Laundering: proceeds and purpose

Another exercise in statutory interpretation involving the proceeds of crime and money laundering (I have noted the three House of Lords decisions on this last month: see R v May, R v Green, and Crown Prosecution Service v Jennings, all blogged 16 May 2008) is United States v Santos [2008] USSC No06-1005, 2 June 2008.

In Santos the issue was whether, in the context of the particular statute in question, “proceeds” means “profits”. The majority held that yes, here it does. This was so in the absence of a legislative history (or context) suggesting otherwise. Each possible meaning of “proceeds” was equally possible in the legislation, and the rule of lenity – that in such a situation the meaning most favourable to the accused should be preferred – applied. Justice Scalia, for the majority, wrote:

“Under either of the word’s ordinary definitions, all provisions of the federal money-laundering statute are coherent; no provisions are redundant; and the statute is not rendered utterly absurd. From the face of the statute, there is no more reason to think that “proceeds” means “receipts” than there is to think that “proceeds” means “profits.” Under a long line of our decisions, the tie must go to the defendant. The rule of lenity requires ambiguous criminal laws to be interpreted in favor of the defendants subjected to them. See United States v. Gradwell, 243 U. S. 476, 485 (1917); McBoyle v. United States, 283 U. S. 25, 27 (1931); United States v. Bass, 404 U. S. 336, 347– 349 (1971). This venerable rule not only vindicates the fundamental principle that no citizen should be held accountable for a violation of a statute whose commands are uncertain, or subjected to punishment that is not clearly prescribed. It also places the weight of inertia upon the party that can best induce Congress to speak more clearly and keeps courts from making criminal law in Congress’s stead. Because the “profits” definition of “proceeds” is always more defendant-friendly than the “receipts” definition, the rule of lenity dictates that it should be adopted.”

The Act considered here pre-dated other money laundering legislation, not applicable to the present case, in which “proceeds” is defined as being gross proceeds, consistently with international treaty obligations.

Cynical defence lawyers might be inclined to think that the courts do everything possible, these days, to avoid having to apply this rule of lenity by using a purposive interpretation as a means of refusing to acknowledge statutory ambiguity.

In another decision on money laundering, Cuellar v US [2008] USSC No 06-1456 (2 June 2008) the Supreme Court held that the prosecution had failed to adduce evidence of one of the elements of the offence charged. This was a form of laundering involving the transportation of the money. The offence requires proof of both the fact of transportation (about which there was no issue on this appeal) and that the accused’s purpose was to conceal the money. On the latter there was no proof of purpose in this case and the conviction could not stand.

Cuellar is simply an analysis of the elements of an offence and an examination of the adequacy of proof. It is quite likely that the corresponding legislation in other jurisdictions will allow the same point to be made. For example, in New Zealand we have definitions of “dealing” with property that include transporting it in the sense used in Cuellar, namely taking it across a border (Crimes Act 1961, s 243(1); Misuse of Drugs Act 1975, s 12B(1)), and laundering requires a purpose of concealment (s 243(4) and s 12B(4)). “Conceal” is also defined in the same sections, and this definition includes “to conceal or disguise the location” of the money. At first glance, it looks as if the accused in Cuellar was doing this: he drove towards the Mexican border with money concealed in his vehicle. But, as Thomas J, delivering the Court’s decision, wrote:

““There is a difference between concealing something to transport it, and transporting something to conceal it,” (478 F 3d 471 at 296-297 Smith, J., dissenting [in the Fifth Circuit’s rehearing en banc of the appeal in the present case]); that is, how one moves the money is distinct from why one moves the money. Evidence of the former, standing alone, is not sufficient to prove the latter.”

The weakness of the evidence was significant to the result in this case: there was insufficient to support an inference that the accused transported the money intending thereby to conceal it.