In the recent judgment in El-Khouri v. Government of the United States of America,[1] a case concerning the operation of the double criminality rule in the context of extradition, the UK Supreme Court made a seminal ruling on the extraterritorial limits of the Proceeds of Crime Act 2002 (POCA).
Background
Joseph El-Khouri, who was based in London, was indicted by a grand jury in New York City on 9 September 2019. A warrant for El-Khouri’s arrest was issued and a request for his extradition was later submitted to the UK by the US.
El-Khouri was alleged to have committed 17 fraud offences related to the insider dealing of securities trading on US stock exchanges. It was alleged that El-Khouri had procured insider information from an employee of an investment bank in London that he used to speculate on share price movements in the US, generating profits of almost US$2 million.
El-Khouri resisted extradition to the US. Among other things, he contended that the conduct alleged in the extradition request did not meet the requirement of ‘double criminality’ under the Extradition Act 2003. The ‘double criminality’ rule requires the conduct in question to constitute a crime under the laws of both the requesting state (US) and the requested state (UK). The matter was appealed all the way to the Supreme Court.
The Supreme Court Decision
The Supreme Court first determined that the conduct alleged in the extradition request occurred outside of the US. The word ‘conduct’ should be given its ordinary meaning, and while it was alleged that the effect of El-Khouri’s conduct was felt in the US, the physical acts attributed to El-Khouri occurred almost entirely outside of the US.
Having made that determination, when assessing whether the double criminality test was satisfied, the court had to determine whether El-Khouri would have committed a crime in the UK if the alleged conduct had occurred outside the UK.
Among other arguments, the US submitted that El-Khouri’s alleged conduct would be an offence under section 329 of POCA even if it had occurred outside the UK. The US relied upon the Court of Appeal’s decision in R v. Rogers as the authority for the proposition that section 329 of POCA had extraterritorial effect and could attach criminality to El-Khouri’s conduct even if it was entirely outside of the UK.
The Supreme Court found that R v. Rogers was wrongly decided, succinctly concluding that:
‘In the absence of any express stipulation that a criminal offence is committed even if the relevant act takes place abroad, the ordinary presumption therefore applies that Parliament has not made such an act a criminal offence triable in the United Kingdom. The Act does not provide that to acquire, use or possess abroad property derived from criminal conduct committed abroad constitutes a criminal offence in the United Kingdom. That would be a truly exorbitant extra-territorial jurisdiction for the United Kingdom to assert and the Act does not assert it.’
On this basis, the Supreme Court held that no offence could be found to have been committed by El-Khouri under POCA or any other criminal statute. Accordingly, there was no finding of a criminal offence in the UK, and the ‘double criminality’ test could not be satisfied. The extradition order was quashed.
Takeaway
POCA has long been somewhat of a statutory outlier in extraterritorial powers that regulators enjoyed when seeking to prosecute those involved in international money laundering. This has now been materially curtailed, and we can expect UK enforcement bodies to adapt their investigations accordingly.
[1] [2025] UKSC 3.
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