S v VAN DER LINDE 2016 (2) SACR 377 (GJ)
Prevention of crime — Offences — Contraventions of s 4 of Prevention of Organised Crime Act 121 of 1998 — Money-laundering — What constitutes — Fraudulent VAT refunds deposited into business accounts and then immediately withdrawn by means of cash cheques or deposited into another business account — Where no attempt at concealment, money-laundering not proven.
The accused was charged in the High Court with 255 counts of fraud, 1 count of forgery, 1 count of uttering and 63 counts of money-laundering in contravention of s 4(b)(i) as read with the provisions of ss 1 and 8 of the Prevention of Organised Crime Act 121 of 1998 (POCA). The counts all related to a fraudulent VAT scheme masterminded by the accused who was the accounting officer or representative of an accounting firm. The scheme involved defrauding Sars by claiming fraudulent tax refunds in respect of four business entities over a period of eight years. The court found the accused guilty on all the counts of fraud, forgery and uttering, and then considered the issue of the money-laundering counts which involved the deposit into an account of an entity of which the accused was the sole member. Twenty-six cheques, which were the proceeds of the fraudulent tax refunds, were paid into this account. The state contended that cashed cheques issued from that account had the inherent effect of concealing property. It was submitted that the drawing of the cash cheques disguised the origin of the money and, once deposited into that account, the proceeds co-mingled with other legitimate funds and became difficult to trace. It accordingly legitimised those proceeds and constituted money-laundering as envisaged by POCA.
The court held that for a contravention of the section there had to be a clear intention to hide or conceal the ‘hot’ money. This entailed the laundering of the legal funds to convert them into ‘clean’ money which the criminal could then safely spend. Money-laundering was by its very nature a secretive practice but the spending of the proceeds of the tax refunds had not been concealed at all. One of the weaknesses of the VAT scheme was the ease with which the money trail could be followed. Almost immediately after a refund was deposited it was withdrawn in full and cashed or deposited into one of the accounts. In those circumstances, where there was no attempt at concealment, the accused could not be found guilty on the money-laundering counts.