R v Saik [2006] UKHL 18

Mr Saik, a bureau de change operator, pleaded guilty to conspiracy to launder money on the basis that he only suspected, rather than knew, the money was criminal proceeds. The House of Lords quashed his conviction, holding suspicion insufficient for statutory conspiracy under section 1(2) of the Criminal Law Act 1977.

Facts

The appellant, Mr Abdulrahman Saik, operated a bureau de change near Marble Arch in London. He was charged with conspiracy to convert the proceeds of drug trafficking and/or criminal conduct, contrary to section 1(1) of the Criminal Law Act 1977, the substantive offence being that under section 93C(2) of the Criminal Justice Act 1988. The particulars alleged that between May 2001 and March 2002 he conspired with others to convert banknotes for the purpose of assisting another to avoid prosecution, ‘knowing or having reasonable grounds to suspect’ that the property represented another person’s proceeds of criminal conduct.

Saik pleaded guilty on a written basis of plea which stated: he pleaded guilty ‘on the basis of laundering money which he suspected was the proceeds of crime’, and that he only became suspicious from about December 2001. The plea was accepted by the prosecution and he was sentenced to seven years’ imprisonment, reduced on appeal to five and a half years. The Court of Appeal dismissed his appeal against conviction but certified two questions for the House of Lords.

Issues

The certified questions were:

1. Whether a defendant could be convicted of statutory conspiracy to contravene section 93C(2) of the Criminal Justice Act 1988 where he entered into an agreement to convert property which he had reasonable grounds to suspect, and did suspect, but did not know, was the proceeds of crime.
2. Whether the objective requirement of ‘reasonable grounds to suspect’ under section 93C(2) was incompatible with the subjective purpose requirement.

The central question was whether the mental element of suspicion, which suffices for the substantive money laundering offence, is sufficient for the offence of conspiracy under section 1 of the Criminal Law Act 1977, or whether the higher threshold of ‘intend or know’ in section 1(2) applies.

Arguments

Appellant

The appellant argued that the conviction was unsafe because suspicion was insufficient to establish conspiracy. Section 1(2) of the 1977 Act required intention or knowledge that the property would be the proceeds of crime, and following R v Montila [2004] 1 WLR 3141, the criminal provenance of the property was a fact necessary for commission of the substantive offence. Suspicion could not satisfy the ‘intend or know’ threshold. It was also argued that there was an incompatibility between the objective ‘reasonable grounds to suspect’ element and the subjective illicit purpose requirement.

Respondent

The Crown submitted (through Mr Peters QC) that suspicion meant the appellant was aware the notes might be proceeds of crime and intended to convert them even if they were. This amounted to a conditional intention sufficient to satisfy sections 1(1) and 1(2). Further, by pleading guilty to acting for the prescribed illicit purpose, the appellant had effectively accepted all ingredients save knowledge, and that state of mind was consistent only with knowledge.

Judgment

The House of Lords unanimously allowed the appeal and quashed the conviction (Baroness Hale dissenting on the reasoning but concurring in the outcome regarding the second certified question).

Section 93C(2): the substantive offence

Following Montila, the criminal provenance of the property is a fact necessary for the commission of the substantive offence. Lord Hope held that the ‘reasonable grounds to suspect’ requirement contains both a subjective element (actual suspicion) and an objective element (that there were reasonable grounds for it). So construed, there is no incompatibility with the illicit purpose requirement.

Section 1 of the Criminal Law Act 1977

Lord Nicholls analysed the mental element of statutory conspiracy in three parts: (i) the mental element of making the agreement; (ii) the intention to carry out the agreed course of conduct including any specific intent required by the substantive offence; and (iii) under section 1(2), intention or knowledge that any fact or circumstance necessary for the commission of the substantive offence will exist.

Lord Nicholls held that section 1(2) applies to all offences and to any ingredient of the actus reus of the substantive offence, including offences where the substantive mens rea is lower than knowledge (such as suspicion). Where the substantive offence requires knowledge as to a fact, section 1(2) still applies to that fact, with ‘intend or know’ performing the same function for future-looking conspiracies as ‘knowingly’ does for substantive offences. In this context, ‘know’ means true belief and cannot be diluted to encompass mere suspicion.

Applied to section 93C(2), the criminal provenance of the property is a fact necessary for the substantive offence. Where property is identified at the time of the agreement, the prosecution must prove the conspirator knew it was the proceeds of crime; where the property is unidentified, the prosecution must prove the conspirator intended the property to be the proceeds of crime.

Application to the appellant

The appellant’s plea was expressly on the basis of suspicion only. Suspicion, as Lord Nicholls stated, is not to be equated with knowledge, and a decision to deal with money suspected to be proceeds of crime is not the same as a conscious decision to deal with such proceeds. The Crown’s ‘conditional intent’ argument was rejected: the appellant did not intend the money to be criminal proceeds; he simply suspected it might be and proceeded regardless. Lord Brown similarly rejected the conditional intention argument, holding that although someone who launders property suspecting it to be hot takes the risk, the risk is realised only through the actual laundering, not the agreement.

The Court of Appeal’s earlier reasoning, based on the pre-Montila understanding, could no longer stand. The reasoning in R v Singh [2003] EWCA Crim 3712 and R v Sakavickas [2005] 1 WLR 857 was disapproved, and R v Ali [2006] 2 WLR 316 was substantially endorsed.

Baroness Hale’s dissent (in part)

Baroness Hale would have answered the first certified question in the affirmative, provided that the defendant intended to put the agreement into effect even if the property was in fact the proceeds of crime. In her view, conditional intent of the ‘even if’ kind should suffice for section 1(2), distinguishing it from recklessness. However, she agreed that the substantive offence requires actual suspicion.

Implications

The decision clarifies the mental element required for statutory conspiracy under section 1 of the Criminal Law Act 1977. The key principles established or confirmed are:

• Section 1(2) applies to any factual ingredient of the actus reus of the substantive offence, and imposes an ‘intend or know’ threshold which supersedes any lower mental element (such as suspicion or recklessness) in the substantive offence.
• In conspiracy, ‘know’ means true belief, not merely suspicion, however well-founded.
• Where property is identified when the agreement is made, the prosecution must prove actual knowledge of criminal provenance; where property is unidentified, the prosecution must prove an intention that the property will be criminal proceeds.
• The unattractive practical result, acknowledged by Lord Nicholls and Lord Hope, is that the prosecution faces a heavier burden in proving conspiracy than in proving the substantive money laundering offence itself.

Lord Hope’s postscript observes that the difficulty is largely a product of the English duplicity rule, which drives prosecutors to charge continuing courses of money laundering as single conspiracies. He noted the Scottish practice of charging a continuing course of criminal conduct in a single narrative charge and suggested Parliament might revisit the issue.

The decision is significant for prosecutors, defence practitioners, and courts dealing with money laundering and other statutory offences with graduated mens rea. It restricts the use of conspiracy as a ‘prosecutor’s darling’ device to aggregate multiple substantive offences where the substantive offence can be committed on suspicion. It also disapproves earlier Court of Appeal authorities which had watered down the section 1(2) requirement. Although section 93C(2) has been superseded by Part 7 of the Proceeds of Crime Act 2002, the analysis of section 1 of the 1977 Act is of general application to all statutory conspiracies.

Verdict: Appeal allowed; the appellant’s conviction for conspiracy was quashed. The first certified question was answered ‘no’; the second was answered by holding that the objective ‘reasonable grounds to suspect’ requirement in section 93C(2) implicitly requires actual suspicion and is not incompatible with the illicit purpose requirement.

Source: R v Saik [2006] UKHL 18; [2007] 1 AC 18