1. Blair has returned many times to this issue since, as shadow Home Secretary, he supported the Criminal Justice Act 1993. The list of ten objectives he delivered at the 2004 Brighton Labour Party conference (http://www.labour.org.uW/ac2004news?ux_news_id=ac04tb), 28 September 2004 included (point 8) ‘those believed to be part of organised crime will have their assets confiscated’. We must wait to see precisely what extension of the current law is proposed.

2. ‘…[I]t simply is not right in Modern Britain that millions of law-abiding people work hard to earn a living, whilst a few live handsomely off the profits of crime. The undeserved trappings of success enjoyed by criminals are an affront to the hard-working majority.’ Foreword to Cabinet Office Performance and Innovation Unit Recovering the Proceeds of Crime (the PIU Report) (London: Cabinet Office. 2000).

3. See, for example, Heba Shams Legal Globalization Money Laundering Law and Other Cases (London: BIICL, 2004).

4. And see for the legislation, Peter Alldridge Money Laundering Law (Oxford: Hart, 2003) (hereinafter MLL) pp 75–83.

5. Entry into force 13 January 2003.

6. SI 2003/3075.

7. European Parliament and Council Directive 2001/97/EC of 4 December 2001 OJ L 344 of 28.12.2001.

8. For latest figures see http://www.homeoffice.gov.uk/crimpol/oic/proceeds/index.html.

9. For example, Re S (restraint order), S v. Customs and Excise Comrs [2004] EWCA Crim 2374.

10. The Assets Recovery Agency (ARA) was created by the Proceeds of Crime Act 2002, s I. See http://www.assetsrecovery.gov.uk.

11. The Drug Trafficking Act 1994 or the Criminal Justice Act 1988, respectively.

12. HM Advocate v McIntosh (sentencing) [2001] UKPC D1; [2001] 3 WLR 107; Phillips v United Kingdom (2002) 11 BHRC 280; R v Rezvi [2002] UKHL 1; R v Benjafield [2002] UKHL 2.

13. MLL, p 133.

14. MLL, p 145.

15. MLL, p 163.

16. Proceeds of Crime Act 2002, s 243.

17. Proceeds of Crime Act 2002, s 308.

18. MLL, p 169ff.

19. MLL, p 242ff.

19. See now Director of the Assets Recovery Agency v Customs and Excise Commissioners [2005] EWCA Civ 334.

20. MLL, p 241.

21. MLL, pp 243–244. In Walsh v Director of the Assets Recovery Agency [2005] NICA 6 the Court of Appeal for Northern Ireland held that allegations, without any specificity, of ‘criminal conduct’ did not, precisely because of their vagueness, engage Art 6. This is a result described by a Scottish judge in an analogous context as ‘Kafkaesque’. (Lord Prosser in McIntosh v HM Advocate 2001 JC 78, [2000] UKHRR 751: ‘[T]he suggestion that there is less need for a presumption of innocence in the [the case where offences are not specifically alleged compared with the case where they are] appears to me to be somewhat Kafkaesque, and to portray a vice as a virtue’.)

22. Proceeds of Crime Act 2002, s 6(7).

23. Proceeds of Crime Act 2002, s 241(3).

24. And see Clingham v Kensington and Chelsea Royal London Borough Council [2002] UKHL 39; Victor Tddros and Stephen Tierney ‘The Presumption of Innocence and the Human Rights Act’ (2004) 67 MLR 402; and Re U (a child) (serious injury: standard of proof) [2004] EWCA Civ 567, [2004] 2 FLR 263.

25. Russell Baker ‘Taxation: Potential Destroyer of Crime’ (1951) 29 Chi-Kent LR 197.

26. Under Anti-Terrorism, Crime and Security Act 2001, s 19.

26. Under Anti-Terrorism, Crime and Security Act 2001, s 19.

27. See Inland Revenue Comrs v Aken [1990] 1 WLR 1374, [1990] STC 497, reserving the point explicitly by pointing out that prostitution is not ipso facto illegal, but doubting the decision of the Supreme Court in Ireland in Huyes v Duggan [1929] 1 IR 406. The granting of the taxation jurisdiction to the ARA would be pointless did income tax not apply to illegal profits.

28. The issue became a live one because bribes of public officials overseas were deductible until the insertion of Income and Corporation Taxes Act 1988, s 577A by the Finance Acts 1992 and 1993. The international move against permitting such bribes, culminating in the Paris Convention of the OECD, Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Paris, 17 December 1997 (Cm 3994). Section 577A, as amended, states: ‘Expenditure involving crime. (1) In computing profits chargeable to tax under Schedule D, no deduction shall be made for any expenditure incurred; (a) in making a payment the making of which constitutes the commission of a criminal offence or; (b) in making a payment outside the United Kingdom where the making of a corresponding payment in any part of the United Kingdom would constitute a criminal offence there.] (1A) In computing profits chargeable to tax under Schedule D, no deduction shall be made for any expenditure incurred in making a payment induced by a demand constituting— (a) the commission in England or Wales of the offence of blackmail under section 21 of the Theft Act 1968, (b) the commission in Northern Ireland of the offence of blackmail under section 20 of the Theft Act (Northern Ireland) 1969, or (c) the commission in Scotland of the offence of extortion. (2) Any expenditure mentioned in subsection (1) or (1A) above shall not be included in computing any expenses of management in respect of which relief may be given under the Tax Acts.’

29. The taxing section (Income and Corporation Taxes Act 1988, s 18) applies to the ‘profits’ of a trade, profession or vocation. This is clearly differentiable from proceeds. So the ‘proceeds not just profits’ doctrine will not extend to the tax jurisdiction. The position differs in the case of VAT. In cases such as Einberger v Hauptzollamt Freiburg [1984] ECR 1177, the Court of Justice has held that VAT does not arise on the unlawful importation of drugs: see R v Goodwin and Unstead [1997]STC 22; R v Citrone [1998] STC 29, [1999] Crim LR 327. But where lawful services compete with lawful ones the unlawful ones are not given a competitive advantage: Polok v Customs and Excise Comrs [2002]EWHC 156, [2002] STC 361 (massage parlours).

30. MLL, p 246ff.

31. Proceeds of Crime Act 2002, s 319.

32. This was regarded by Lord Greene MR as beyond argument in Norman v Colder [1945] 1 All ER 352, following, as it did, from the wording of Income Tax Act 1918, s 137(4) (now Taxes Management Act 1970, s 50(6)), and was restated, for example, in Gamble v Rowe [1998] STC 1247,71 Tax Cas 190.

33. King v Wulden [2001] STC 822, on appeal from [2000] STC (SCD) 179. By the time the case went on further appeal ([2001] EWCA Civ 1518) the House of Lords had decided (in R v Lambert [2001] UKHL 37) that the Human Rights Act 1998 had no application before 2 October 2001.

34. The basis upon which the ARA takes jurisdiction is that there are reasonable grounds to suspect that income or chargeable gains accrue or arise as a consequence of the person's or another's criminal conduct: Proceeds of Crime Act 2002, s 317.

35. UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, Vienna, 1998.

36. Proceeds of Crime Act 2002, s 327, replacing Drug Trafficking Act 1994, s 49 and Criminal Justice Act 1988, s 93C.

37. Proceeds of Crime Act 2002, s 328, replacing Drug Trafficking Act 1994, s 50 and Criminal Justice Act 1988, s 93A.

38. Proceeds of Crime Act 2002, s 329, replacing Drug Trafficking Act 1994, s 51 and Criminal Justice Act 1988, s 93B. There is also a ‘tipping off offence (s 333) and an offence of in the regulated sector of failure to inform the authorities of suspected transactions (ss 330–332).

39. MLL, pp 206–207.

40. R v Ussama-el-Kurd [2001] Crim LR 234, CA.

41. Peter Alldridge ‘The Moral Limits of the Crime of Money Laundering’ (2001) 5 Buffalo Crim LR 279–319.

42. SI 2003/3075. This article will not deal with those areas of investment business covered by the Financial Services Authority Sourcebook.

43. Defined in Proceeds of Crime Act 2002, Sch 9, as amended.

44. Proceeds of Crime Act, ss 330(2), 331(2). The use of a negligence test for criminal liability for an omission is very unusual. Even manslaughter requires more than simple negligence.

45. Proceeds of Crime Act 2002, s 340(11); Money Laundering Regulations 2003, SI 2003/3075, reg 2(1).

46. Though not invariably: income from corruptly obtained contracts is often declared.

47. See Ann Mumford and Peter Alldridge ‘Taxation as an Adjunct to the Criminal Justice System’ [2002] British Tax Review 458.

48. Although there is now a summary offence (Finance Act 2000, s 144, as to which see David C Ormerod ‘Summary evasion of income tax’ [2002] Crim LR 3; David Salter ‘Some Thoughts on Fraudulent Evasion of Income Tax’ [2002] British Tax Review 489), there remains a range of indictable offences which can also be charged (cheating the public revenue, false accounting, theft and deception offences).

49. Enterprise Act 2002, s 251.

50. Vienna Convention, Art 3(10); Council of Europe Convention on Instrumentalities. Art 18.

51. Government of India v Taylor [1955] AC 491.

52. Money Laundering Regulations 1993, SI 1993/1933, reg 5(3). ‘In determining whether a person has complied with any of the requirements of para (I) above, a court may take account of–(a) any relevant supervisory or regulatory guidance which applies to that person.’ The provision is repeated in Money Laundering Regulations 2003, SI 2003/3075, para 3(3).

53. Whether or not it was lawful to do so: R v Metropolitan Police Comr, exp Blackburn [1968] 2 QB 118, [1968] 1 All ER 763 holds that while the police may put in place priorities, it is not open to the police to decide not to enforce particular criminal laws. Indicating that it did not wish to receive reports of other cases of laundering not only manifests intention not to enforce the law in those cases but also purports to grant permission to professional not to discharge their legal duty by making reports (authors’ note).

54. ICAEW Money Laundering Guidance Notes (1993) p 14.

55. Until the Serious and Organised Crime Agency takes on the role.

56. The 40 Recommendations are described as ‘The Crown Jewel of soft law’: Guy Stessens Money Laundering: A New International Law Enforcement Model (Cambridge: Cambridge University Press, 2000) p 17. The amended recommendations can be found at http://www1.oecd.org/fatf/pdf/40Recs-2003_en.pdf. See Shams, above n 3.

57. Michael Levi and William Gilmore ‘Terrorist finance, money laundering and the rise and rise of mutual evaluation : a new paradigm for crime control?’ in Mark Pieth (ed) Financing terrorism (Dordrecht, London: Kluwer Academic, 2002).

58. And on blacklisting see Jackie Johnson ‘Blacklisting: initial reactions, responses and repercussions’ (2001) 4 Journal of Money Laundering Control 211.

59. These are the sorts of schemes against which the ‘Ramsay doctrine’ (WT Ramsay v Inland Revenue Comrs [1982] AC 300) or attempts at general anti-avoidance rules are intended to strike. For the current approach of the courts see Barcluys Mercantile Business Finance Limited (respondents) v Mawson (Her Majesty's Inspector of Taxes) (appellant) [2004] UKHL 51; HM Comrs of Inland Revenue (appellants) v Scottish Provident Institution (respondents) (Scotland) [2004] UKHL 51.

60. Harmful Tax Competition: An Emerging Global Issue (Paris: OECD, 1998).

61. And see Lord Rooker, 635 HL Official Report (5th series) col 1067,27 May 2002.

62. Proceeds of Crime Act 2002, s 330.

63. Jack Blum et al Financial Havens, Banking Secrecy and Money-Laundering, UNDCP technical series issue 8 (New York City, NY: UN, 1998) p 51.

64. Note the use of ‘also’ not ‘only’. The FATF does not itself require a report in the case where the only offence is tax evasion. There are many jurisdictions - Switzerland is one - in which this is not done (authors’ note).

65. Interpretive Note to Recommendation 15 (July 1999). Under the revised Recommendations (2003)this is now para 2 of the Interpretative Note to Recommendation 13, but the text is unchanged.

66. Julian Schutte ‘Tampere European Council Presidency Decisions’ (1999) 70 Revue Internationale de Droit Pénal 1023 at 1034–1035.

67. Daily Telegraph, 17 April 2000.

68. Dated 28 February 2000, supplementary to evidence given on 8 February 2000.

69. ICAEW Technical release 15/99. The British Bankers Association also presented new guidelines to its members in June 1999, stating that the financial proceeds of tax evasion should be viewed by British authorities as laundered money.

70. The Law Society's Guidance on Money Laundering is set out as Annex 3B(1) of its online guide to professional conduct. Paragraph 2.8 states: ‘Tax evasion is a criminal offence and the financial benefit gained represents a person's benefit from criminal conduct, even if the money or property on which tax should have been paid was iegitimately earned.’ The guide does not, however, considers 340 closely. See also paras 4.42 and 6.62. The Bar Council guidance is less extensive, because in general the barrister will be able to shelter behind the precautions taken by the solicitor (http://www.barcouncil.org.uk/document.asplanguageid1&documentid=2591). The introduction of direct access to the barrister, together with the specific inclusion in the regulated sector of tax advisers, may alter the position.

71. Martyn Bridges ‘The Nexus between Tax Evasion and Money Laundering'in Andrew Clark and Peter Burrell (eds) A Practitioner's Guide to International Money Laundering Law and Regulation (Old Woking: City & Financial Publishing, 2003) p 243.

72. Proceeds of Crime Act 2002, s 6.

73. Criminal Justice Act 1988, s 71(5).

74. [2001] UKHL 68.

75. [2000] 1 CAR(S) 497 at 500–501.

76. Peter Alldridge ‘Smuggling, Confiscation and Forfeiture’ (2002)65 MLR 781.

77. 380 HC Official Report (6th series) cols 634–639,26 February 2002, Amendment 41 (Dominic Grieve MP).

78. 380 HC Official Report (6th series) col 639, 26 February 2002, Amendment 41 (George Foulkes).

79. HL Official Report (5th series) col 57, 22 April 2002 (Lord Kingsland).

80. HL Official Report (5th series) cols 57–59, 22 April 2002 (Lord Rooker).

81. Which has been followed, by implication, in R v Foggon [2003] EWCA Crim 270.

82. Note that in R v Edwards [2004] EWCA 2923 the Court of Appeal received an undertaking (at [25]) from counsel for the Customs and Excise Authorities that there would be no attempt to claim the tax, and the First Protocol argument was mentioned.

83. It is the expressed policy of the UK government to accede to ECHR, Protocol 7, Art 4: Rights Brought Home (Cm 3782, 1997) para 4.15.

84. Subsequent attempts to extend Smith have not been successful: R v Foggon (John James) [2003] EWCA Crim 270, [2003] STC 461; R v Olubitan (Ayodele Olusegun) [2003] EWCA Crim 2940, [2004] 2 CAR (S) 14; R v Davy [2003] EWCA Crim 781, [2003] 2 CAR (S) 101. Compare, however, R v Davies (Derrick) [2003] EWCA Crim 31 10, [2004] 2 All ER 706 and R v Ellingham [2004] EWCA Crim 3446 (regarding Smith as ‘settled’).

84a. The argument is very similar to that which succeeded in R v Preddy [1996] AC 8 15.

85. Proceeds of Crime Act 2002, s 304. ‘Unlawful conduct’ is criminal conduct: s 241 and s 316.

86. [2001] UKHL 68.

87. Note that by taking on the tax affairs of a subject, the ARA does not acquire the Board of Inland Revenue's powers to prosecute: Proceeds of Crime Act 2002, s 323(3)(b).

88. Proceeds of Crime Act 2002, s 242.

89. Ann Mumford and Peter Alldridge ‘Taxation as an Adjunct to the Criminal Justice System’ [2002] British Tax Review 458.

90. Proceeds of Crime Act 2002, s 326(1).

91. Proceeds of Crime Act 2002, s 327(2).

92. Proceeds of Crime Act 2002, s 340(3).

93. Proceeds of Crime Act 2002, s 340(6).

94. On these offences generally, see MLL, pp 192–197.

95. It is wider than the offence generated by Criminal Law Act 1977, s 1 of conspiring to commit the offence under s 327.

96. Proceeds of Crime Act 2002, s 340(3).

97. R v Smith (DR)[1974] QB 354, [1974] 1 All ER 632.

98. P v P (ancillary relief: proceeds of crime) [2003] EWHC 2260, [2004] Fam 1

99. Both the Law Society and the Bar Council redrew their guidance to their members in the light of the judgment, and again in the light of Bowman v Fels [2005] EWCA Civ 226.

100. ‘Caught in the act: a new law designed to prevent terrorists, drug barons and big-time criminals laundering money is ensnaring ordinary people quarrelling over family assets’Guardian, 22 June 2004, G2, pp 16–17.

100. Less surprising, but more worrying, is that the point was not made by a litigant in person in Squirrell Ltd v National Westminster Bank plc [2005] EWHC 664, [2005] 2 All ER 784, who could not afford to engage a lawyer because his assets had been frozen.

101. P v P was later disapproved in the Court of Appeal decision of Bowman v Fels [2005] EWCA Civ 226 - not a tax case.

102. Tournier v National Provincial and Union Bank of England [1924] 1 KB 461.

103. Defined by reference to ss 327–329: Proceeds of Crime Act 2002, s 340(11)(a).

104. [2001] UKHL 68.

105. Enterprise Act 2002, s 251.

106. Michael Levi ‘Cleaning up the Bankers’ Act: the United Kingdom Experience’ in Brent Fisse et al The money trail: confiscation of proceeds of crime, money laundering and cash transaction reporting (Sydney: Law Book Company, 1992).

107. And see Andrew Ashworth ‘Is the criminal law a lost cause?’ (2000) 166 LQR 225.