R v Rogers

In R v Rogers (Bradley) and others the Court of Appeal of England and Wales held that the three money laundering offences in Part 7 of the Proceeds of Crime Act 2002 (POCA) have extraterritorial effect, such that an offence of converting criminal property under section 327(1) (c) of POCA could be tried in the United Kingdom even where the defendant, who lived and worked in Spain, committed no part of the offence within the UK. The court’s decision and approach is of considerable importance to practitioners in this area and merits closer scrutiny.

The background to the decision

Bradley Rogers, a Spanish resident, had been accused of involvement in two advance fee fraud schemes, whereby individuals in the UK had been persuaded to pay advance fees on the promise of either elimination of their existing debts or lucrative work as escorts. The profits of the fraud were transferred to Spain, including to a bank account owned by Rogers, from which they were subsequently withdrawn.

Rogers was originally indicted on counts of conspiracy to defraud and, in the alternative, an offence of removing criminal property from the jurisdiction contrary to s.327(1)(e) of POCA. He successfully argued that there was no case to answer in respect of the POCA offence on the ground that there was no evidence that he was involved in removing the funds from the UK to Spain. However, the judge permitted the crown’s application to amend the indictment to add a new count of ‘converting criminal property’ under section 327(1)(c) by permitting the receipt into and withdrawal of the funds from his Spanish bank account.

Rogers was convicted of this offence. He appealed on the grounds, among others, that the judge had erred in ruling that the Crown Court had jurisdiction to deal with the amended count in circumstances where the alleged conversion was carried out in Spain by a non-resident of the UK in relation to a Spanish bank account. He submitted that there is a well-established presumption in construing a statute creating an offence that, in the absence of a provision to the contrary, it is not intended to make conduct taking place outside the territorial jurisdiction of the UK triable in an English court. Rogers further submitted that there was no such provision within POCA.

The judgment of the Court of Appeal

The court dismissed the appeal, upholding the trial judge’s decision on two grounds.

First, the court held that the provisions of Part 7 of POCA provided the necessary jurisdiction, relying on certain provisions of POCA as giving a strong indication that section 327 was intended to have extraterritorial effect.

Second, the court held that even if the statute did not provide jurisdiction, the modern approach to jurisdiction required ‘an adjustment to the circumstances of international criminality’ and identified money laundering as ‘par excellence an offence which is no respecter of boundaries’.

Was Part 7 of POCA intended to be extraterritorial?

While the court’s decision that sections 327 to 329 (by implication) have extraterritorial effect is not surprising, the approach adopted in reaching that decision has arguably left unclear the limits of that jurisdiction.

English criminal law does not ordinarily apply to conduct abroad unless there is a specific statutory provision to the contrary. Examples of specific statutory provisions giving extraterritorial effect are bribery offences under section 12 of the Bribery Act 2010 and trade control offences under Part 4 of the Export Control Order 2008. The effect of these provisions is clear on their face and attracted much debate whilst passing through parliament.

In Rogers, the court acknowledged that a specific statutory wording is required to give extraterritorial effect and was satisfied that the language of Part 7 of POCA provided this. In so doing, the court placed particular emphasis on a number of provisions in Part 7. However, this purported statutory basis is not as clearcut as it may first appear.

First, the court noted that, although section 327(1)(e) provides that criminal property must be removed from the UK, it places no such geographical limitation on the other methods of committing the offence, including conversion under section 327(1)(c). However, as the court had acknowledged, the presumption that English criminal law is territorial means that it is not necessary for a statute to specify that an offence must be committed ‘within the jurisdiction’ and it is arguable that the jurisdictional nexus was inserted merely as a means to provide greater clarity to the basis of the offence of removal.

Second, the court noted that section 327(2)(a) provides a defence of knowing or believing that relevant ‘criminal conduct’ occurred outside the UK, and was not unlawful there. Criminal conduct is defined in section 340(2)(b) to include, among other things, conduct which would constitute an offence in any part of the UK if it occurred there. The court held that this gave a strong indication that a defendant’s money-laundering activity outside the UK can be within the jurisdiction of the English courts.

However, the obvious response to this point – which the court touched on but did not consider in any detail – is that the purpose of these provisions is actually to define and limit the circumstances in which the UK courts will have jurisdiction to try a defendant for laundering the proceeds of a crime that is committed overseas. Only if someone within the UK thereafter became concerned with the ‘criminal property’ in one of the ways set out under sections 327 to 329 would it previously have constituted a primary money-laundering offence under POCA.

Third, the court noted that the definition of criminal property in section 340 includes ‘all property wherever situated’ (s.340(9)), taking this as a further indication that principal money laundering offences may be committed outside the UK in respect of criminal property that is also outside the UK. However, the more natural interpretation is simply that acts within the UK which relate to criminal property situated abroad fall within the remit of the UK courts: the commission of the act providing sufficient basis for the UK court to have jurisdiction. For example: giving approval from the UK for payments to be made or received abroad which could fall under section 327 or section 329.

Finally, the court placed particular emphasis on the fact that the definition of ‘money laundering’ in section 340(11)(d) includes an act which would constitute an offence in the UK, which it said ‘appears to admit of no other construction than that Parliament intended extra-territorial effect to this legislation’.

This conclusion does not appear to withstand closer scrutiny. First, the purpose of section 340(11)(d) is to define money laundering as a term to be used across the whole of Part 7. Notably, the term ‘money laundering’ is not actually used in any of the principal money laundering offences, nor – crucially – does it constitute an offence in itself. Instead, it is used to define the parameters of offences of failure to disclose in sections 330-2 and the definition makes good sense in that context: these offences are intended to promote within the UK the disclosure of information relating to money laundering activity worldwide, with a view to facilitate cross-border transfers of intelligence and enforcement activity.

Secondly, it is arguable that if the statutory draftsmen had really intended the section to have extraterritorial effect, they would simply have stated that a person will commit an offence triable in the UK even if the conversion (or transfer etc.) of the criminal property took place abroad. It is perhaps disappointing that arguments such as these were not aired before the court.

The ‘modern approach’ to jurisdiction

It is widely accepted that Smith (Wallace Duncan) (No 4) represents the current state of the law on the question of jurisdiction. The court in Rogers quoted an extract from Smith containing the now well-established principle that the courts seek to ‘apply the English criminal law where a substantial measure of the activities constituting a crime take place in England’, subject to cases which should be dealt with by other countries on the basis of international comity.

However, the court went on to emphasise the earlier part of the extract which laments the evolving nature of international fraud and states that the court must adapt its approach to jurisdiction in response. In this regard, the court appears to have been particularly persuaded by the crown’s argument that the absence of a geographical limitation in the definition of an offence meant that any such limitation could only be identified by applying the international law of comity, which requires only that ‘… each sovereign state should refrain from punishing persons for their conduct within the territory of another state where the conduct has no harmful consequences within the territory of the state that imposes the punishment’.

The court emphasised that the underlying criminal conduct occurred in the UK and had an impact on victims in the UK, such that Rogers’ acts in dealing with the proceeds of that criminality were inextricably linked to the jurisdiction in which the criminality occurred. The court therefore held that ‘…when the significant part of the criminality underlying the case took place in England …there is no reasonable basis for withholding jurisdiction …’. Ultimately claiming jurisdiction not on the basis that ‘a substantial measure of the activities constituting a crime [took] place in England’ but that ‘a significant part of the criminality underlying the case took place in England’ (our emphasis added).

Whilst this is arguably a justifiable and even necessary extension of the test in Smith, the approach adopted by the court has introduced an undesirable element of uncertainty as to how Smith will be applied to future cases. In this particular instance, the court was influenced by the existence of underlying criminal activity in the UK and the fact that the laundering of the money overseas caused further harm to victims in the UK by the continued deprivation of the victims of their monies. The court also went on to state that ‘where the conversion of criminal property relates to the mechanics of a fraud which took place in Spain and which impacted on Spanish victims,’ English courts would not claim jurisdiction. It may therefore be that the expansive approach adopted in Rogers will be confined to cases where an individual would otherwise avoid justice if the English courts decided they had no jurisdiction to try the matter but this has yet to be determined conclusively.

Conclusion

The case of Rogers highlights the jurisdictional issues raised by the ever- developing nature of international fraud and serves as a reminder that the law in this area must keep pace with the activities of those it seeks to prosecute. While it would be preferable for all substantive questions of criminal jurisdiction to be decided by Parliament and placed on a clear statutory footing, for present purposes it is hoped that a future court decision will reconsider the jurisdictional issues discussed in Rogers and clarify the law in this area.

Unfortunately, as at June 2019, there has been little in the way of clarification. In the years following the decision in Rogers, two cases have affirmed the decision: Jedinak v Czech Republic [2016] EWHC 3525 (Admin) and Sulaiman v France [2016] EWHC 2868 (Admin). Unfortunately, neither of these cases have recognised or contended with the issues outlined above.

An earlier version of this article was first published on globalinvestigationsreview.com on February 12, 2015.