David McCluskey and Esha Marwaha argue that World Uyghur Congress v NCA provides important clarification for lawyers and accountants on what constitutes criminal property, the scope of the s329(2)(c) exemption, and why the judgment does not create a 'never ending chain of criminal property'.
The Court of Appeal's judgment in R (on the Application of World Uyghur Congress) v National Crime Agency and Spotlight on Corruption [2024] EWCA Civ 715 has generated some anxiety amongst professional services firms. Commentary following the judgment has suggested that firms accepting fees from clients in respect of whom they have previously reported suspicions must now seek a Defence Against Money Laundering (DAML) for any subsequent use of those funds. This interpretation, we contend, represents a fundamental misreading of both the judgment and the legislative intent behind the Proceeds of Crime Act 2002 (POCA).
The Court's analysis: two routes to lawful acquisition
The Court identified two distinct mechanisms by which criminal property may be lawfully acquired, depending upon the acquirer's state of mind: first, by an innocent acquirer under s308 POCA, who must acquire 'in good faith, for value, and without notice that it was recoverable property' and thereby obtains good title; second, by a non-innocent acquirer relying on the exemption from liability under s329(2)(c).
The Court specifically overruled earlier authority and clarified that 'the accurate position is that no offence would be committed under section 329(1). Section 329(2) would afford protection to the purchaser while he had the property in his possession even if he knew it was criminal property, but it would not protect him if, for example, in that knowledge, he transferred it to someone else, or took it out of the country and thereby became potentially liable under section 327(1)(d) or (e)'.
This passage is critical to understanding the judgment's true scope.
The legislative framework: defining criminal property
Under s340 POCA, property is criminal property if it constitutes or represents a person's benefit from criminal conduct and the alleged offender – the acquirer – knows or suspects that it constitutes or represents such a benefit. To convict a person of money laundering, including a non-innocent acquirer, both elements must be proven at trial, though a non-innocent acquirer does not need to establish the first element in order to take advantage of the s329(2)(c) exemption.
Section 329(2)(c) provides that a person does not commit an offence under s329(1) if 'he acquired or used or had possession of the property for adequate consideration'. The breadth of this exemption – covering acquisition, use, and possession – is deliberate and significant.
The challenge for professional services
The practical reality confronting professional services firms is acute. Once suspicion is declared in a Suspicious Activity Report (SAR), it tends to persist – indeed, the entire POCA framework is designed to encourage reporting with a deliberately low threshold for what constitutes reportable suspicion. Consequently, declared suspicion will taint
Current commentary suggests that firms receiving suspected criminal property as fees must now seek a further DAML before using those funds to pay overheads, counsel's fees, or other business expenses. This interpretation creates an untenable position. Professional services firms striving to comply with their obligations find themselves compelled to seek consent notwithstanding the exemption provided by s329(2)(c). Yet such DAML applications serve merely to obtain a protection that the applicant already possesses. The s329(2)(c) exemption confers this statutory safeguard. The WUC judgment did not remove it; rather, the Court affirmed its continued operation.
The scope of the s329(2)(c) exemption
The s329(2)(c) exemption applies to all three limbs of s329(1), where the person 'acquired or used or had possession' of the property for adequate consideration. The Court stated that 'Section 329(2)(c) would afford protection to the purchaser while he had the property in his possession even if he knew it was criminal property', indicating that both acquisition and subsequent possession would be covered by s329(2)(c).
It would be illogical if acquisition were permitted but not subsequent possession – such an interpretation would deprive the exemption of practical effect, allowing acquisition but prohibiting the very possession that necessarily follows from it. By the same logic, there is no principled basis upon which 'use' should be excluded from the exemption's scope, even if it occurs subsequent to acquisition. The proper interpretation of s329(2)(c) is that it exempts all actions in relation to the property, provided they constitute either acquisition or use or possession for adequate consideration.
Crucially, when the Court stated that the exemption would not protect a purchaser 'if, for example, in that knowledge, he transferred it to someone else, or took it out of the country and thereby became potentially liable under section 327(1)(d) or (e)', it did not suggest that subsequent 'use' would constitute a breach of section 329(1). Rather, the Court specifically identified conduct falling within the distinct offence under s327 of POCA – namely, transfer to third parties or removal from the jurisdiction. These activities lie beyond the scope of the s329(2)(c) exemption precisely because they involve onward transmission rather than retention and deployment within the recipient's legitimate business operations.
Legislative intent and lawful business activity
The intention of the legislature was to criminalise the movement of criminal property to others by those who know or suspect it to be so, not to criminalise the lawful activities of those who provide goods or services and receive, in adequate consideration, funds into the business that provided those lawful goods or services. Otherwise, the s329(2)(c) exemption would not have been drafted in its current form, specifically exempting acquisition, use, and possession.
It cannot have been the legislature's intention to provide an adequate consideration exemption through s329(2)(c) whilst simultaneously rendering it ineffective by prohibiting the recipient of those funds from doing anything beyond receipt without obtaining a DAML. Such an interpretation would be inconsistent with the clear language of the statute, and as the analysis above demonstrates, was manifestly not the view adopted by the Court. Accordingly, deployment of funds received to pay overheads in the course of a firm's normal business operations constitutes use, and such use falls within the exemption under s329(2)(c).
Services vs sales
There is a fundamental distinction between the provision of services which are lawful in themselves in exchange for payment which is suspected to be criminal property, and the acquisition (and subsequent sale) of goods which are or represent criminal property. In the first scenario, the service provider is furnishing a lawful service and receiving, in adequate consideration, criminal property in the form of funds which it knows or suspects to be so. In the second scenario, the acquirer is obtaining criminal property knowing or suspecting it to be so, with the intention of selling it on at a profit.
The first scenario is covered by the s329(2)(c) exemption as to acquisition, possession, and use. The second scenario is covered by the same exemption as to acquisition and possession, but selling the goods on – whether at a profit or not – rightly falls outside the scope of the s329(2)(c) exemption. This is the true import of the WUC judgment, which was concerned with the purchase and onward sale of goods which were criminal property, not with professional services. Properly understood, it does not, and should not, impact professional services firms.
This analysis does not conflict with the WUC judgment, which addressed a supply chain involving the purchase and sale of goods which, to the acquirer's knowledge or suspicion, might be criminal property. There are sound public policy reasons for distinguishing between a lawful service provided in exchange for suspected funds which are then lawfully deployed by the service provider, and the onward sale of goods which were acquired in the knowledge or suspicion that they constitute criminal property. Both activities might be conducted at market value and in the normal course of business, but one constitutes use and is protected by the s329(2)(c) exemption, whilst the other constitutes a separate offence under POCA and is not.
The practical outlook
Where a professional firm has received suspected criminal property in reliance on s329(2)(c) in payment of professional fees, and has in good faith paid those funds into its own business account for deployment in its normal operating expenses without transferring them on in their entirety, the prospect of that firm or any individual within it being prosecuted for the payment out of any portion of those funds is remote, even where a court later determines that the funds used to pay the firm were in fact criminal property.
Prosecution in the public interest would require some element of collusion, or evidence indicating not merely a lack of good faith but knowledge or belief that the client was engaged in criminal activity and a desire to assist in that criminal enterprise.
Conclusion
Far from creating uncertainty, World Uyghur Congress provides much-needed clarity. It confirms that the s329(2)(c) exemption operates as Parliament intended – to protect those who provide lawful goods and services for adequate consideration, even where they suspect the payment constitutes criminal property. The judgment does not create a never-ending chain of criminal property requiring repeated DAMLs for ordinary business use. Rather, it draws a principled distinction between the lawful deployment of suspected criminal property within a business providing legitimate services (protected by s329(2)(c)) and the onward transfer or sale of criminal property to third parties (caught by s327).
Professional services firms should take reassurance from this – the legislative framework, properly understood and as endorsed by the Court of Appeal, permits them to receive and deploy fees for legitimate work without seeking consent for every subsequent use of those funds in the ordinary course of business. The exemption exists precisely to facilitate legitimate commerce whilst criminalising the deliberate laundering of proceeds through the economic system.
