Susan Grossey: Feeling the benefit
27 Jul 2017

Susan has been making her living from crime for over twenty years.  She provides anti-money laundering training and advice to the regulated community in the UK, Guernsey, Jersey, the Isle of Man and Gibraltar, and writes and talks on the subject at every opportunity.  As her hobby she writes historical novels—about financial crime.

One of my very favourite things in my professional life is the concept of criminal benefit.  I like what this says about our attitude to crime and those who commit it.  Put very simply – and I am sure a lawyer or asset recovery specialist could elaborate enormously – when decisions are being made in sentencing and confiscation hearings, what matters is not the amount of money the criminal originally stole or made illegally, but what benefit he has accrued from that money.  In a ridiculous example, if someone picks my pocket and steals a pound and then buys a lottery ticket with that pound and wins a million quid, then their benefit is one million pounds – and any subsequent confiscation proceedings will seek to recover the million, not just the original pinched pound.  As you can imagine, criminals are not keen on this way of calculating things.

But there’s no getting away from it, as a recent case confirmed.  Between early 2010 and late 2011, Cornishmen Gary Fulton and Daniel Wood were involved in a missing trader scam – a sort of carousel fraud.  In June 2016 they both pleaded guilty to money laundering and were jailed – Fulton for four-and-a-half years and Wood for seven.  In June 2017 they appealed (R v Fulton and Wood 2017 EWCA Crim 308, for those of you who track these things), on the basis that their sentences had been calculated on the total amount laundered in the scam (there were demonstrably 597 transfers involving about €35 million), with the judge assessing the relevant harm as £30 million.  Fulton’s defence, however, contended that the relevant loss was the loss to foreign revenue authorities, and as the tax in Germany was 19% and that in the Czech Republic 20%, the relevant harm was only £6.1 million.  Moreover, as Fulton claimed that he was involved in only 60% of the trading, he felt that his sentence should be based on 60% of £6.1 million, making £3.6 million.

Sadly for the two gentlemen concerned, the Court of Appeal was not with them on this point, noting that it is inherent in the concept of money laundering that criminal property will be mixed with other money in the financial system.  Thus the criminality of the offence must be gauged by the nature and scale of the laundering, not the nature and scale of the underlying crime.  As the appeal judges correctly observed, it is the whole amount involved, not merely the part that comprises criminal property, which impacts the financial system.  Dismissing their appeals, Mr Justice Popplewell said the original trial judge was entitled to take the whole sum into account when considering how serious their roles were.  Sitting with Lord Justice Gross and Judge David Griffith-Jones QC, he added: “We take the view the sentences were not excessive, let alone manifestly so.”  And so say all of us.

This piece first appeared on Susan’s blog, I hate money laundering.

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