Serious Crime Act 2015
2015 CHAPTER 9
ANNEX B: OVERVIEW OF THE CONFISCATION PROCESS UNDER POCA
1. Confiscation
1.1 Basic concepts
Confiscation is the process used by the courts to take away the proceeds of criminal conduct. The trigger that sets this process in motion is a conviction for a criminal offence (or offences) from which the defendant has benefited. A confiscation order will be made against the defendant for a sum of money, not specific property. A confiscation order can presently only be made by the Crown Court, although there are provisions in SOCPA for the Secretary of State, by order, to make provision that would enable a magistrates’ court in England and Wales to make a confiscation order.
1.2 Benefit
An offender benefits from criminal conduct if he or she obtains property as a result of that conduct or in connection with it. The benefit is the value of the property obtained. It is important to note that the benefit is not the profit made from the conduct, but the total value of property obtained. For example, an offender acquired heroin with a street value of £10,000, the offender’s benefit is £10,000 – even if the heroin was seized by police before the offender was able to sell it and realise any profit.
1.3 Obtaining an order
Under POCA, the confiscation procedure is mandatory and the court must proceed to confiscation if the defendant:
is convicted of an offence or offences (from which they have benefited) in proceedings before the Crown Court,
is convicted of an offence or offences (from which they have benefited) in proceedings before a magistrates’ court and is committed to the Crown Court for sentencing, or
is convicted of an offence or offences in proceedings before a magistrates’ court and is committed to the Crown Court with a view to a confiscation order being made,
and the court is asked to proceed by the prosecutor or the court believes it is appropriate to do so.
The Crown Court is under a duty to proceed with confiscation unless the court believes that a victim has begun, or intends to begin, civil proceedings against the defendant, in which case the Court has discretion to determine whether or not to proceed.
1.4. The court process
When the prosecutor indicates to the court that they wish to proceed to confiscation, an order under section 18 of POCA may be served on the defendant. This requires the defendant to declare all assets in which he or she has an interest. Once the section 18 response has been received, the prosecutor will prepare a statement of information (a “section 16 statement”). The section 16 statement sets out the prosecution position and details the defendant’s benefit from criminal conduct.
The defence will respond to the section 16 statement with a statement of information (under section 17 of POCA). The statement of information procedure is designed to provide a quick and effective method of identifying the extent of the defendant’s benefit.
At the confiscation hearing the court must decide whether the defendant has a criminal lifestyle or has benefited from particular criminal conduct (see below). When assessing the defendant’s benefit at the hearing the court must take account of conduct occurring, and property acquired, up to the time it makes its decision.
The court must always deal with the issue of confiscation upon conviction and prior to sentence. The proceedings can, however, be postponed:
on application by the defendant;
on application by the prosecutor; or
if the court believes it is appropriate.
If either the prosecutor or defence require time to present their case in relation to confiscation proceedings, the court may set a date for the confiscation hearing and specify dates by which the prosecutor’s statements and defence responses are to be served. Proceedings may not be postponed for more than two years from the date of conviction unless, in the view of the court, there are exceptional circumstances.
A confiscation order is payable as soon as the order is made unless the defendant can show the court that he or she needs time to pay. If this is the case, the court may extend the time to pay for up to six months from the date the order is made. If the court believes there are exceptional circumstances then it may extend the period in which payment is due to a maximum of 12 months. The defendant may apply to the court under this provision at any time after the confiscation order is made, but not after the six month period has elapsed. Time to pay should not be granted unless the prosecutor has been given the opportunity to make representations.
1.5. Criminal conduct
Criminal conduct is defined as:
“Conduct that constitutes an offence in any part of the UK or, if the conduct occurred elsewhere, would constitute an offence in any part of the UK if it occurred there”.
Criminal conduct can be either “particular” or “general”. This affects the way a confiscation case proceeds and can lead to distinct confiscation regimes: particular criminal conduct or general criminal conduct (criminal lifestyle).
Particular criminal conduct
Particular criminal conduct refers to offences that the defendant has been convicted of in the current (confiscation) proceedings and all other offences taken into consideration.
Example of “particular criminal conduct”
An example would be where the court is considering a confiscation order in relation to a defendant who is convicted of a single offence of theft (say, a watch valued at £800) from a jeweller’s and asks the court to take a similar offence (of obtaining a shirt valued at £50) into consideration. The benefit in this case totals £850 and the court can make a confiscation order in this amount.
General Criminal Conduct
“General criminal conduct” means the defendant’s criminal conduct, whenever the conduct occurred and whether or not it has ever formed the subject of any criminal prosecution. “General criminal conduct” therefore would include any “particular criminal conduct”. This regime depends on the concept of “criminal lifestyle”. The court must apply the assumptions to all of the defendant’s income and expenditure in the previous six years if the court decides the defendant’s benefit to be from general criminal conduct.
The following assumptions may be applied, unless it is found to be incorrect or there is a serious risk of injustice:
that any property transferred to the defendant at any time after the relevant date,
any property held by the defendant at any time after conviction,
any expenditure incurred by the defendant after the relevant date, for instance luxury holidays,
is tainted or obtained by criminality
and the defendant obtained the property free from any other interests.
If the prosecution is alleging general criminal conduct, it is suggesting that the defendant has been a career criminal and that assets obtained or enjoyed by him or her are tainted or obtained by criminality.
Section 75 of POCA sets out a number of tests that are applied. A person has a criminal lifestyle if one or more tests are met, including whether the defendant has committed specific offences under Schedule 2 to POCA (for example, drug trafficking).
It is assumed that the defendant’s entire income over the previous six years represents the proceeds of crime. With general, or “lifestyle” offences, the prosecution can look at a defendant’s benefit for a period going back six years from the “relevant date”. The relevant date is the day when the proceedings started, usually the date of charge.
1.6. Recoverable amount
Once the defendant’s benefit has been determined the court must decide the available and recoverable amounts and make an order requiring the defendant to pay that amount. The “recoverable amount” is a sum of money equal to the defendant’s benefit from the conduct concerned allowing for the change in the value of money. The court will endeavour to recover the full value of a defendant’s benefit from criminal conduct, whether particular or general. Where this is not possible, for example where the defendant’s personal wealth is now less than the benefit obtained, the court will determine the available amount. This is a sum of money due to be paid immediately and comprises:
the total value of all the defendant’s free property(43) at the time the confiscation order is made (that is, the total value of all their property minus any priority obligations44); plus
the value of any tainted gifts.
The court will adopt a staged approach and attempt to recover:
the full value of the benefit, or
if the defendant’s assets are less, the available amount, or
if less, a “nominal amount” – for example £1.
An example of how the recoverable amount is calculated is provided at Appendix (i).
Once a confiscation order has been made, the court must specify the sentence to be served in default, that is should the defendant fail to pay. This is the additional prison sentence that the defendant must serve if the order is not satisfied within the time allowed by the court. The maximum period of imprisonment depends upon the amount due and currently ranges from seven days to 10 years.
The court must have regard to the confiscation order before imposing a fine or other order involving payment on the defendant, except for a compensation order, but otherwise to leave the confiscation order out of account in sentencing the defendant.
1.7. Enforcement
The magistrates’ court (“enforcement authority”) has the ultimate responsibility for enforcing a confiscation order and it will enforce the order as if it were a fine. Once the payment period has expired, the enforcement authority can use its own powers to issue a distress warrant for bailiffs to realise assets. This is usually a two-stage process: initial distress warrants are only for known assets. If the order is not satisfied by the recovery (realisation) of those assets, a further warrant may be issued specifying the value to be realised without listing individual assets. However, in cases where there are assets outside the jurisdiction, existing restraint orders, property held in names of third parties and involving real property or appointing receivers, the enforcer will normally be the Crown Prosecution Service, the National Crime Agency or the Serious Fraud Office. In these matters both enforcement and prosecution authorities will work closely together to achieve the payment of confiscation orders.
It is the defendant’s responsibility to apply for a variation or discharge of the order where the assets are not sufficient to satisfy the confiscation order. In the cases where assets have been realised, but have generated lower than estimated values and no further assets exist, the prosecution may consent to the variation or discharge being sought.
The defendant (or receiver, if appropriate) may apply to the court for the amount of an order to be reduced if the available amount is insufficient for full payment. This is dealt with under section 23 of POCA which provides that the court “may substitute such smaller amount as the court believes is just”. The defendant must show that there is good reason why they no longer have sufficient assets to pay the order.
A confiscation order must be paid immediately unless it is shown that the defendant requires time to pay. The magistrates’ court will impose the default sentence (previously determined by the Crown Court) if the defendant fails to pay, but serving the sentence does not remove the debt. Any default sentence will run consecutively (in addition) to the substantive sentence. Interest is payable on any outstanding amount once the time to pay has expired.
2. Restraint
2.1 Basic concepts
Effectively a restraint order freezes a defendant’s assets so that they may be used to satisfy a confiscation order and prohibits a specified person(s) from dealing with any realisable property held by them. These specified persons can include third parties holding property. A restraint order may apply to all realisable property held by the defendant wherever it is in the world. This includes cash and any realisable property transferred to the defendant after the order is made and any other property which the defendant may hold but which the investigator is unaware of. Subject to the precise terms of the restraint order, the defendant may be responsible for returning all property held abroad to the jurisdiction of the court. Anyone who holds property jointly with the defendant or on their behalf may be specifically restrained from dealing with such property or property deemed to be a tainted gift. The court can make any order it believes is appropriate to ensure that a restraint order is effective.
An order cannot restrain property of greater value than the alleged benefit of the criminal conduct.
The court must discharge the restraint order if criminal proceedings do not commence within a reasonable time, an application by the prosecutor for reconsideration of the case or benefit has not been made, an application for confiscation where the defendant has absconded has not been made or upon conclusion of any proceedings. The court must also discharge the restraint order when a confiscation order is not made or the order is satisfied.
2.2 Applying for a Restraint Order
A restraint order may be obtained where there is reasonable cause to believe that that an alleged offender has benefited from their criminal conduct, and at any time after:
a criminal investigation has started with regard to an offence,
proceedings have been started for an offence but not concluded,
an application has been made by the prosecutor for reconsideration of a case, benefit or available amount, or
an application for confiscation has been made where the defendant has absconded.
A restraint order may also be obtained when:
an application has been, or is likely to be, made by the prosecutor for reconsideration of benefit where a confiscation order has already been made,
an application has been, or is likely to be, made by the prosecutor for reconsideration of the available amount where a confiscation order has already been made.
Applications for a restraint order may be made without the subject of the order being notified (to avoid the subject taking action to hide or dissipate the assets) to a Crown Court judge by:
the prosecutor; or
an accredited financial investigator.
An application for a restraint order will take the form of a written statement by a financial investigator giving details of the case and the defendant’s benefit and property (including any tainted gifts).
2.3 Serving a Restraint Order
The investigator is responsible for serving the restraint order on the defendant (and any other affected parties) as soon as possible after the court grants it. The defendant must be served with the restraint order together with the copy of the investigator’s witness statement.
3. Investigation
Part 8 of POCA provides investigation powers for confiscation and other investigations under the Act. A confiscation investigation is an investigation for the purposes of determining whether a person has benefited from criminal conduct. These investigation tools include: production orders, search and seizure warrants, disclosure orders, customer information orders and account monitoring orders. Applications for these investigative tools may only be made to a court by an appropriate officer and may be sought before, after or at the same time as an application for a restraint order. The granting of an order is dependent on appropriate statutory requirements being met.
Production Orders These allow appropriate officers to obtain information about the financial affairs of a person subject to a confiscation, money laundering or civil recovery investigation, most usually in relation to his or her bank accounts. A production order requires the person in possession or control of the material (for example, a bank or building society) to produce it to an appropriate officer to take away, or give an appropriate officer access to it within the period stated in the order. |
Search and Seizure Warrants A search and seizure warrant authorises an appropriate officer to enter and search specified premises and to seize and retain any material found which is likely to be of substantial value (whether or not by itself) to a money laundering, confiscation, detained cash, civil recovery or exploitation proceeds investigation. |
Disclosure Orders A disclosure order is an order authorising an appropriate officer to give notice to any person requiring him or her to answer questions, to provide information or to produce documents relating to any matter relevant to the investigation. This order gives extensive powers throughout a confiscation or civil recovery investigation. Thus, unlike other orders, it does not have to be applied for separately on each occasion. It is not available for money laundering investigations. |
Customer Information Orders These are court orders requiring financial institutions to identify whether the person under investigation holds or has held an account at the financial institution and to provide specified information about the customer. This may be useful where, for example, it is suspected that a person has substantial assets lodged with various unknown banks in a particular area or lodged in different names. The order allows the investigator to send written notice to all banks in the area requiring them to search for accounts held by the person under investigation. The bank may be required to search for all names known to be used by the person under investigation. Customer Information Orders are available for money laundering, exploitation proceeds and confiscation or civil recovery investigations. |
Account Monitoring Orders These allow appropriate officers to obtain account information (including transaction details) over a defined period from a financial institution for up to 90 days at a time. The order is available for confiscation, money laundering and exploitation proceeds investigations. |
Appendix (i).Example Calculation of Benefit (Particular Criminal Conduct)
Summary of offences charged
Following a house break in, cash to the value of £50,000 was stolen. The defendant was subsequently charged with a single offence of burglary contrary to section 9(1)(b) of the Theft Act 1968.
The defendant was found guilty of the above offence and asked for one further offence, relating to the theft of £1,000 from a neighbour of the principal victim to be taken into consideration.
Personal History/Lifestyle
The defendant owns a property which he inherited from his mother and is currently valued at £240,000.
The defendant claimed, when arrested, that he had spent the money he stole gambling. Enquiries indicate that he recently lost £40,000 in a local casino. Since the offence, the defendant also purchased a vehicle for £10,000. The defendant still has possession of this vehicle.
The defendant has been convicted of one previous offence of dishonesty.
The defendant’s wife does not work and has been claiming benefits.
Extent of Benefit
Particular Criminal Conduct
| Benefit derived as a result of the offences as charged: | £50,000 |
| Benefit derived as a result of the offences taken into consideration: | £1,000 |
| Total benefit: | £51,000 |
In accordance with section 80(2)(a) of POCA, the value of monies obtained should be adjusted to take account of the changes in the value of money. Using the Retail Prices Index, additional benefit as at the date of the confiscation hearing would be calculated.
| Monies obtained from particular criminal conduct | £51,000 |
| Change in value of money | £983 |
| Total benefit from particular criminal conduct | £51,983 |
Confiscation order
If the court accepts that the defendant has benefited from the proceeds of crime to the extent of £51,983 then the court should declare the benefit in that amount, or in any other amount in respect of which the court finds the defendant has benefited.
The recoverable amount is an amount equal to the defendant’s benefit from the conduct concerned. If the defendant shows that the available amount is less than the benefit, the court should make a confiscation order in that sum.
The onus is on the defendant to provide the court with full details of all his free property, including full valuations for any houses he has an interest in. He will also need to supply the court with details of the likely costs that will be incurred in realising the property.
In this example, the defendant has property valued at £240,000 and a vehicle now valued at £6,000. The available amount is therefore £246,000. As the available amount is higher than the recoverable amount, the confiscation order should be made in the sum of £51,983.
Property is all free property wherever situated and includes money, all forms of real or personal property and other intangible property. Property is free unless there is a pre-existing court order in respect of it (section 8).
Priority obligations include fines or other court orders made prior to the confiscation order.
