The Supreme Court (SC) last week delivered an important judgment on the UK’s extradition framework and the operation of “double criminality”. In El-Khouri v Government of the United States [2025] UKSC 3, the SC quashed an order for extradition of a UK-Lebanese dual national to the US on insider trading charges. The judgment is doubly significant – it also overturns longstanding precedent on the extra-territoriality of UK money laundering offences.

 Background 

The Defendant (D) is accused of insider dealing. D is alleged to have made payments to middlemen who obtained material non-public information about US listed stocks from two bank analysts. The bank analysts were based in London, whilst the middlemen were said to have spent time “in London, Paris and elsewhere.” D is alleged to have used the information to trade contracts for differences (CFDs) based on the anticipated movements in the prices of the relevant companies on the NASDAQ and New York Stock Exchanges. D is based in the UK and entered into all of the transactions in question with a broker in the UK. The CFDs were not traded in the US. The jurisdictional link with the US is that payments made by D to one of the middlemen allegedly included payment on two separate occasions to stay at a hotel in New York. 

In the UK, the FCA investigated but concluded that there was insufficient evidence to prosecute D. However, on 9 September 2019 a grand jury in New York City returned an indictment charging D with 17 offences of securities fraud, wire fraud, fraud in connection with a tender offer and conspiracy. The US District Court for the Southern District of New York issued an arrest warrant, and an extradition request was submitted to the UK.

Prior decisions

The extradition request was heard at Westminster Magistrates’ Court in January 2021. D resisted extradition on the basis that the alleged conduct did not constitute an extradition offence because it did not meet the “double criminality” requirement (discussed further below). The district judge rejected this argument and the Secretary of State subsequently ordered extradition. D’s subsequent appeal to the High Court (HC) was dismissed. The SC granted permission to appeal the HC’s decision. 

Legal framework 

The Extradition Act 2003 (the Act) governs extradition from the UK. The US is a “category 2 territory” under the Act. 

s137 of the Act sets out the basis on which conduct can constitute an “extradition offence”. It contains the double criminality requirement for extradition to a category 2 territory. This requires that the conduct forming the basis of the extradition request must constitute a crime under both the law of the requesting state (the US) and the requested state (the UK).

s137(3) and s137(4) deal alternatively with conduct occurring “in” and “outside” the territory of the requesting state.

1. s137(3)(b)-(c): where the conduct occurs “in” the requesting territory, the condition is that the conduct would constitute an offence in the UK punishable by imprisonment of 12 months or more and that it would be similarly punishable in the requesting state.
2. s137(4)(b)-(c): where the conduct occurs “outside” the requesting territory, the condition is that in corresponding circumstances equivalent conduct would constitute an extra-territorial offence in the UK punishable by imprisonment of 12 months or more and that it would be similarly punishable in the requesting state.

Basis of appeal 

Throughout the course of the extradition proceedings, the US relied on s137(3), arguing that the relevant conduct occurred in the US. This had been accepted at first instance in the Magistrates’ Court on the basis that the effect of the conduct was likely to have been felt on US markets. In the HC, D did not challenge this and focussed solely on the argument that the conduct would not constitute a punishable offence in the UK (i.e., that the condition in s137(3)(b) was not met).

The point of law of general public importance for the SC to resolve was therefore whether the HC’s approach to whether D’s alleged conduct constituted an "extradition offence" was correct, having regards to the requirements of s137(3)(b).

At the start of the SC hearing, the SC asked the parties to address two questions:

1. whether it is s137(4) that is applicable in this case, not s137(3); and
2. whether the reasoning in the prior case of Cando Armas¹ regarding where the relevant conduct takes place, was correct.

SC’s decision

The implication from the SC’s questions raised at the beginning from the hearing was that the parties had proceeded incorrectly in assuming that the conduct in this case had occurred in the US.

D’s argument that s137(3)(b) was not met

Before turning to its analysis of s137(4), the SC briefly considered the Defendant’s argument that the test in s137(3)(b) had not been met because the relevant conduct would not constitute an offence in the UK.

The SC rejected this argument. There was no need to hypothetically assess whether acts done in the requesting state (the US) would constitute an offence in the requested state (the UK). The alleged acts had in fact taken place in the UK and it was agreed between the parties that, if proven, the relevant conduct would constitute insider dealing.

Application of s137(4)

The SC noted that despite the fact that almost all of the conduct specified in the extradition request occurred in the UK, D had felt constrained to accept that the conduct occurred in the US so that the relevant test for double criminality was that set out in s137(3) (i.e., that the conduct had occurred in the US). This was based on the prior decision in Cando Armas, an extradition case in the House of Lords in which it was held that acts done outside the requesting state will be sufficient to constitute “conduct” in that state so long as their intended effect was to bring about harm in that state.

The SC held that the decision in Cando Armas was not correct for the following reasons.

1. Plain meaning: The definition of “conduct” in Cando Armas does not accord with plain meaning of the word – “conduct” would normally be understood as a synonym for acts done by the requested person in the specified location and would not include the effects felt in that location as a result of acts done elsewhere. The definition of “conduct” in Cando Armas is abnormally wide.
2. Statutory framework: The result of the abnormally wide definition for “conduct” makes the statutory scheme of s137, which distinguishes between conduct “in” or “outside” the jurisdiction, entirely unworkable.
3. Justification: The justification for the broad definition of conduct does not stand scrutiny. Not only does it ignore the distinction between s137(3) and s137(4), but the reasoning only considered the common law and took no account of the fact that the territorial scope of many UK criminal offences is defined by statute.

In this case, the SC determined that the conduct occurred outside the US. The only act alleged in the US was paying for a hotel room for one of the middlemen whilst in New York. That act was not an ingredient of insider dealing and was “purely incidental” to the narrative of events. It is therefore the double criminality test in s137(4), rather than s137(3), that is relevant. 

The SC noted that the requirement under s137(4)(b) that the conduct would constitute an extra-territorial offence in the UK is a “necessary safeguard against exorbitant claims where the requesting state seeks to exercise extra-territorial jurisdiction” and that extradition will only be possible if the UK would exercise jurisdiction in corresponding circumstances. This underscores that principle of reciprocity inherent in the UK’s extradition regime. s137(4)(b) requires an assessment of whether the UK would exercise jurisdiction if the relevant conduct had taken place outside the UK. In this case, the SC decided that it would not. The territorial scope of the insider trading offence under the UK requires (a) an individual to have been in the UK when doing the act; (b) trading that takes place on a UK regulated market; or (c) a professional intermediary (i.e., the broker) that performs the relevant acts in the UK. When transposed to this case, none of these conditions would be met – D was not in the US when he did the alleged dealing, the dealing was not alleged to have occurred on a US regulated market and the broker was not in the US when the dealing occurred.

The allegations against D therefore did not constitute an extradition offence under the Act.

Money laundering 

The US advanced a further argument that payment for the hotel rooms in New York constituted a money laundering offence under s329 of the Proceeds of Crime Act 2002 (POCA) and that consequently there was an extradition offence under s137(4) of the Act because POCA had extra-territorial effect.

The SC rejected this argument, and in doing so limited the scope of POCA’s extra-territorial effect. It held that to come within the territorial scope of s329 POCA, the acquisition, use or possession of the proceeds of the criminal conduct must occur in the UK. Whilst POCA does provide that the acquisition, use or possession of funds in the UK that derive from criminal conduct abroad constitutes an offence, POCA does not provide that the acquisition, use or possession of property abroad that is derived from criminal conduct abroad constitutes a criminal offence in the UK. If that were the case, it would be a “truly exorbitant extra-territorial jurisdiction” for the UK to assert. 

In doing so, the SC decided that the Court of Appeal decision in Rogers² - which to date has been viewed as authority that ss327-329 of POCA have extra-territorial effect so long as the significant part of the underlying criminality took place in the UK – was wrongly decided.

Conclusion

This is a high-profile judgment offering clarity on the UK’s extradition regime. It may be viewed as an important restraint on jurisdictional overreach by other states, in particular the US, and a check on overzealous enforcement of conduct that does not take place in the state requesting extradition. 

The SC’s decision could hardly have come at a more sensitive time for transatlantic relations. UK and US enforcement agencies alike are adapting to the dramatic early salvos of the Trump Administration, which began with a “pause” on enforcement of the Foreign Corrupt Practices Act. That wider context makes it difficult to predict the impact of the judgment on cross-border enforcement cooperation. While the decision will inevitably be read by some as an insight into wider diplomatic and geopolitical sentiment, the judgment is, we suggest, better viewed as a defence of the plain reading of the Act and a clarification of the UK’s legal framework for extradition. 

The SC’s decision that the primary money laundering offences under POCA do not have extra-territorial effect is also significant and casts a different light on several cases³ for which Rogers was considered binding authority, putting into doubt the much-quoted conclusion in that judgment that “the offence of money laundering is par excellence an offence which is no respecter of national boundaries”.

¹Office of the King’s Prosecutor, Brussels v Cando Armas [2005] UKHL 67

²R v Rogers [2014] EWCA Crim 1680

³Sulaiman v Tribunal de Grande Instance, Paris [2016] EWHC 2868 (Admin); Jedinak v District Court in Pardubice (Czech Republic) [2016] EWHC 3525 (Admin); Balaz v District Court of Zvolen (Slovakia) [2021] EWHC 1862 (Admin); and Rogala v Circuit Court in Lublin (Poland) [2021] EWHC 3324 (Admin).