www.moneylaunderingbulletin.com
May 2015
FEATURE ❱ CASES
Case to answer: R v Rogers - implications
for practitioners
The Court of Appeal (Criminal Division) decided in
R v Rogers [2014] EWCA Crim 1680 that a UK court has
jurisdiction to convict a defendant of money laundering in
circumstances where all of the conduct constituting the
money laundering takes place abroad. Jonathan Fisher QC
writes that the decision has significant implications, not fully
appreciated, for solicitors, accountants and financial services
providers offering professional services from offices abroad.
A question arises as to whether the case has been wrongly
decided.
Practitioners have been aware from the implementation of the
legislation that the criminal offences contained in Part 7 of the
Proceeds of Crime Act 2002 (POCA) have a wide application.
The money laundering offences embrace all types of criminal
conduct giving rise to financial benefit. Moreover, by virtue
of section 340(2)(b) of POCA, the legislation captures benefit
derived from conduct committed lawfully abroad which would
have constituted the commission of a criminal offence if it had
been committed in the UK. The fact that the conduct is perfectly
lawful in the place where it is committed is none to the point.
Double criminality of the conduct giving rise to the benefit in
the place where the conduct is committed and the place where
the financial benefit is handled does not need to be shown. To
be guilty of a money laundering offence, it is sufficient for a
prosecutor to show that the actus reus of the money laundering
offence, namely the handling or assisting in the handling of the
criminal property, took place in the UK, the property having
been deemed to constitute criminal property in the UK by
virtue of a legislative fiction. Anti-money laundering trainers
frequently demonstrate the point by making dubious reference
to the earnings of a Spanish bullfighter or the income generated
by a Dutch brothel (“the bullfighters and brothels test”), but it
is criminal offences such as corruption and bribery which have
greater resonance in the sharp realities of the commercial world.
This is because there are still many places in the world where it is
not a criminal offence to pay a secret and unofficial commission
or reverse commission to a person working in the private sector as
a hidden appreciation for obtaining a contract for the provision
of work or services. Even though payment of the commission
(otherwise known as a bribe, or less prosaically “a bung”) is
lawful in the country in which it was paid, unquestionably the
conduct would constitute the commission of a criminal offence
under UK law. If the proceeds of the contract are remitted into
the UK or any UK citizen assists in their handling, a money
laundering issue arises.
It does not follow by any means that the same principles should
necessarily apply in the converse situation, where the proceeds of
criminal conduct taking place in the UK are handled by a person
abroad. In this instance, the actus reus of the money laundering
offence, namely the handling of the property or assisting in the
handling of the property, takes place entirely outside of the UK.
As the courts have explained in many cases, the primary basis of
English criminal jurisdiction is territorial, it being the function
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of the English criminal courts to maintain the Queen’s
peace within her realm (Board of Trade v. Owen [1957]
A.C. 602, per Lord Tucker at page 625). Or as expressed a
little more boldly, “[T]he whole body of the criminal law
of England deals only with acts committed in England”
(Cox v. Army Council [1963] A.C. 48, per Viscount
Simonds at page 67). In fact, there is a well-established
presumption in construing a statute creating a criminal
offence that, in the absence of clear words to the contrary,
it is not intended to make conduct taking place outside
the territorial jurisdiction of the Crown an offence capable
of being tried in an English court (Air India v Wiggins
[1980] 71 Cr App R 213 per Lord Diplock at page 217).
This is because, as another senior Judge explained, “[I]t
would be an unjustifiable interference with the sovereignty
of other nations over the conduct of persons in their own
territory if we were to punish persons for harmful conduct
which did not take place in the United Kingdom and had
no harmful consequences there” (Treacy v DPP [1971] AC
537, per Lord Diplock at page 561). In this way, the UK
courts have historically recognised a self-imposed restraint
on the exercise of criminal jurisdiction for considerations
of international law and the comity of nations. The right to
prescribe and enforce criminal prohibitions over conduct
within a State’s own territory is an indispensable attribute
of national sovereignty.
It is against this background that the Court of Appeal
(Criminal Division) decision in R v Rogers [2014] EWCA
Crim 1680 falls to be considered.
The facts
An unpleasant advance fee fraud was committed by a
number of fraudsters in the UK. The fraud was organised
from call centres in Spain and Turkey where the fraudsters
would speak to potential victims who had been enticed
through internet and newspaper advertising to call
through. The victims were enticed into paying an advance
fee to the fraudsters on false promises that in some cases
their debts would be eliminated, and in other cases that
escort services would be provided. The money was paid
into UK accounts of bogus UK companies and used to
defray expenses of operating the fraud. The profits were
subsequently transferred to bank accounts in Spain.
Rogers was the principal fraudster’s lieutenant in Spain.
He was the holder of a UK passport and received a large
amount of money transferred into accounts controlled by
him in Spain. Approximately UK£715,000 was received
in small tranches so as to avoid any anti-money laundering
provisions. Rogers also allowed the principal fraudster to
withdraw substantial monies from the bank accounts.
In the fullness of time, Rogers was prosecuted in the
UK and amongst other criminal offences he was charged
with an offence contrary to section 327(1)(c) of POCA.
This offence is committed when a person converts
criminal property and exposes him to a maximum
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sentence of 14 years imprisonment. The particulars of
the indictment alleged that “between 23rd October
2007 and 1st September 2010 [Rogers] converted the
sum of £715,000 being criminal property obtained by
fraud from England and Wales by permitting the receipt
of money into his personal bank accounts in Spain and
allowing the subsequent withdrawal of the money”. The
jury convicted Rogers after the trial Judge ruled that the
Crown Court had jurisdiction to deal with the offence
where all the money laundering activities had been
undertaken in Spain by a non-resident of the UK. It
followed from the jury’s verdict that Rogers had known or
suspected that the monies constituted criminal property
at the time when he handled them, or permitted them
to be handled, in his Spanish bank accounts. Rogers was
sentenced to 2 years and 10 months imprisonment.
On appeal
Rogers contended before the Court of Appeal (Criminal
Division) that the Crown Court did not have jurisdiction
to try him for a money laundering offence where he had
been living and working in Spain, and where the totality
of the money laundering conduct with which he was
charged had taken place abroad. There was no allegation
that Rogers had undertaken any aspect of the money
laundering activity in the UK, and the handling of the
monies in the Spanish bank accounts had not caused the
victims to suffer any additional loss.
The prosecution met this argument in two ways.
First, the prosecution submitted that the provisions in
Part 7 of POCA made quite clear that the Crown Court
could exercise extra-territorial jurisdiction to try a money
laundering offence where the handling of the property
took place abroad. Secondly, the prosecution argued that
the traditional limitations on the exercise of criminal
jurisdiction should be viewed through a more modern
lens. Accordingly, the prosecution argued, in their
contemporary form the rules of international comity “do
not require more than that each sovereign state should
refrain from punishing persons for their conduct within
the territory of another state where the conduct had had
no harmful consequences within the territory of the state
that imposes the punishment” (judgment, paragraph 37).
The Court of Appeal (Criminal Division) accepted
both prosecution arguments and upheld the conviction.
On the point of statutory construction, the Court
of Appeal (Criminal Division) relied heavily on the
provision in section 340(11) of POCA, which defines an
act of money laundering as an act which (a) constitutes an
offence under section 327, 328 or 329, or (b) constitutes
an attempt, conspiracy or incitement to commit such an
offence, or (c) constitutes aiding, abetting, counselling
or procuring the commission of such an offence, or (d)
would constitute such offence “if done in the United
Kingdom”. It is the presence of the last six words which
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were decisive in the Court’s view. This provision, the
Court ruled, “appears to admit of no other construction
than that Parliament intended extra-territorial effect to
this legislation” (judgment, paragraph 48). In addition, the
Court was fortified by the addition of section 327(2A) of
POCA, which made clear that a person was exempted from
the money laundering offences in a tiny number of cases
specified by Statutory Instrument where foreign conduct
would have constituted a minor regulatory offence if it had
taken place in the UK. The presence of this section gives
“a strong indication that a defendant’s money laundering
activity abroad is potentially within the jurisdiction of the
English courts” (judgment, paragraph 45).
As regards the more modern approach to jurisdiction,
the Court of Appeal was gushing in its enthusiasm. The
Court noted that: “The reliance of international banking
on ever developing and advancing communications
technology has added new weapons to the armoury
of fraudsters, especially those whose purpose it is to
perpetrate fraud across national boundaries. If the issue of
jurisdiction in cases of obtaining is to depend solely upon
where the obtaining took place it is likely that the courts,
and especially juries, will be confronted with complex and,
at times, obscure factual issues which have no bearing on
the merits of the case. This court must recognise the need
to adapt its approach to the question of jurisdiction in the
light of such changes …” (judgment, paragraph 53)
Moreover, summarising the “celebrated discussion” by
Lord Diplock of the boundaries of international comity in
Treacy v Director of Public Prosecutions [1971] AC 537, the
Court quoted the following “most valuable analysis” put
forward by a Canadian judge, La Forest J, in Libman v R
[1985] CCC (3d) 206 at page 221: “The English courts
have decisively begun to move away from definitional
obsessions and technical formulations aimed at finding a
single situs of a crime by locating where the gist of the
crime occurred or where it was completed. Rather, they
now appear to seek by an examination of relevant policies
to apply the English criminal law where a substantial
measure of the activities constituting a crime take place in
England, and restrict its application in such circumstances
solely in cases where it can seriously be argued on a
reasonable view that these activities should, on the basis
of international comity, be dealt with by another country.”
Implications for practitioners
The decision of the Court of Appeal (Criminal Division) in
R v Rogers has considerable implications for professionals
when providing client services abroad, particularly in
cases where arrangements for handling client funds, asset
control and management and/or tax planning are involved.
Hitherto, professional advisers have been proceeding
on the basis that they are exposed to the commission of
the criminal liability in the UK only where they have
undertaken – or cause some action to be undertaken
– in the UK with reference to the criminal property in
© Informa UK Ltd 2015
question. For example, if a solicitor or accountant based in
Geneva instructs a UK bank to transfer his client’s monies
to a foreign bank account, either by telephone facsimile
machine or email, arguably (and it is arguable) this action
might be regarded as sufficiently proximate to the UK for
the jurisdiction of its criminal courts to be triggered. Here,
the concern is that by his action a professional person may
have aided and abetted a UK-based client in the commission
of one of the money laundering offences, or encouraged
or assisted the UK-based client in the commission of a
criminal offence contrary to sections 44, 45 or 46 of the
Serious Crime Act 2007. In this situation, the actus reus
of the criminal offence committed by the professional
person would be the conduct which constituted the
aiding and abetting, or encouraging and assisting, of
his UK based client in the handling of his, i.e. the UKbased client’s, proceeds of crime. What the professional
adviser did not commit, so it was thought prior to the
decision of the Court of Appeal in R v Rogers, was one of
the money laundering offences under sections 327, 328 or
329 of POCA. This is because, for the purposes of section
327 and 329, any actual handling of criminal property
by the professional adviser would have taken place outside
the UK, and similarly, for the purposes of section 328,
the professional adviser would have been outside the UK
when he agreed to enter into an arrangement with his
client to handle the proceeds of crime. Accordingly, the
conventional wisdom ran, the professional adviser would
not commit any of the money laundering offences since
he was outside of the UK’s jurisdiction at the time when
the offence would have been committed. The effect of the
decision in R v Rogers is to change this understanding, and
the prospect of criminal liability for UK citizens handling
criminal property abroad is now placed beyond doubt.
But in so doing the decision has left the boundaries of
criminal liability somewhat opaque in this increasingly
complicated area of law.
There are a number of unanswered questions. Would the
conviction in R v Rogers have been upheld if Rogers had not
been a UK citizen? The Court has left the answer unclear.
Traditionally, the presumption against a Parliamentary
intention to make acts done by foreigners abroad offences
which can be tried by an English criminal court is even
stronger than the position where a UK national is concerned.
As Lord Russell said in R v Jameson [1896] 2 Q.B. 425,
430, “[o]ne other general canon of construction is this, that
if any construction otherwise be possible, an Act will not be
construed as applying to foreigners in respect to acts done
by them outside the dominions of the sovereign power
enacting”. Has this principle of statutory construction also
yielded to a more modern view of jurisdiction? Applying
the reasoning put forward by the Court of Appeal in
R v Rogers, it seems that it has. A substantial measure of
the activities constituting the predicate fraud crime took
place in England, and so the same considerations would
appear to apply. Certainly, public policy considerations
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would support this outcome. If the professional adviser is a
foreign national and working abroad for a UK professional
services firm, it would be nonsensical if he could avoid
criminal liability in circumstances where a UK national
would be convicted for participating in the same conduct.
This would raise the possibility of a UK employee asking
a non-UK employee to handle a client account where
there is a suspicion of money laundering, in order to avoid
the prospect of criminal liability for the commission of a
money laundering offence in UK law.
But how far does this go? Would criminal liability
in R v Rogers have extended to a situation where Rogers
was handling monies that were derived from criminal
conduct committed outside the UK? Here, the position
becomes more interesting because unlike the situation in
R v Rogers where the two arguments put forward by the
prosecution operate in tandem, the arguments come into
conflict with each other. On the one hand, applying the
approach taken by the Court of Appeal in R v Rogers to
the issue of statutory construction, there is no reason why
criminal liability should not arise. With the definition of
criminal property deemed to include monies derived from
foreign conduct which would have constituted a criminal
offence if committed in the UK, logically it would follow
that criminal liability in the UK for handling the criminal
property abroad would arise. In practice, a prosecuting
authority would not be interested in commencing criminal
proceedings for money laundering where both the
underlying criminal conduct and handling the proceeds of
crime were committed abroad, but in principle, applying
the reasoning of the Court of Appeal in R v Rogers, the
ability to initiate criminal proceedings in the UK is
something which can be said to have been contemplated
by Parliament. However, it is clear that the elasticity in the
modern view of criminal jurisdiction does not stretch this
far. For as the Court of Appeal explained, with reference
to the facts in R v Rogers: “This is not a case where the
conversion of criminal property relates to the mechanics
of a fraud which took place in Spain and which impacted
upon Spanish victims. In those circumstances, our courts
would not claim jurisdiction” (judgment, paragraph 55).
Is R v Rogers wrongly decided?
The implications flowing from the Court’s reasoning
in R v Rogers lead to a consideration of whether or not
the case was correctly decided. There is, I suggest, a
strong argument that it was not. The short point is that
the Court of Appeal (Criminal Division) confused the
internationalism of the underlying criminal conduct with
the internationalisation of domestic criminal jurisdiction.
Section 327(2A) of POCA focuses on the place where the
underlying criminal offence, often known as the predicate
offence, occurred. This understanding accords entirely
with the definition of money laundering first put forward
in the European Council Directive on Money Laundering
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in 1991, which made clear that “[m]oney laundering
shall be regarded as such even where the activities which
generated the property to be laundered were perpetrated
in the territory of another Member State or in that of a
third country”. It is the location of the predicate offence
which can have occurred in a country different to the
one in which the money laundering actually took place.
But the definition says nothing about the ability of a
domestic court to try a defendant for the commission of
a money laundering offence where handling the property,
or assisting in handling the property, took place outside
of the jurisdiction in which the defendant is being tried.
Handling the property, or assisting in its handling, is the
actus reus of the money laundering offence, and whilst it
does not matter where the predicate offence giving rise
to the criminal property was committed, the place where
the actus reus of the offence took place remains critical
to the issue of criminal jurisdiction. There is nothing in
Part 7 of POCA which changes this position, and the
Court of Appeal (Criminal Division) fell into error in R v
Rogers when eliding statutory provisions dealing with the
location of the predicate offending with the place where
the actus reus of the money laundering was committed.
Regarding section 340(11)(d) of POCA, it is difficult
to see how this provision helps to sustain the Court of
Appeal’s ruling. If anything, it militates in the opposite
direction. Section 340(11) provides a definition of money
laundering for the purposes of the money laundering
reporting obligations set out in sections 330, 331 and
332 with which those working in the regulated sector
are required to comply. These are free-standing reporting
obligations and are triggered in circumstances where
a person knows, suspects or has reasonable grounds for
knowing or suspecting that another person is engaged
in money laundering For the purpose of determining
what is meant by the reference to “money laundering”
in sections 330, 331 and 332, the phrase is defined by
section 340(11). And as section 340(11)(d) makes clear, it
does not matter whether the money laundering is taking
place in the UK or abroad. Either way, the existence of
suspected money laundering by another person must be
disclosed in order for the person working in the regulated
sector to discharge the section 330, 331 or 332 reporting
obligations. However, what section 340(11)(d) does
not address, which is the crucial point in R v Rogers, is
the issue of the jurisdiction of the UK criminal courts
to try a defendant for an offence which constitutes
money laundering when the totality of the actus reus
of the offence takes place abroad. The phrase “money
laundering” does not appear as a constituent element of
the offences in sections 327, 328 or 329 of POCA. The
actus reus of these offences is deemed by section 340(11)
(d) to constitute money laundering for the purposes of the
reporting obligations in sections 330, 331 and 332 even
where the money laundering activity takes place abroad,
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but this is an entirely different matter from the issue of
jurisdiction to try a defendant for the commission of the
money laundering offence.
Then, having misinterpreted the statutory provisions
in Part 7 of POCA, the Court proceeded to distort the
principles of criminal jurisdiction in order to support
the decision which it had reached on the issue of
statutory construction. Whilst, as Lord Woolf said in
R v Smith (Wallace Duncan) (No 4) [2004] Q.B. 1418
at paragraph 64, “[i]t would undermine the inherent
nature of the common law if courts were prevented as a
matter of principle from developing the law to meet the
needs of contemporary society in the present situation”,
nonetheless, the consequences of modernisation require
most careful thought, with an eye to the ramifications
which would follow. Unfortunately, the Court of
Appeal did not give this aspect of the matter sufficient
consideration. In addition, there is the associated question
of whether it is right for the courts to initiate significant
change to established legal principles without usurping
the role of Parliament and the legislative process.
© Informa UK Ltd 2015
Conclusion
As observed at the outset, it is trite law that a person
located in the UK can launder the proceeds of criminal
conduct which takes place abroad, provided that the
predicate conduct would constitute an offence in the UK
if it had occurred here. And it is also correct to say that
there is potential vulnerability for a professional adviser
located abroad to aid and abet or encourage or assist the
commission of a money laundering from abroad where
there is some supporting conduct taking place within the
UK which is sufficient to trigger criminal jurisdiction.
The Court of Appeal (Criminal Division) goes much
further in R v Rogers, and says that there is no need for
any such conduct to have taken place in the UK for the
criminal courts to have jurisdiction. It is plainly wrong,
but until the decision is overturned practitioners will be
well advised to follow it.
■ Jonathan Fisher QC is a practising barrister at
Devereux Chambers in London and a Visiting Professor in
Practice at the LSE. (www.jonathan-fisher.co.uk)
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