Spotlight on Corruption is delighted to have been granted permission to intervene in a landmark Court of Appeal case which has significant implications for the UK’s anti-money laundering regime.
In 2021, the World Uyghur Congress (WUC) – an international non-governmental organisation which represents the collective interests of the Uyghur people – brought a judicial review against the Secretary of State for the Home Department, National Crime Agency (NCA) and HM Revenue and Customs for failing or refusing to launch criminal investigations into Uyghur forced-labour cotton products being imported into the UK from Xinjiang. In particular, WUC argued that the UK authorities had failed to properly interpret and apply the Proceeds of Crime Act 2002 (PoCA) and the Foreign Prison Made Goods Act 1897.
In January 2023, the High Court delivered its judgment refusing WUC’s challenge – WUC v Secretary of State for the Home Department, HMRC and NCA  EWHC 88 (Admin).
On 5 May 2023 the Court of Appeal gave WUC permission to appeal because of the importance of the legal and public interest issues raised. Spotlight welcomes this appeal, which shines an important light on the proceeds of human rights abuses as criminal property under PoCA and the NCA’s framework for commencing investigations under PoCA more broadly.
Spotlight is intervening on the basis that the High Court judgment has serious practical implications for the interpretation and application of PoCA beyond the facts of this case:
- The Court appeared to endorse the NCA’s position that before it could commence an investigation under Part 5 or Part 7 of PoCA, it needed to identify specific criminal property and criminal conduct connected with it. This risks setting a precedent for an unacceptably high threshold of evidence to have to be met for the NCA to initiate an investigation under PoCA. This would effectively turn the regime on its head by requiring proof of an offence before an investigation can commence.
- The Court appeared to accept that a company which knowingly purchases goods obtained by corruption can sell the goods, thus profiting from the corruption, provided that it paid market value for them in the first place. This interpretation would have a profound impact on the utility of PoCA and significant consequences for efforts to tackle tainted funds being brought into the UK’s financial system. It may enable the laundering of the proceeds of corruption and prevent such proceeds from being recovered.
- The judgment is likely to have a chilling effect on the UK’s suspicious activity reporting (SAR) regime, where accountants, bankers, lawyers and other professionals report suspected money laundering to law enforcement. There is a real risk that the judgment may disincentivise the filing of SARs where market value has been provided for goods obtained by corruption.
- The judgment may significantly impede the government’s stated intention, through its Economic Crime Plan 2023-2026, to recover £1 billion in criminal assets over the next 10 years. This ambition is critical: the NCA estimates that there is “a realistic possibility that over £100 billion is laundered through and within the UK and UK registered corporate structures each year.” The impact of money laundering domestically is estimated to cost each household in the UK £255 every year.
Spotlight’s intervention focuses on the current operation of PoCA in relation to the proceeds of corruption and the likely impacts of the judgment on the operation of PoCA. We will publish more information about the case and our intervention as it progresses.
Spotlight is represented by Kingsley Napley LLP and Kennedy Talbot KC.