ASK MAT – “I’m worried my client has benefited from crime, but my boss says not to worry because the activity isn’t criminal in South Africa”

ASK MAT – “I’m worried my client has benefited from crime, but my boss says not to worry because the activity isn’t criminal in South Africa”

MAT SAYS:

• Oh dear. Please report your suspicion to your MLRO as soon as possible. A proper investigation can then take place.
• At best, the MLRO may decide your boss needs some retraining.
• At worst, more serious action could be required because it looks like he may be ignoring not just Jersey law and regulatory expectations, but also your firm’s own internal policies and procedures.
• Let me explain the real risk here. It’s called the Single Criminality Test, and you are absolutely right to be concerned.

Warning

• My basic answer will focus on Jersey, but most jurisdictions have the test; it's just applied differently in different Jurisdictions
• Also, there are no widely recognised "other tests" beyond variations and combinations of these, plus the way countries define the range of predicate offences (the underlying crimes that can generate "criminal proceeds").
• Many other countries apply dual criminality for overseas predicate offences, which would make the position safer for you in those places.
• However, even dual-criminality jurisdictions often still require you to report suspicions and conduct proper due diligence.
• I have added plenty of sources below  -also see Appendix 1
• If you want a deeper dive on this complex area, please reach out, and we can include this in your next face-to-face AML training session

MAT SAYS:-

What is the Single Criminality Test?

• It is a key rule under money-laundering and proceeds-of-crime legislation.
• It determines whether money or assets count as “criminal proceeds” and can therefore be investigated, frozen, or confiscated, even when the original activity occurred in another country.

How it works (in plain English):

• The authorities look only at Jersey law.
• They ask: “If this same behaviour had happened in Jersey, would it be a serious criminal offence under our law?”
• If the answer is yes, the money or assets can be treated as proceeds of crime in Jersey even if the activity was perfectly legal in the country where it actually took place (in your case, South Africa).

This is called “single” criminality because

• you only need to satisfy one legal system: Jersey’s.
• You do not need to prove the conduct was also a crime abroad.

Simple Example:

• An activity (such as certain types of gambling, regulated cannabis business, or another grey-area practice) may be legal in another country.
• But if the same behaviour were illegal in Jersey and punishable by one year or more in prison, any profits passing through Jersey can still be treated as criminal property.
• Banks, lawyers, and other businesses may then have a duty to report it and could face money laundering charges themselves if they handle the funds without proper checks.

Real-Life Illustration: The Bhojwani Case in Jersey

• A clear example of the single criminality test in action is the prosecution of Raj Arjandas Bhojwani, an Indian businessman.
• Mr Bhojwani was convicted in Jersey of money laundering offences involving approximately $130–180 million. The money came from highly inflated contracts for supplying trucks and equipment to the Nigerian government during the military regime of General Sani Abacha (1993–1998). The corruption and kickbacks all happened outside Jersey.
• The prosecution argued, and the court agreed, that because the underlying conduct (inflating contract prices to generate secret payments) would have been a serious criminal offence if it had occurred in Jersey, the funds counted as proceeds of crime here.
• Bhojwani was convicted on three counts of money laundering, sentenced to six years’ imprisonment, and ordered to forfeit £26.5 million. The case was upheld on appeal in Jersey and later by the European Court of Human Rights.

Why the Single Criminality Test Cannot Be Ignored

This case shows exactly why you cannot brush aside suspicions just because “it’s not illegal in South Africa”:

• Jersey’s Proceeds of Crime (Jersey) Law is built around the single criminality test.
• It gives the island-wide powers to tackle international money laundering, even when the original crime happened overseas.
• Ignoring it can lead to serious personal and business consequences: failure to report suspicions, handling “dirty” money [criminal property], or inadequate due diligence can itself be a criminal offence, carrying heavy fines or prison time.
• Courts and regulators enforce it strictly; it is not optional.
• It protects Jersey’s financial system by making it much harder for criminals to launder money [criminal property] through the island.

Important note on the UK:

• The UK’s Proceeds of Crime Act 2002 (POCA) started with a similar broad approach but has added some limits and defences over time, especially for overseas conduct.
• Jersey has maintained a particularly strong version of the test for most cases.

In short:

• The Single Criminality Test means “Our rules decide whether it’s crime money   regardless of what the foreign country says.”
• You must take it into account whenever dealing with funds that have any international element.
• When in doubt, report it. Let the MLRO and the experts decide.

Appendix 1

Beware that other countries use a different test

• There are no widely recognised "other tests" beyond variations and combinations of these, plus the way countries define the range of predicate offences (the underlying crimes that can generate "criminal proceeds").
• Many other countries apply dual criminality for overseas predicate offences, which would make the position safer for you in those places.
• However, even dual-criminality jurisdictions often still require you to report suspicions and conduct proper due diligence.

Here’s a clear, simple breakdown:

1. Single Criminality Test (Jersey-style)

• Only Jersey law matters.
• Question: “If this exact same behaviour had happened in Jersey, would it be a serious crime here?”
• If yes → the money/assets can be treated as proceeds of crime in Jersey, even if it was completely legal in the foreign country (e.g. South Africa in your client example).
• This gives Jersey (and similar jurisdictions) very broad powers to tackle international money laundering.

2. Dual Criminality Test (common in many countries)

• Both countries’ laws must be considered.
• The conduct must be a crime in the foreign country AND a crime in the local country (if it had happened locally).
• This is narrower and more protective for businesses and individuals. If the activity is legal abroad, it is often harder (or impossible) to treat the proceeds as criminal locally.

3. The "All-Crimes" Approach (how wide the net is cast)

This is not a separate “test” for overseas conduct, but it works alongside single or dual criminality:

• Many countries (including Jersey and the UK) use an all-crimes model: almost any serious offence that generates proceeds can be a predicate offence for money laundering.
• Some countries use a list-based or threshold-based approach (only specific serious crimes, or crimes punishable by more than e.g. 1 year in prison, count).

Most modern AML laws follow the FATF (Financial Action Task Force) standard, which encourages countries to cover the widest possible range of predicate offences.

Summary of Main Approaches Worldwide

SOURCES

Here are some critical, reliable web sources you can refer readers to for the Single Criminality Test in the context of Proceeds of Crime in Jersey and the UK. I’ve focused on official legislation, regulator guidance, and clear explanatory articles (avoiding overly technical or outdated ones where possible).

For Jersey (strong single criminality approach)

• Official Proceeds of Crime (Jersey) Law 1999 (the core legislation): https://www.jerseylaw.je/laws/current/l_8_1999 (Defines “criminal conduct” using the single criminality test – i.e., judged only by what would be an offence in Jersey.)
• Comsure Group article – very clear plain-English explanation of the Single Criminality Test in Jersey: http://www.comsuregroup.com/news/dirty-russian-money-will-we-see-prosecutions-under-the-single-criminality-test-jersey-perspective/ (Excellent for non-technical readers; explains why it matters in practice.)
• Jersey Financial Services Commission (JFSC) AML/CFT/CPF Handbook (latest version): https://www.jerseyfsc.org/industry/financial-crime/amlcftcpf-handbooks/amlcftcpf-handbook/ (Official guidance on how the law applies, including to overseas conduct.)
• Ogier insight on cannabis amendments (shows how Jersey modified the test in one area while keeping the core single criminality rule): https://www.ogier.com/news-and-insights/insights/cannabis-amendments-to-the-proceeds-of-crime-law-in-jersey/

For the UK (POCA – modified single criminality with defences)

• Proceeds of Crime Act 2002 (POCA) – full legislation (Section 340 defines criminal property): https://www.legislation.gov.uk/ukpga/2002/29/contents
• Crown Prosecution Service (CPS) guidance on Money Laundering Offences – clear official explanation of criminal property and overseas conduct: https://www.cps.gov.uk/prosecution-guidance/money-laundering-offences
• International Compliance Association (ICA) insight – straightforward comparison of Single vs Dual Criminality (includes UK position and the “dual criminality override defence”): https://www.int-comp.org/insight/single-criminality-vs-dual-criminality/

Additional useful overviews

• Walkers Global article on Jersey’s Proceeds of Crime Law regime: https://www.walkersglobal.com/Insights/2024/10/Proceeds-of-Crime-Law---Jerseys-AML-CFT-and-CPF-regime
• Appleby Global overview of financial crime in Jersey: https://www.applebyglobal.com/publications/financial-crime-in-jersey-overview/

Bhojwani case in Jersey.

Primary / Official Sources

• Detailed case analysis (Jersey & Guernsey Law Review – excellent legal commentary on the single criminality aspects): https://www.jerseylaw.je/publications/jglr/Pages/JLR1106_Kelleher.aspx
• European Court of Human Rights decision (Bhojwani v. United Kingdom – final appeal rejected): https://hudoc.echr.coe.int/eng?i=001-142509

Clear News Reports (good for non-technical readers)

• BBC – “Man in corrupt deal with ex-Nigerian dictator loses appeal” (2016 summary of the full case): https://www.bbc.com/news/world-europe-jersey-36783134
• BBC – “Man in money laundering scam with dictator to repay £26.5m” (confiscation order): https://www.bbc.com/news/world-europe-jersey-13699045
• Bailiwick Express – “European Court backs Jersey decision in Nigerian money laundering case”: https://www.bailiwickexpress.com/news/jersey-committed-fighting-money-laundering-new-appeal-rejected/
• The Guardian (contemporary report on the sentencing): https://www.theguardian.com/uk/2010/jun/27/nigeria-dictator-businessman-jailed-jersey

Additional Useful Links

• BBC on sentence reduction (2011): https://www.bbc.com/news/world-europe-jersey-12431537