The recent case of Balaz v District Court of Zloven (Slovakia) [2021] EWHC 1862 was right to recognise that the principal money laundering offences between sections 327 – 329 of the Proceeds of Crime Act 2002 (POCA) are extra-territorial but what this means remains moot. In the landmark judgment in R v Rogers [2014] EWCA Crim 1680, the Court of Appeal considered that because money laundering is international in nature and often involves cross-border transactions Parliament must have intended that the offence in s 327 would have extra-territorial effect. Many now consider that the approach in Rogers also applies to sections 328 and 329 but several years on, the extent to which a UK nexus is required unfortunately still remains unclear.   

The issue was skirted around in Balaz although could well have come to the fore. Slovakia sought to extradite Balaz from the United Kingdom for an alleged fraud generating 1,000 euros. Since most of the alleged conduct took place in Germany rather than Slovakia, the English extradition court had to be satisfied that the conduct would have amounted to an extra-territorial offence under English law. At first instance, the District Judge was satisfied that the alleged conduct amounted to an extra-territorial offence of fraud as well as an extra-territorial offence of money laundering because Balaz had allegedly possessed the 1,000 euros which was criminal property.

On appeal before Mr Justice William Davis, Slovakia conceded that the reasoning in relation to the fraud offence was not sustainable but maintained that the extradition requirements were met because of the extra-territorial money laundering offence. Balaz did not challenge the premise that the money laundering offences are extra-territorial in the wake of Rogers. Instead, on his behalf, it was contended that the scenario would never have resulted in a money laundering charge in England if the conduct was captured by a substantive offence (ie., fraud). In turn, it was contended that the requirements for extradition could not be satisfied.

Balaz was ultimately unsuccessful in overturning the extradition order as the court considered that all that was required was an assessment of the conduct and not whether, as a matter of jurisdiction, it would have attracted a charge. 

The case is primarily about extradition but holds an interest for those concerned with money laundering matters. From a money laundering perspective, the general premise that sections 327 – 329 of POCA are extra-territorial was accepted by the parties and therefore there was no argument about the circumstances in which the extra-territorial offences apply. But it would seem that it was potentially open for this point to be taken and for there to be consideration of just how much nexus to the United Kingdom (or the prosecuting State) is required. Indeed, the matter has been previously queried by Jonathan Fisher QC in an article examining the implications of Rogers for Money Laundering Bulletin.[1]

It was said in Rogers that the “offence of money laundering is par excellence an offence which is no respect of international boundaries” (at [52]). Observations made by Lord Woolf CJ in R v Smith (Wallace Duncan) (No.4) [2004] 2 Cr App R 17, [2004] EWCA Crim 631 that the English courts have moved away from definitional obsessions about jurisdiction and instead will apply English criminal law where a “substantial measure of the activities constituting a crime take place in England” were considered to be apt. In Rogers, there was no act of money laundering in England but the fact that the underlying fraud generating the criminal property took place in England and there were English victims was regarded as sufficient.

Balaz was rather different. The alleged fraudster, Balaz, was a Slovak national but was in Germany. The victims, also Slovak nationals, had travelled to Germany having seen an online advertisement. The predicate offence which concerned false representations took place during a meeting in Germany and the criminal property generated as a result was a sum of cash handed over in Germany. There was no evidence of the money going elsewhere, let alone back to Slovakia. Aside from the nationalities of the alleged perpetrator and victims and the fact that the online advertisement had been seen by people in Slovakia, there appeared to be little nexus to Slovakia. As a matter of English law, the offences of money laundering are extra-territorial but it is an open question whether a charge of possessing criminal property, contrary to English law, could ever apply in such a case. Any activities taking place in that country were far from substantial and the nexus was considerably weaker than in Rogers.

Consideration of issues of jurisdictional nexus ultimately did not arise on the facts. Money laundering practitioners might see this as a missed opportunity. Still, the case is pause for thought. If section 329 of POCA (possessing criminal property) could apply to such a situation where the nexus to the prosecuting State is so tenuous this would be a very wide approach to extra-territoriality. Several years on from Rogers, further cases examining the reach of the extra-territorial provisions in Part 7 of POCA are sorely needed.