THE battle against money laundering suffered a serious setback when judges ruled yesterday that alleged plotters must know and not just suspect the cash to be the proceeds of crime.

Lord Justice Hooper, sitting with Mr Justice Tugendhat and Sir Douglas Brown in the Court of Appeal, quashed the convictions of four men jailed for conspiracy to launder £170 million. “The money must be proved to have been the proceeds of drug trafficking or other criminal conduct,” they ruled.

Actual knowledge, at the time of the alleged conspiracy, of where the money came from had to be established.

The judges certified that the case raised a point of law of general public importance, enabling the prosecution to seek leave to appeal to the Lords.

The judges also ordered that in the event of the Crown losing that appeal, three of the men should be retried on conspiracy charges, omitting the reference to “reasonable grounds to suspect” that the money came from crime.

Liaquat Ali, Akhtar Hussain and Moshan Khan were convicted at Leeds Crown Court in June 2003 of conspiracy to conceal, disguise or remove from the jurisdiction £170 million proceeds of drug trafficking.

The money was alleged to have been laundered through a travel agency and money transfer business. Ali and Hussein were each jailed for 12 years. Khan received 8 years.

Shahid Bhatti was sentenced to 6 years at the same court in October for a similar conspiracy. The question of whether he should be tried again has yet to be decided.

All four men denied knowing or suspecting that some of the money they handled came from crime.

Yesterday’s decision was based on a House of Lords ruling last year that to establish money laundering, it was not enough to show that a defendant had reasonable grounds to suspect that the cash was the proceeds of crime when, in fact, it was not or could not be proved to be so. Proof of where the money came from was essential, the law lords held.

Yesterday’s ruling increased the burden of proof placed on the Crown by the law lords with the judges ruling that, in a case of conspiracy, actual knowledge on the part of the defendant rather than mere suspicion must be established.

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