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Proceeds of Crime Act 2002

Interpretation

Section 75: Criminal lifestyle

134.Section 75 is to be read in conjunction with section 6 and Schedule 2. As explained in the note on section 6, the question of whether a person has a criminal lifestyle is central to the operation of Part 2 of the Act, because it determines whether the defendant is subject to the confiscation of benefit from his particular criminal conduct or his general criminal conduct. Section 75 set out in detail the criteria that govern whether or not a person has a criminal lifestyle.

135.The criminal lifestyle regime is based on the principle that an offender who gives reasonable grounds to believe that he is living off crime should be required to account for his assets, and should have them confiscated to the extent that he is unable to account for their lawful origin. The criminal lifestyle tests, therefore, are designed to identify offenders who may be regarded as normally living off crime. Under section 75, a person has a criminal lifestyle if he satisfies one or more of the tests set out in that section.

136.The first test is that he is convicted of an offence specified in Schedule 2 (see the commentary on Schedule 2 below). Subsection (7) enables the Secretary of State to amend Schedule 2 by order. The second test is that the defendant is convicted of an offence of any description, provided it was committed over a period of at least six months and he obtained not less than £5,000 from that offence and/or any others taken into consideration by the court on the same occasion. The third test is that the defendant is convicted of a combination of offences amounting to “a course of criminal activity”.

137.The third test is more complicated than the other two. The defendant satisfies it if he has (a) been convicted in the current proceedings of four or more offences of any description from which he has benefited, or (b) he has been convicted in the current proceedings of any one such offence and has other convictions for any such offences on at least two separate occasions in the last six years. In addition, the total benefit from the offences and/or any others taken into consideration by the court on the same occasion (or, in the case of (b), occasions) must be not less than £5,000.

138.The first test is based on the earlier drug confiscation legislation, where conviction of a drug trafficking offence is always regarded as indicative of a criminal lifestyle (although the term itself is not used in the earlier legislation). The second test is new. The third test is similar to that in the earlier non-drug legislation, where an enquiry may be launched into benefit from a person’s entire past criminal conduct (other than drug trafficking) where the person is convicted in the current proceedings of two or more offences from which he has benefited, or of one offence in the current proceedings and another one in the last six years. However, the number of triggering offences is greater in the Act because, under section 10, the application of the assumptions is mandatory where a criminal lifestyle is identified, whereas it is discretionary in the earlier non-drug legislation.

Section 76: Conduct and benefit

139.Section 76 defines criminal conduct as any conduct constituting an offence in England and Wales or which (if it took place elsewhere in the United Kingdom or abroad) would constitute an offence there. The restriction of the scope of confiscation under earlier confiscation legislation to the proceeds of drug trafficking, other indictable offences and specified summary offences is thus abolished. Under the Act, the Crown Court that makes a confiscation order will only need to consider whether the defendant has benefited from any conduct which is, or would be contrary to the criminal law of England and Wales. Section 76 also defines “general criminal conduct” and “particular criminal conduct”. For the significance of these terms see the note on section 6.

140.Section 76 also provides that a person benefits from criminal conduct if he obtains property as a result of or in connection with the conduct. This unites in one new provision two similar but not identical definitions in the earlier confiscation legislation relating to drug trafficking, and that relating to other offences. Under the earlier drug trafficking legislation a person benefits from drug trafficking if he receives any payment or reward in connection with drug trafficking carried on by him or another person. Under the earlier legislation relating to other offences, a person benefits from an offence if he obtains any property as a result of or in connection with its commission.

Sections 77 & 78: Tainted gifts; Gifts and their recipients

141.Section 77 is another section which aligns two similar but slightly different provisions in the earlier drug and non-drug confiscation legislation (where a tainted gift is referred to as a “gift caught by this Act”). Like the Act, the earlier legislation enables gifts made by the defendant to other persons to be recovered in satisfaction of the confiscation order, and makes ancillary provision (for example, to enable assets of the recipient of a gift to be placed under restraint)..

142.The new scheme provides that, where the court has decided that the defendant has a criminal lifestyle, any gift made by the defendant to any person in the period beginning six years before the commencement of proceedings is caught, together with any gift made at any time out of the proceeds of crime. This is relevant both at the confiscation hearing and for the purposes of enforcement. If the court decides that the defendant does not have a criminal lifestyle, only gifts made since the beginning of the earliest of the offences committed are caught. Again, this is relevant at the confiscation hearing and for the purposes of enforcement.

143.However, in relation to a time before the court has decided whether the defendant has a criminal lifestyle, for example, at a pre-trial restraint hearing, the wider definition of tainted gifts applies. When making a restraint order, the court must exercise its discretion as to how much property to restrain by reference to the size of the confiscation order that may eventually be made. So, although a court can technically apply the wider definition of tainted gifts at the restraint stage, if it is clear at that time that the defendant does not have a criminal lifestyle and that therefore the narrower definition will apply at the confiscation hearing, the court will have to take this into account when making the restraint order.

144.Section 78 makes it clear that a gift includes a transaction for a consideration which is significantly less than the value of the gift at the time of the transfer; for example, if the defendant sells a car worth £10,000 at the time of the transfer for £2,000. This is a departure from the earlier legislation, where an undervalue transaction is defined as the difference between the value of the property when the defendant received it and its value at the time of the transfer. The old definition could cause injustice when the property transferred at an undervalue has depreciated in value between its receipt by the defendant and its transfer.

Sections 79-81: Value: the basic rule; Value of property obtained from conduct; Value of tainted gifts

145.Sections 79-81 set out how the court is to work out the value of property held by a person, the value of property obtained from criminal conduct and the value of a tainted gift. These sections broadly reproduce the property valuation principles set out in the earlier legislation.

Sections 82-84: Free property; Realisable property; Property: general provisions

146.Section 82 introduces the new concept of free property as any property that is not subject to certain kinds of forfeiture and deprivation orders. The underlying principle is that property already subject to one of these orders made in earlier proceedings should not be included in the calculation of the amount available for confiscation because it is already accounted for. In addition, property is not free if it is subject to certain orders under Part 5 of the Act on civil recovery. Section 83 defines realisable property by reference to the free property of the defendant and the recipient of a tainted gift. Section 84(1) defines property in very wide terms.

Sections 85-87: Proceedings; Applications; Confiscation orders

147.Sections 85-87 define when proceedings are started, when proceedings and applications are concluded, and when confiscation orders are satisfied and are subject to appeal. The definitions are particularly important in that they determine the earliest and latest points at which a restraint order may be made. The provisions in section 85 have been extensively reworked when compared with those in existing legislation to take account of the new right of appeal (in sections 31-33) for the prosecutor and the Director. The purpose of the new provision is to ensure that proceedings are not concluded where the prosecutor or Director appeals against the Crown Court’s decision, and thus to ensure that a restraint order may be made where such an appeal is lodged, and that any restraint order already made in the case does not have to be discharged.

Section 88: Other interpretative provisions

148.The definition of a criminal investigation in subsection (2) is required because the power to make a restraint order is brought forward, by section 40(2), to the beginning of a criminal investigation.

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