The UK’s law enforcement agencies have broad powers to freeze and seize assets they consider to be the proceeds of crime. Some of these powers can be utilised very quickly and easily. Their impact can be highly disruptive.
Law enforcement’s proceeds of crime related powers can be divided into the following broad categories:
Powers of this type are mainly governed by the Proceeds of Crime Act 2002 (POCA), although a number of other pieces of legislation may also be relevant.
The standard of proof required in these matters is much lower than for a criminal conviction. Law enforcement agencies are often able to take action without having to prove a criminal offence has taken place at all.
If a law enforcement agency such as the police has sufficient reason to think an asset may be either the proceeds of crime or intended for use in future criminal conduct, then it can relatively easily freeze or seize that asset while it investigates.
This can often be done very quickly. Depending on the nature of the investigation it can sometimes be achieved without the need to apply for a court order. The enforcement agency will, however, require a court’s approval if it seeks to hold onto the assets beyond a short initial period.
There are various different mechanisms for detaining assets pending investigation, each with their own time limits, requirements and procedures. For example:
Depending on its outcome, at the end of the period of investigation, law enforcement may apply to the magistrates’ court for permeant forfeiture of frozen cash, bank accounts or valuable assets.
In addition, law enforcement agencies can, under POCA Part V, bring civil recovery proceedings to the High Court to recover criminal assets, no matter whether or not the assets have previously been frozen.
In these cases the agency needs to satisfy the court ‘on the balance of probabilities’ (i.e. that it is more likely than not) that the asset in question either is recoverable property or was intended for use in unlawful conduct. The burden of proof is on the law enforcement to show this, but the evidential threshold is a great deal lower than would apply in a criminal prosecution.
Anyone who has been served with an unexplained wealth order and who has not successfully either challenged it or complied with it, will find their assets are presumed to be recoverable property.
Criminal prosecutors are able to apply for the permanent confiscation of assets from anyone convicted of an offence.
While the prosecution can only confiscate assets worth up to the value of the person’s benefit from criminality, the regime for convicted individuals is draconian. In certain circumstances all assets held by a convicted individual from six years prior to the day they were charged with the offence may be presumed to have been obtained through criminal conduct, unless the convicted person can prove they were obtained legitimately.
It is for the court to determine how much a convicted person personally benefited from criminal conduct. Once it has done so, the burden is on the convicted person to prove that the value of all their currently available assets is less than the amount of their benefit from criminal conduct. This means that even legitimately obtained assets can be confiscated if the person has spent the proceeds of their crime.
Any unpaid confiscation order will accrue interest. The courts can also force the sale of assets to pay an order and can sentence defaulters to imprisonment for up to fourteen years.
Anyone whose assets are subject to law enforcement action is advised to take legal advice from a law firm which specialises in proceeds of crime investigations.
The practicalities of preparing a robust defence to a proceeds of crime action can often seem daunting. It may require a detailed examination of banking, property and trust structures going back a number of years.
There are also many pitfalls for the inexperienced. Anyone who does not seek expert advice might find themselves accused of having ‘hidden assets’ or having made ‘tainted gifts’, meaning that they may be required to pay money that they no longer possess.
Hickman & Rose have long experience dealing with proceeds of crime issues, particularly when they intersect with complex financial investigations and proceedings. Our lawyers have achieved significant successes for clients in challenging the scope of law enforcement’s investigation, proving the legitimacy of assets and negotiating the best possible outcome.
Most proceeds of crime matters do not occur in a vacuum. There is usually a parallel criminal investigation for which an individual may have been arrested, invited to attend an interview under caution or charged with a criminal offence.
Hickman & Rose’s criminal, regulatory and civil lawyers work together to ensure a strategic consistency of approach, which prioritises your ultimate goals over any one discrete issue.