Issue link: https://maltatoday.uberflip.com/i/1539233
6 maltatoday | SUNDAY • 7 SEPTEMBER 2025 OPINION Matthew Xuereb Thomas Sciberras Herrera Good faith gone wrong: Considering the elements of money laundering Matthew Xuereb and Thomas Sciberras Herrera Xuereb is a lawyer and Sciberras Herrera a paralegal MONEY laundering is the process of converting cash, funds or property deriv- ing from criminal activity to give it a legitimate purpose. It typically occurs in three stages: Place- ment, layering, and integration. A simple example is that of a drug deal- er using a pizzeria to launder money. The drug dealer earns cash from the drug sales and places it into the pizzeria's cash register. At the end of the day, the cash is layered by over-declar- ing the number of pizzas sold. Finally, the drug money is integrated into the pizze- ria's official bank account as if it were a legitimate business revenue. The crime of money laundering is not found in the Criminal Code but is in- stead provided for in the ad hoc Preven- tion of Money Laundering Act, enacted in 1994. The Act defines money laun- dering as: The conversion or transfer of property; the concealment or disguise of the nature, source, location, disposition, movement or ownership of property; the acquisition, possession or use of proper- ty; or the retention of property without reasonable excuse. In all cases, the crime includes knowing or suspecting that the property was derived directly or indirect- ly, from criminal activity. Notably, the term 'property' in this con- text is expansive, encompassing money, works of art, jewellery, land and even le- gal instruments. The definition of money laundering presupposes a two-fold requirement: The commission of a predicate offence generating illicit proceeds; and the act of laundering those proceeds. Importantly, to be found guilty of this offence, one does not need to be con- victed of the predicate offence itself. In Republic of Malta vs Christian Grech (2012), the court held that although the accused had not been convicted of pros- titution, money laundering charges could still subsist. This offence is of a peculiar nature. While in general criminal law the burden of proof lies on the prosecution—he who alleges must prove—in money launder- ing cases, the burden of showing the law- ful origin of the funds lies on the person accused. In Republic of Malta vs Carlos Frias Mateo (2012), the court referred to Blackstone, stating that, "the standard of proof the prosecution is now required to satisfy at committal proceedings is very low, lower than that resting on a plaintiff in civil proceedings. It is commonly ex- pressed as establishing a prima facie case or a case to answer." However, in Police vs Vladimir Del- gado (2015), the court clarified that the prosecution still bears the ultimate bur- den of proving beyond reasonable doubt that the accused not only committed the prohibited act (actus reus), but also pos- sessed the necessary mens rea—meaning he must have had knowledge, or at least suspicion, that the property in question originated, directly or indirectly, from an underlying criminal activity. The word 'suspicion' was added in 2007 and although our law does not define it, in the Delgado case the court referred to the English Court of Appeal case Regina vs Hilda Gondwe Da Silva, where 'suspi- cion' was described as follows: "The word suspicion means that the defendant must think that there is a possibility, which is more than fanciful, that the relevant facts exist. A vague feeling of unease would not suffice." Thus, the most contentious element in this offence is proving beyond a reason- able doubt whether suspicion existed at the time the accused received the illicit funds. This issue was recently addressed head-on in Republic of Malta vs Ayub Ali Khan Mohammed (2025). The court described the facts of the case as a "classic instance of romance fraud." The victim, Attilia Attard, received a friend request on Facebook from someone identifying himself as Victor Scarlett, allegedly an American soldier stationed in Syria. Af- ter building a strong rapport, Scarlett expressed a desire to travel to Malta to meet her. However, he claimed that leave would only be granted if she sent $2,850 to his "Commander." This money was sent to the accused. The prosecution was therefore required to prove beyond a reasonable doubt that the accused had foresight/suspected that the money received into his account was the proceeds of a scam. The individual behind the scam was the accused's flatmate, a man named God- win. Godwin had told the accused that he was unable to pay rent and asked wheth- er he could either borrow money or re- ceive funds through the accused's bank account. The accused, unable to lend him money, provided his account details. Godwin explained that his Nigerian card had expired, and he could not access his funds. The court described this case as a situ- ation of "good faith gone wrong." It held that the circumstances must be assessed in the broader context of the COVID-19 pandemic, the appellant's status as a third-country national residing in Malta, his cohabitation with Godwin, and the apparent plausibility of Godwin's expla- nation—especially in light of the general atmosphere of unemployment and mu- tual aid during the pandemic; where all factual elements which have been con- sidered in order to decipher if the recipi- ent of funds had knowledge or suspicions about any underlying illegitimate activi- ty. The court concluded that the defend- ant had provided "a plausible rebuttal supported by adequate evidence" and acquitted the accused on the basis that the mens rea requirement had not been satisfied. The case highlights that, although one might view the law as draconian due to the lowered burden of proof for the ac- tus reus, the necessity of proving mens rea serves as a safeguard for individuals who receive money in good faith. For in- stance, in the pizzeria example, suppliers who have no suspicion of money laun- dering would still be protected from lia- bility, ensuring that those acting in good faith are not unduly punished. The definition of money laundering presupposes a two-fold requirement: The commission of a predicate offence generating illicit proceeds; and the act of laundering those proceeds. Importantly, to be found guilty of this offence, one does not need to be convicted of the predicate offence itself.