the National Westminster Bank in Blythswood Square. On such occasions the money was transported simply in plastic carrier bags, with no form of security in place. The bags were taken into the bank, the money handed over and international transmission forms completed. On some occasions the money was to be "routed" through several banks in different countries before ending up in Islamabad. On a number of such occasions the amount of money was so large, bulky and heavy that it could not be passed to the bank teller in the normal way. Members of the bank staff gave evidence of a considerable number of cash transfers totalling in excess of six figures. Many such payments were made more than once a day. The payments were made sometimes by the appellant and sometimes by Zohaib. The payments were noticeable as being more than was ever paid in by other Asian businesses. It was obvious that the amounts of cash paid into the bank and transmitted by them abroad at the behest of Makkah Travel were far in excess of those paid in on a day to day basis by individual Asians. For these reasons and, in accordance with their legal obligations, reports of the transactions were sent by the bank to HM Customs. No reports of suspicious transactions were made by Makkah Travel itself. The sums referred to in charges 2 and 3 were those found, after analysis of the company's records, to represent sums possessed or transferred which could not be accounted for as forming part of the company's ordinary business.

[7] At the time of the alleged offences (and in particular prior to its amendment, with effect from 1 July 2005, by the Serious Organised Crime and Police Act 2005) the relevant sections of part 7 of the 2002 Act were in the following terms:

"PART 7

MONEY LAUNDERING

Offences

327 Concealing etc

(1) A person commits an offence if he -

(a) conceals criminal property;

(b) disguises criminal property;

(c) converts criminal property;

(d) transfers criminal property;

(e) removes criminal property from England and Wales or from Scotland or from Northern Ireland.

(2) But a person does not commit such an offence if -

(a) he makes an authorised disclosure under section 338 and (if the disclosure is made before he does the act mentioned in subsection (1)) he has the appropriate consent;

(b) he intended to make such a disclosure but had a reasonable excuse for not doing so;

(c) the act he does is done in carrying out a function he has relating to the enforcement of any provision of this Act or of any other enactment relating to criminal conduct or benefit from criminal conduct.........

328 Arrangements
(1) A person commits an offence if he enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person.

(2) But a person does not commit such an offence if -

(a) he makes an authorised disclosure under section 338 and (if the disclosure is made before he does the act mentioned in subsection (1)) he has the appropriate consent;

(b) he intended to make such a disclosure but had a reasonable excuse for not doing so;

(c) the act he does is done in carrying out a function he has relating to the enforcement of any provision of this Act or any other enactment relating to criminal conduct or benefit from criminal conduct.

329 Acquisition, use and possession

(1) A person commits an offence if he -

(a) acquires criminal property;

(b) uses criminal property;

(c) has possession of criminal property.

(2) But a person does not commit such an offence if -

(a) he makes an authorised disclosure under section 338 and (if the disclosure is made before he does the act mentioned in subsection (1)) he has the appropriate consent;

(b) he intended to make such a disclosure but had a reasonable excuse for not doing so;

(c) he acquired or used or had possession of the property for adequate consideration;

(d) the act he does is done in carrying out a function he has relating to the enforcement of any provision of this Act or of any other enactment relating to criminal conduct or benefit from criminal conduct...........

330 Failure to disclose: regulated sector

(1) A person commits an offence if each of the following three conditions is satisfied.

(2) The first condition is that he -

(a) knows or suspects, or

(b) has reasonable grounds for knowing or suspecting,

that another person is engaged in money laundering.

(3) The second condition is that the information or other matter -

(a) on which his knowledge or suspicion is based, or

(b) which gives reasonable grounds for such knowledge or suspicion,

came to him in the course of business in the regulated sector.

(4) The third condition is that he does not make the required disclosure as soon as is practicable after the information or other matter comes to him.

(5) The required disclosure is a disclosure of the information or other matter -

(a) to a nominated officer or a person authorised for the purposes of this Part by the Director General of the National Criminal Intelligence Service;

(b) in the form and manner (if any) prescribed for the purposes of this subsection by order under section 339.

(6) But a person does not commit an offence under this section if -

(a) he has a reasonable excuse for not disclosing the information or other matter;

(b) he is a professional legal adviser and the information or other matter came to him in privileged circumstances;

(c) subsection (7) applies to him.

(7) This subsection applies to a person if -

(a) he does not know or suspect that another person is engaged in money laundering, and

(b) he has not been provided by his employer with such training as is specified by the Secretary of State by order for the purposes of this section...........

Interpretation

340 Interpretation

(1) This section applies for the purposes of this Part.

(2) Criminal conduct is conduct which -

(a) constitutes an offence in any part of the United Kingdom, or

(b) would constitute an offence in any part of the United Kingdom if it occurred there.

(3) Property is criminal property if -

(a) it constitutes a person's benefit from criminal conduct or it represents such a benefit (in whole or part and whether directly or indirectly), and

(b) the alleged offender knows or suspects that it constitutes or represents such a benefit.

(4) It is immaterial -

(a) who carried out the conduct;

(b) who benefited from it;

(c) whether the conduct occurred before or after the passing of this Act.

(5) A person benefits from conduct if he obtains property as a result of or in connection with the conduct.......

(11) Money laundering is an act which -

(a) constitutes an offence under section 327, 328 or 329,

(b) constitutes an attempt, conspiracy or incitement to commit an offence specified in paragraph (a),

(c) constitutes aiding, abetting, counselling or procuring the commission of an offence specified in paragraph (a), or

(d) would constitute an offence specified in paragraph (a), (b) or (c) if done in the United Kingdom........"

[8] In presenting the Crown case to the jury (in particular in relation to charges 2, 3 and 4), the Advocate depute, who also appeared in this appeal, made it plain that the Crown sought to draw the inference that the cash referred to was criminal property from the whole circumstances, and in particular from the way it was handled. It was submitted that the Crown did not need to prove a particular crime or crimes as the source of the property. In the course of his submissions the Advocate depute said:

"What the Crown has to prove is that the property is or represents, in whole or in part, directly or indirectly, benefit from crime, without specifying the nature of that crime"

[9] In his charge to the jury the trial judge gave directions entirely consistent with the approach of the Crown. He said inter alia

"For the purposes of the Act, however, it does not matter what sort of crime the profit has come from. It is not necessary in relation to the offences created by this part of the Act for the Crown to prove the source of such proceeds provided, of course, that the source was criminal"

[10] In support of the appellant's ground of appeal 6, senior counsel submitted that the Trial Judge had misdirected the jury in respect of what the Crown required to prove in relation to any offence of money laundering; a misdirection which, it was said, directly affected charges 2 and 3, and also indirectly charge 1, where the Crown required to prove that the appellant knew or suspected or had reasonable grounds for suspecting etc. that Gurie was engaged in money laundering. On a proper construction of the Act, and in particular having regard to section 340(2) and (3), it was necessary for the Crown, in every case where a charge of money laundering was brought, to prove that the property which an accused was said to have, for example, transferred (section 327, as in charge 3) or possessed (section 329, as in charge 2) was property which formed a person's benefit from a specific criminal offence (the appellant's primary submission) or, at least his benefit from a specific class or type of criminal offence (the appellant's secondary submission). Insofar as the trial judge directed that it was unnecessary to prove what sort of crime the property derived from he had erred.

[11] Having considered the language of section 340 (in context, and having regard to the apparent purpose of part 7 of the 2002 Act), the previous legislative history, evidence as to the apparent mischief which the Act was intended to address and the prevailing interpretation of the relevant provisions of the Act in the Court of Appeal in England, we have come to the view (agreeing with the submissions of the Advocate depute) that this ground of appeal falls to be rejected.

[12] Part 7 of the Act is plainly designed to prevent the laundering of "dirty" money or other property constituted by any person's benefit from criminal conduct. It requires no special knowledge to appreciate that criminal conduct may be of many different kinds, and that cash or other property can be accumulated by the same person or persons as a result of many different forms of criminal behaviour, whether drug dealing or racketeering or theft etc. Against that background the question to which the language of section 340 (2) (a) gives rise, is whether it is enough in any case to prove that property must have derived from some offence, or offences, or whether it is necessary to prove that it derived from a specific offence, or offences. There is nothing, it appears to us, in the language of section 340(2)(a) which suggests or requires the latter. Indeed in R v NW and Others [2008] EWCA Crim 2 (23 January 2008), which senior counsel for the appellant ultimately founded most strongly upon, it was acknowledged by Laws LJ, delivering the opinion of the court, that the force of the Crown position in that case rested "in the fact that the statutory words appear to contain no reference, certainly no express reference, to any need to particularise the crime or class of crime in question" (para 22). By contrast there is good reason, we consider, to suppose that the former was intended. It is one thing for Parliament to have provided that the Crown must shoulder the burden of proving beyond reasonable doubt that any property is the product of some criminal offence or offences. It would be quite another to suppose that Parliament intended the Crown to undertake in every case the heavy additional burden of proving the specific offence or offences from which any particular property derived. Of course proof of the particular provenance of criminal property may, in certain cases, be entirely possible, but to senior counsel's question "how can one know the property is derived from criminal conduct unless one is able to prove a particular offence or at least class of offence?" there is, we think, a ready answer. It is not difficult to conceive of circumstances, particularly perhaps relating to the handling or movement of large sums of cash, which could readily be said to yield an inference, in particular absent any innocent explanation, that the cash was acquired as a result of criminal conduct, even if the particular offence, or offences, was, or were, unknown. This too was, it seems, accepted in R v NW and Others, in particular at para 16, where it was said

"We did not understand the respondents to submit that there could never be a case in which the Crown might properly invite the jury to infer from the available facts that criminal activity was the only reasonable and non-fanciful explanation for the presence of the relevant property in the hands of the defendants, even though there was nothing to show what class of crime was involved. We would in any event reject so general and unqualified a proposition. Everything, of course, depends on the particular facts. The protection of the defendants is such that an inference can only properly be drawn if it meets the criminal standard of proof, and the jury must of course be so directed".

It is also, in our view, not difficult to conceive of circumstances in which a person may be engaged, for reward or otherwise, to help another conceal his ill-gotten gains, knowing that such gains were the product of criminal activity but otherwise ignorant, and perhaps deliberately kept so, of the precise origins. It would be surprising if a statement admitting such engagement could not be founded on by the Crown as a complete admission of a money laundering offence under the Act. In these circumstances, in our opinion, the language of section 340(2)(a) (upon which senior counsel particularly relied) is entirely consistent with an apparent intention to describe, generally, any conduct contrary to the criminal law of any part of the United Kingdom.

[13] Further assistance can be gained from consideration of the previous legislative history. Prior to the 2002 Act separate legislation dealt with money laundering of the proceeds of drug trafficking on the one hand and money laundering of the proceeds of other criminal conduct on the other. The first money laundering offences were introduced in the Drug Trafficking Offences Act 1986 and in the Criminal Justice (Scotland) Act 1987, and related exclusively to the proceeds of drug trafficking. The provisions of these Acts were superseded, still in relation to drug trafficking, in the Criminal Justice (International Co-operation) Act 1990 (which applied in Scotland) and the Drug Trafficking Act 1994. In this legislation drug trafficking was defined as conduct which, inter alia, was in contravention of certain specified drugs offences. Money laundering offences in relation to the proceeds of other criminal conduct were introduced in the Criminal Justice Act 1993, which inserted new provisions into the Criminal Justice Act 1988. This legislation applied to Scotland. Criminal conduct was defined therein as "conduct which constitutes an offence to which this Part of this Act applies ..." (Section 93A of the Criminal Justice Act 1988 (as amended)). So long as there existed these two legislative regimes, it was plainly necessary for the Crown in any prosecution to identify and prove at least the class of predicate offence.

[14] It is to be noted, however, that in R v Tarsemwal Lal Sabharwal [2001] 2 Cr App R (S) 81 where the appellant was convicted of conspiracy to facilitate the retention of the proceeds of drug trafficking under Section 50 of the Drug Trafficking Act 1994, Hunt J, delivering the opinion of the court, said:

"13. The main point that Mr McCahill [counsel for Mr Sabharwal] takes before us today is that you cannot have a conviction under section 50 of the Drug Trafficking Act 1994, or a conspiracy based upon the ingredients of that Act, unless you can point to an individual prior conviction or the prosecution are in a position to prove a conviction or the commission of specific offences. We do not accept that that is right. If it were right, it would drive a coach and horses through this sort of prosecution.

14. At trial, the prosecution submitted that the evil which is aimed at under these sections and similar sections dealing with criminal conduct is to ensure that people who do assist in the laundering of money obtained from drug trafficking of any kind should be punished. In seeking to convict under such a count as this, it is sufficient to show that the money is the proceeds of drug trafficking in general, not that it comes from any individual offence, or indeed group of offences, or identifies one particular individual or group of individuals.

15. We accept that that is right. If, of course, known offences can be identified, then all well and good. If known offenders can be identified, all well and good. In some cases that will be possible and Mr McCahill refers in his skeleton to certain cases where it has been possible. But if the prosecution cannot, they are perfectly entitled to proceed as this prosecution did.

16. In seeking to prove it, they relied not only on the enormous quantities of money and that it must be, as Mr McCahill concedes, "dirty money", but on the traces of the drugs found on the money which were referred to by the experts. All that was perfectly proper and normal in the circumstances and we find there is no merit in the argument put forward before us."

[15] In R v Montila and Others [2004] 1 WLR 3141 the House of Lords required to consider the question of whether

"In a prosecution under Section 93C(2) of the Criminal Justice Act 1988 or under Section 49(2) of the Drug Trafficking Act 1994 is it necessary for the Crown to prove that the property was, in the case of the 1988 Act, the proceeds of crime and, in the case of the 1994 Act, the proceeds of drug trafficking?"

Section 49(2) of the Drug Trafficking Act 1994 was in the following terms:

"A person is guilty of an offence if, knowing or having reasonable grounds to suspect that any property is, or in whole or in part directly or indirectly represents, another person's proceeds of drug trafficking, he -

(a) conceals or disguises that property; or

(b) converts or transfers that property or removes it from the jurisdiction, for the purpose of assisting any person to avoid prosecution for a drug trafficking offence or the making or enforcement of a confiscation order"

Section 93C(2) of the Criminal Justice Act was in similar terms, save that it related to another person's proceeds of criminal conduct. The particular decision of their Lordships, answering the question in the affirmative, is not presently of direct relevance. Nor is R v Saik [2007] 1 AC 18, in which that decision was applied. Nor are we persuaded, despite senior counsel for the appellant's submissions, that much assistance is to be gained from the observation by Lord Hope of Craighead (who delivered the opinion of the Committee in Montila) that the language which Parliament has "chosen to use in the 2002 Act is different from that in the enactments which are in issue in this case. There is no room for any ambiguity. The property that is being dealt with in each case must be shown to have been criminal property" (para 41). Nevertheless what may be of significance is that his Lordship, having noted (in para. 42) the Crown's submission that:

"if the Crown has to prove the origin of the property, counts alleging that the money was the proceeds of drug trafficking on the one hand and that it was the proceeds of criminal conduct on the other would be mutually destructive if applied to the same property. As Scott Baker LJ put it in the Court of Appeal [2004] I WLR 624, 632, para 34, the Crown would have to prove in every case a coincidence between the defendant's view of origin and the origin itself. So the jury would have to be told that they could not convict under section 49(2) of the 1994 Act if the defendant thought that the money which was said to be the proceeds of drug trafficking might be the proceeds of criminal conduct, and that they could not convict under Section 93C(2) of the 1988 Act if he thought that the money which was said to be the proceeds if criminal conduct might be the proceeds of drug trafficking."

and having acknowledged that the identified "problem" was plain enough in theory, observed (at para 44):

"The problem appears to have been solved for the future by the approach which is taken in the 2002 Act to the definition of criminal property."

Given the objective and subjective elements of what constitutes criminal property under section 340(3)(a) and (b) of the 2002 Act, it is not obvious that "the problem" could be said to have been solved if it was still necessary for the Crown to prove a specific offence and an apparent coincidence between the objective and subjective elements.

[16] It seems clear that the existence of the two separate legislative regimes, and the need to distinguish between different classes of crime, was regarded as a weakness; that weakness being the mischief which the 2002 Act sought to remedy. In a June 2000 report by the Cabinet Office Performance and Innovation Unit, "Recovering the Proceeds of Crime" (the recommendations of which - in particular for a single regime - were implemented in the 2002 Act; part 7 of the Explanatory Notes to the Act treating the report as part of its legislative history), it was said that the existing separate regimes

"[failed] to take proper account of the fact that criminals may be involved in both drugs and non-drugs businesses, making it hard to ascribe proceeds of crime to one source rather than another ... Similarly, the activities of organised crime groups are known to cover many types of offence, overlapping between drug and non-drug crime ..." (paras 8.9 and 8.10)

[17] In so far as it may be thought necessary or appropriate to consider Parliamentary material relating to the 2002 Act, it is to be noted that the Home Office Minister responsible for the Bill at Second Reading said:

"... the separate treatment of drug trafficking and other criminal activity makes the legislation ineffective against today's versatile criminal entrepreneurs. When dealing with criminal groups, it is often in practice impossible to distinguish between the proceeds of their drug trafficking and those of other activities. The Courts have called for the abolition of this distinction in the criminal law on money laundering."

(Second Reading Speech of the Minister for Police, Courts and Drugs, Mr John Denham, HC Debs 30 October 2001, Col 759.)

[18] If the legislative history and apparent purpose of the 2002 Act is, as we believe it is, entirely supportive of the construction which we favour, (and would certainly suggest no obvious reason for the appellant's secondary submission), so too is the weight of judicial opinion in the Court of Appeal in England, to which we now turn.

[19] In R v Craig [2007] EWCA Crim 2913 (15 November 2007)

Gage L.J., giving the opinion of the court, cited a passage from the decision of Butterfield J in R v Kelly (unreported) in which it was said:

"Whilst the prosecution must prove that the property is 'criminal property' within the meaning of the statutory definition, there is nothing in the wording of the section which imports any further requirement that the property emanated from a particular crime or a specific type of criminal conduct."

and at para 29 said

"We accept this is a correct statement of principle, although it was given in a case where the point was not raised in the way in which it has been today."

[20] A different approach was taken by a differently constituted bench, chaired by Laws L.J., in R v NW and Others cit. sup. Notwithstanding the observations made at para 16 of the decision (quoted above, at para [12]), the court, having in particular considered at length a single judge decision relating to civil recovery under Part 5 of the 2002 Act (Director of the Assets Recovery Agency v Green [2005] EWHC 3168 (Admin)), (albeit a decision approved in Director of Assets Recovery Agency v Szepietowski [2007] EWCA Civ 766), concluded that under Part 7 of the 2002 Act the Crown required to prove at least "the class of crime in question" (para 37).

[21] This decision has not, however, been followed in subsequent decisions of the Court of Appeal.

[22] R v Anwoir and Others [2008] EWCA Crim 1354 was decided on 27 June 2008 by a bench chaired by Latham L.J., who delivered the opinion of the court. In referring to the grounds of appeal, at para 12, his Lordship said:

"The first ground is what we have described as the NW ground. This ground is based upon the decision of this court in R v NW..... It is submitted that in that case, this court held that for the purposes of a prosecution under section 328 of POCA the prosecution whilst, it did not have to establish precisely what crime or crimes had generated the property in question, it did have to establish at least the class or type of criminal conduct involved. It is acknowledged on the part of the appellants that this decision would appear to conflict with another decision of this court, R v Craig .... which does not appear to have been drawn to the attention of the court in NW."

His Lordship went on to say:

"18. It seems to us that it is necessary to look, however, with some care at both the decisions in the civil recovery proceedings and at the judgment of Laws L.J. in NW in order to see the extent to which there is in truth any real difference between the approach of the court in Craig, and the approach in NW. It is important to bear in mind that in Green Sullivan J was seeking to answer questions which were generally phrased, without reference to the particular facts of the case. And in giving his answer to preliminary issues raised, namely the extent of particularity required, he said at paragraph 47:

'1. In civil proceedings for recovery under Part 5 of the Act the Director need not allege the commission of any specific criminal offence but must set out the matters that are alleged to constitute the particular kind or kinds of unlawful conduct by or in return for which the property was obtained.

2. A claim for civil recovery cannot be sustained solely upon the basis that a respondent has no identifiable lawful income to warrant his lifestyle.'

19. In using the phraseology 'kind or kinds of unlawful conduct', he was referring back to paragraph 17 of his judgment in which he made it plain that such general descriptions as 'importing and supplying controlled drugs' and 'money laundering' would be quite sufficient. It is also important to note what he said in paragraphs 33 and 34. He there set out circumstances where the way in which money was being held or transported might of itself require an explanation, whereas the mere possession of money would not be sufficient. Implicit in those paragraphs, it seems to us, is the conclusion that circumstances could well arise where the only logical inference is that the property is the proceeds of crime. It will all depend upon the facts. We think this is precisely what Laws L.J. had in mind in paragraph 16 of his judgment ......

20. The difficulty comes from the next paragraph in which he said:

'Accordingly there may be cases (whether or not this is one) in which guilt under POCA section 327 or 328 could be inferred, applying the criminal standard, without proof of the class of crime in question. Whether a prosecution in such a case is lawfully and properly brought depends in our judgment on the correctness or otherwise of the respondent's second argument, namely that on the correct construction of POCA section 340 the Crown are required to prove at least the type or class of crime in question to which we will come in due course.'

21. There is a clear tension between these two paragraphs. Laws L.J. stated that the issue was a pure matter of law. But it is perhaps important to note that NW was a case in which the prosecution's evidence was essentially based upon the fact that NW had no visible means of support. That is quite a different case from the scenarios envisaged by Sullivan J in paragraphs 33 and 34 of his judgment. We consider that in the present case the Crown are correct in their submission that there are two ways in which the Crown can prove the property derives from crime, a)  by showing that it derives from conduct of a specific kind or kinds and that conduct of that kind or those kinds is unlawful, or b)  by evidence of the circumstances in which the property is handled which are such as to give rise to the irresistible inference that it can only be derived from crime. This in our judgment gives proper effect to the decision in Green, and is consistent with the decisions of this court in Gabriel [2007] 2 CAR 11, IK [2007] 2 CAR 10 and, of course, Craig. We consider that it is also consistent with the approach of this court in R v El Kurd (unreported CA 26^th July 2007, [2007] EWCA Crim 1888)."

[23] In R v F and B [2008] EWCA Crim 1868 (17 July 2008) a differently constituted bench (albeit chaired by Latham L.J., now Vice President of the Court of Appeal, Criminal Division) reached a similar conclusion. In giving the opinion of the court Latham L.J. said:

"5. The short point for the purposes of today is that the defence submission to the judge was based on the decision of this court in the case of R v NW and others....., which it was submitted established that in order to prove that the money or property in a case was criminal property the prosecution had to be able to establish at least what type of criminal conduct was involved which had produced the property. The judge, having heard that submission and having been supplied also with the authority of R v Craig [2007] EWCA Crim 2913, which would appear to say to the contrary, concluded that he was required to follow the decision in R v NW and could not say that the prosecution had been able to establish in this case what type of criminal conduct had been involved and, accordingly, he ruled that there was, as we indicated, no case to answer in respect of counts 1 and 2 on the indictment.

6. Since the ruling by the judge, this court has given judgment in the case of R v Anwoir......., where, in paragraph 21 of the judgment, I set out what the court considered to be the correct position in law.....

Prima facie it would appear that this case fell into category (b), in which the prosecution are entitled to ask the jury to consider the facts and to submit that the facts established without doubt that the property is criminal property from the circumstances that we have outlined in this judgment.

7. On behalf of the respondents, it is submitted that, whilst it is accepted that a case can be proved by inference, it is necessary for the purposes of procedural fairness for at least some background material to be available to enable the jury to conclude that criminality of some sort is involved.

8. We have considered that submission in the light of the views expressed by this court in R v Anwoir but conclude that the statement of principle which we set out in paragraph 21 is one upon which the prosecution is entitled to rely in this case. We can see no procedural unfairness arising out of the fact that the prosecution at this stage is unable to point to any particular criminality. The fact is that, certainly as far as the first respondent is concerned, the answers he gave to the Customs Officers suggest (one says no more than this at this stage because obviously he may well wish to give a full explanation) that he knew full well that criminality of some sort was involved in the production of that money. The second respondent's participation in the matter is also a matter which would clearly be one for the jury; but nonetheless it seems to us that there is clearly material here which justifies the matter being put before the jury without there being any procedural difficulty for the respondents to be able to answer the charges in the case."

[24] It appears to us to be clear from the above that the decision in R v NW and Others has effectively been superseded. In these circumstances it is enough to say that we prefer and endorse the reasoning in R v Craig, R v Anwoir and Others and R v F and B. It can, we think, reasonably be said, in particular, that the decision in R v NW and Others (reached in the face of an argument advanced on behalf of the Crown which suggested that it was enough to found on a defendant's lifestyle, leading to some reverse onus of proof - very different from the argument of the Crown in the present appeal) depended heavily upon the analysis by Sullivan J (in Director of the Assets Recovery Agency v Green) of language which could be said to be notably different in Part 5 of the 2002 Act, which relates to the different matter of civil recovery of property obtained through unlawful conduct. It may be noted, for example, that in terms of section 241(3) the court has to decide "on a balance of probabilities whether it is proved (a)  that any matters alleged to constitute unlawful conduct have occurred". There is no equivalent provision in Part 7. In any event, there is certainly nothing in R v NW and Others which gives any support to senior counsel's primary submission, as he readily conceded before us.

[25] For completeness we add only that although we were referred, on behalf of the appellant, to two other cases, R v Gabriel [2007] 2 Cr App R 11 and R v IK [2007] 2 Cr App R 10, neither, in our view, afford direct assistance to him. In the former it is recorded, without adverse comment, that the Crown case proceeded on the basis that the appellant had been engaged "in some criminal activity", albeit a subsequent problem was caused by an erroneous response by the Recorder to a particular question posed by the jury. Insofar as it was observed that it would be a sensible practice for the prosecution "either by giving particulars, or at least in opening, to set out the facts upon which it relies and the inferences which it will invite the jury to draw as proof that the property was criminal property", that, in our view, is entirely neutral in the present context. (And in the present case no preliminary issue was raised by the defence prior to the trial about the relevance or specification of the charges, albeit the appellant's representation has since changed.) In the latter case the court decided that it was open to the jury to infer that a discrepancy of £5.9 million, which was the subject of counts 1 and 2 on the indictment, was the product of criminal conduct in circumstances where

"The case was put on the basis that the jury could properly infer a criminal source from the dishonest non-recording of the transactions and the subsequent wholesale forging of documents designed to paper over the absence of records of the money laundering. It was said that the cheating of the Revenue which was the subject of count 11 and which gave rise to the criminal property which was the subject of count 12 was an example of the type of criminal conduct which might have given rise to the discrepancy which was the subject of counts 1 and 2." (Paras 10 and 34)

[26] In all the circumstances ground of appeal 6 falls to be refused.

[27] Ground of appeal 7 alleges that the verdicts returned by the jury in respect of charges 1, 2 and 3 were verdicts which no reasonable jury properly directed could have returned (section 106(3)(b) of the Criminal Procedure (Scotland) Act 1995). Although it thus extends to all charges of which the appellant was convicted, it was accepted before us that, absent notes of evidence, senior counsel would require to restrict his argument, at this stage, to the appellant's conviction on charge 1. He sought to reserve his right to advance at a later date any arguments, under this ground of appeal, in respect of charges 2 and 3. This motion was not opposed by the Crown. We therefore agreed to confine consideration of ground 7 at this stage to its application to charge 1.

[28] The short argument advanced on behalf of the appellant is that, standing the acquittal of Gurie on all charges, it is clear that the jury were not satisfied that the Crown had proved that Gurie was engaged in money laundering. On a proper construction of section 330 of the 2002 Act it is necessary for the Crown to prove that the money laundering allegedly known or suspected etc. was indeed taking place. Plainly the jury were not so satisfied. They could thus be said to have returned a verdict in respect of the appellant which was inherently inconsistent with their verdict in respect of Gurie.

[29] In our opinion, again agreeing with the Advocate depute, this contention - in so far as it proceeds on a misconstruction of the relevant section - falls to be rejected.

[30] There is nothing in the language of section 330(2) which states or requires that money laundering is in fact taking place. It is plain that the obligation thereunder can arise if a person suspects or has reasonable cause for suspecting that it is. Senior counsel for the appellant nevertheless stressed the use of the word "is" (engaged in money laundering) as opposed to "may be", but we do not find this to be convincing. As a matter of language it is obvious that a person may suspect that something is taking place, albeit it later turns out that his suspicion is ill-founded. To say that a person suspects that something is taking place is not, we consider, materially different from saying that he thinks that something may be taking place. Any use of "may be" after "suspects" could be said to be tautologous. Further, the obligation, in terms of the section, is to report any such suspicion etc "as soon as is practicable". There is no time to check before the required disclosure has to be made. Given that the apparent purpose of the section is to prevent money laundering and in particular to provide assistance to the investigatory authorities, so that they may investigate, it is not obviously consistent with that purpose to require proof of actual money laundering. If the Crown required to prove actual money laundering at the time when the relevant suspicion arises (as was argued by senior counsel) it is not difficult to imagine considerable practical difficulty, given that it is only thereafter that investigation, prompted by the reporting, may be expected to begin, and evidence obtained. Moreover the effect of the appellant's contention is, in our view, to require an additional condition where none is specified.

[31] With effect from 1 July 2005 a further condition for commission of the offence, subsection (3A), was indeed introduced by the Serious Organised Crime and Police Act 2005. It reads as follows:

"(3A) The third condition is -

(a) that he can identify the other person mentioned in subsection (2) or the whereabouts of any of the laundered property, or

(b) that he believes, or it is reasonable to expect him to believe, that the information or other matter mentioned in subsection (3) will or may assist in identifying that other person or the whereabouts of any of the laundered property."

It is further provided

"(5A) The laundered property is the property forming the subject-matter of the money laundering that he knows or suspects, or has reasonable grounds for knowing or suspecting, that other person to be engaged in."

Although senior counsel laid stress on the phrase 'the laundered property' in subsection (3A), subsection (5A) makes it clear, we consider, that "the laundered property" is simply the property forming the subject matter of the money laundering that a person knows or suspects etc. It may thus, in our view, exist even if, in the event, the suspicion proves unfounded.

[32] Our reading of the relevant section is, moreover, entirely consistent with the Directives which the legislation was designed to implement. As is well known, United Kingdom statutes require to be construed "as far as possible, in the light of the wording and the purpose of the Directive in order to achieve the result pursued by the latter." (Marleasing SA v La Comercial Internacional de Alimentación SA (Case C-106/89, [1990] ECR I-4135, para 8). As discussed in Bowman v Fels [2005] EWCA Civ 226 the relevant Directives are Council Directive 91/308/EEC and Council Directive 2001/97/EC. To that may be added Council Directive 2005/60/EC. In Article 6 of the first of these Directives it was provided

"Member States shall ensure that credit and financial institutions and their directors and employees cooperate fully with the authorities responsible for combating money laundering:

- by informing those authorities on their own initiative, of any fact which might be an indication of money laundering......"

This language remained the same in the second Directive. In the third (2005) Directive it was provided in paragraph 29 of the preamble that

"(29) Suspicious transactions should be reported to the financial intelligence unit (FIU), which serves as a national centre for receiving, analysing and disseminating to the competent authorities suspicious transaction reports and other information regarding potential money laundering or terrorist financing. This should not compel Member States to change their existing reporting systems where the reporting is done through a public prosecutor or other law enforcement authorities, as long as the information is forwarded promptly and unfiltered to FIUs, allowing them to conduct their business properly, including international cooperation with other FIUs." (emphasis added)

Article 21, paragraph 2, provides

"2. That FIU shall be established as a central national unit. It shall be responsible for receiving (and to the extent permitted, requesting), analysing and disseminating to the competent authorities, disclosures of information which concern potential money laundering, potential terrorist financing or are required by national legislation or regulation. It shall be provided with adequate resources in order to fulfil its tasks." (emphasis added)

[33] Although we were referred to the case of Luciano Arcaro [1997] 1 CMLR 179 there is nothing in that case which would cause us to question the construction of section 330 of the 2002 Act which we favour. All that was acknowledged at para 42 of that decision was that if it is plain that a Directive has not been transposed into national legislation that legislation cannot be interpreted so as to impose criminal liability on any individual in accordance with the Directive.

[34] We were referred to no case which specifically addressed section 330 of the 2002 Act, but in Squirrell Ltd v National Westminster Bank Plc [2006] 1 WLR 637 Laddie J held that even if a bank account did not contain funds which were criminal property and no offence had been committed by the holder of the account, section 328(1) of the 2002 Act nevertheless applied where the bank had a suspicion that the account-holder was involved in dealing with criminal property. Reference was made to Hussien v Chong Fook Kam [1970] AC 942 where Lord Devlin said

"Suspicion in its ordinary meaning is a state of conjecture or surmise where proof is lacking: 'I suspect but I cannot prove.' Suspicion arises at or near the starting-point of an investigation of which the obtaining of prima facie proof is the end."

[35] Counsel for the appellant pointed out that in R v Montila the House of Lords, in seeking to construe the sections of the Criminal Justice Act 1988 and the Drug Trafficking Act 1994 with which it was concerned, laid stress on the fact that a person could be guilty of an offence "knowing ..." of the relevant matters. It was said at para 27 "A person cannot know that something is A when in fact it is B."

Further stress was laid in that case on the absence of any statutory defence if the property which the defendant was alleged to have known or to have had reasonable grounds to suspect was another person's proceeds turned out to be something different (para 28). Senior counsel, however, accepted that their Lordships in that case were dealing with what might be described as core money laundering offences (equivalent to sections 327 to 329 of the 2002 Act), in respect of which , in our view, materially different considerations apply.

[36] It was pointed out to us that, during the second reading of the Bill in the House of Lords, Lord Goldsmith, who summed up on behalf of the government, is recorded as having said

'The concern that the negligence offence is unfair overlooks the fact that the offence in clause 330 of failing to report to the authorities is permitted only if the prosecution proves that money laundering was planned or undertaken.'

We are not persuaded, however, either that the section is ambiguous or that the statement referred to is sufficiently clear so as to make it appropriate to use it as an aid to construction (Pepper v Hart [1993] AC 593). As to the latter part of the statement, no reason or explanation was given, and it is difficult to understand the reference to "planned" money laundering in what, it appears, was an unprepared answer.

[37] In the course of the debate before us we were also referred to certain textbooks and articles. It may be observed that in Confiscation and the Proceeds of Crime (Mitchell, Taylor and Talbot.) it is said, at para 9.030, under reference to section 330,

"Clearly, there is no need for the prosecution to prove that the transaction that was not disclosed in fact related to the proceeds of drug trafficking. Montila only applied to the substantive money laundering offences."

In Blackstone's Criminal Practice (2009 Edition) it is said

"Sections 330, 331 and 332 create offences of failure to disclose possible money laundering activities." (emphasis added)

Although in Fraud: Criminal Law and Procedure (Montgomery and Ormerod) it is said (at D.9.223) "It appears that it must be proved by the prosecution that money laundering has taken place in order to succeed in obtaining a conviction under section 330 of POCA.", the relevant footnote suggest that the source of that comment is an article by Gary Summers, "Reporting suspicious transactions - a fine balance", New Law Journal, 3 March 2006. Although we have had regard to the terms of this article, we are, with respect, not persuaded by its reasoning or conclusion.

[38] In these circumstances ground of appeal 7 falls, in so far as it relates to charge 1, to be refused.

[39] The appeal will be continued to enable the remaining grounds to be considered.