Fraud

There are wide-ranging powers in UK legislation to seize and freeze property pending the provision by a person of satisfactory information as to the source of his or her funds or other property. One such example is the power of the court to impose an Unexplained Wealth Order on an individual requiring him or her to explain his wealth but other powers such as cash forfeiture, account forfeiture and listed asset forfeiture powers often in practice also require explanation of how that asset or money came to be held. The provision of such information can also be essential to successful dealings with the UK’s enforcement authorities.

The Proceeds of Crime Act 2002 (POCA) is a particularly complex legislative regime and it seeks to confiscate assets which are obtained during the commission of a criminal offence.

The rationale behind POCA is simple: crime does not pay.

The powers created by POCA are vast but a key one is confiscation.

If a defendant is convicted of an offence the prosecuting authority, on behalf of the Crown may make an application under POCA for confiscation; this can be following a conviction in either the Magistrates’ or the Crown Court where it is suspected that the defendant has benefitted financially from their criminal activity.

There are two key figures to consider in confiscation proceedings:

1) Benefit amount: the figure which the Crown alleges has been obtained as a result of the defendant’s criminal activity. 

Unless the defendant can prove otherwise, where a ‘criminal lifestyle’ is alleged and established by the Crown, the benefit amount will also include all assets obtained by the defendant during the last six years, which may not necessarily be directly linked to the crime.

This has the potential to significantly increase the benefit figure.

A criminal lifestyle is defined in numerous ways but can be one of the following:

  • where the defendant has committed an offence which is listed within POCA such as money laundering, some drugs offences or trafficking offences
  • where the defendant has been convicted of three or more offences which they have benefited from by way of £5,000 or more
  • within the last six years the defendant has been convicted on at least two separate occasions of an offence which they benefited from by way of £5,000 or more; or
  • where the defendant has committed an offence over a period of six months or more and over that time, they have benefited from conducting the offence by way of £5,000 or more. 

2) Available amount: the value of defendant’s available assets at the time of prosecution.

The court will, unless there is evidence of hidden assets, make a Confiscation Order in the sum of the available amount, not the benefit amount.

If the available amount is minimal, then the court can make a nominal order of £1.

However, under Section 22 POCA, the Crown can re-open the matter and ask the court to re-consider the available amount, particularly where the benefit amount is considerably higher, under the original Confiscation Order. This can happen at any time, where it is just to do so, until the benefit amount has been repaid.

It is therefore vitally important to challenge not only the available amount, but the benefit amount too.

Once a Confiscation Order is imposed by the court there are various powers of enforcement available to the Crown including foreign travel bans by way of confiscating passports. This will be imposed where the court considers it necessary to do so.

One issue that can often become a problem for those who are subject to a Confiscation Order is where the Order is not paid within the time limit imposed by the Court (up to three months); if the terms of the Order cannot be met, the defendant will be imprisoned for a period set by the court in the initial proceedings which directly corresponds to the value of the Order. 

It is important to note that imprisonment in default of paying an Order does not create a ‘nil balance; on release the Order will still be payable.

This can be seen by a recent case at Westminster Magistrates' Court where one of the Hatton Garden burglars refused to pay the Confiscation Order, despite having the assets to do so; he was sentenced to a further seven years imprisonment. 

As discussed, POCA is wide ranging and goes beyond confiscation – for example, at the start of an investigation the defendant may be subject to a Restraint Order on any assets which prevents the disposal of them until a Confiscation Order is paid in full. 

It’s important that you access quickly the very best legal advice available in this highly specialised area of law.