Financial proceeds of crime
There is serious money to be made from serious crime in the UK. Huge amounts of income is derived by criminals through organised crime and fraud. Where criminals are convicted of offences through which they have enriched themselves, they will invariably be held to account for that money.
It is not in the public interest for criminals to keep the money made from their activity, or for them or their families to enjoy the fruits of it. For this reason, the authorities have various powers to seize money and goods, and to start legal proceedings to recover the money.
Who is responsible for seizing criminal assets?
Under the Proceeds of Crime Act 2002 (POCA), various organisations are involved in the recovery of criminal assets and related prosecutions, including:
- The National Crime Agency (including a dedicated Asset Confiscation Enforcement team)
- The Director of Public Prosecutions
- The Director of the Serious Fraud Office
- Director of Revenue and Customs Prosecutions
The law allows the forfeiture, seizure and freezing of money, criminal property, proceeds and assets that result from crime.
What legislation authorises criminal confiscation?
The regime under POCA has been strengthened by amendments introduced by the Serious Crime Act 2015. Part 2 of POCA deals with the situation where a confiscation order for certain assets will be made. Since 2015, for instance, the authorities are able to feeze assets more quickly than ever – and earlier in investigations.
When can a criminal confiscation order be made?
A criminal confiscation order may be made by the Crown Court where the defendant is convicted in the Crown Court(and, in limited circumstances, the Magistrates’ Court can make confiscation orders). The Court must, where the prosecution makes an application, undertake a ‘confiscation enquiry’. It can also do this of its own initiative if it considers it appropriate to do so.
A confiscation order can be made if the Court decides, following conviction, that the defendant has a ‘criminal lifestyle’ for the purposes of POCA.An order is made for a sum of money rather than the asset itself, so the defendant is effectively ordered to pay an amount representing the benefit derived from the offence/s.
What does it mean to have a ‘criminal lifestyle’?
A defendant will be considered by the Court to have a ‘criminal lifestyle’ if they fall within one of the following three categories:
- They committed an offence specified in Schedule 2 of POCA, including:
- Drug trafficking
- Money laundering
- Directing terrorism
- People trafficking
- Arms trafficking
- Intellectual Property
- Pimps and Brothels
- They committed an offence which constitutes conduct that forms part of a course of criminal activity (and the defendant’s benefit was at least £5,000)
- The offence was committed over a period of at least 6 months (and the defendant’s benefit was at least £5,000)
It the court decides that the defendant does have a criminal lifestyle, the court can proceed on the basis of four assumptions. These assumptions include that any property transferred to the defendant after the relevant day was obtained by him as a result of his general criminal conduct and at the earliest time he or she appears to have held it; and any expenditure incurred by the defendant after the relevant day was met from property obtained by the defendant as a result of their general criminal conduct.
The Court will then calculate the amount to be recovered (ie. an amount equal to the defendant’s benefit from their criminal conduct) and make an order accordingly
What if the defendant did not have a criminal lifestyle?
If the Court decides the defendant did not have a criminal lifestyle, it must then calculate the benefit derived from the actual offences of which the defendant was convicted, and make an order accordingly.
How is it decided that the defendant benefitted from their criminal conduct?
The defendant will be assumed to have benefitted from their criminal conduct under Section 76(4) of POCA, if they obtain property or other financial advantage as a result of (or in connection) with the conduct. The prosecution’s evidence from the trial will be important in proving the extent of this benefit.
What if not enough money or assets are available?
It is for the defendant to prove that the available amount is less than the recoverable amount. If the recoverable amount as calculated by the Court is greater than the amount available, the Court must then decide what the available amount is. It will take various factors into account, including:
- Identifying any free property
- Calculating the total market value of that property
- Deducting priority obligations such as fines
- Adding the value of tainted gifts
Where an order is therefore made in the sum of the available amount rather than the recoverable amount, the Court must include a statement of its findings in the confiscation order.
How long does the defendant have to pay the amount?
Under POCA, the amount of the confiscation order should be paid on the making of the order. However, if the defendant needs time to pay (and can prove that additional time is required) – this can be extended at the Court’s discretion to 6 months (sometimes 12 months in exceptional circumstances).