POCA WORK & ASSET FORFEITURE: An Introduction

Contributed by John Binns, Richard Sallybanks and Guy Bastable, BCL Solicitors LLP

The continuing development of the various aspects of the Proceeds of Crime Act 2002 (POCA) can be best understood in terms of the tension necessarily involved in what is both an increasingly complex and technical area of the law on the one hand, and a political hot potato on the other. As we near the end of its second decade of operation, that tension may now be approaching its high-water mark.

As most criminal practitioners will know, most of the judicial and legislative attention to POCA has traditionally been focused on the regime for imposing confiscation orders on convicted defendants, which is both draconian and often baffling for the uninitiated. Though from first principles there would seem little basis to argue with a regime that required the court to assess a defendant’s ‘available amount’ and ‘benefit’ from criminal conduct, whether he had a ‘criminal lifestyle’, had ‘hidden assets’ or had made any ‘tainted gifts’, serious difficulties with it have arisen for two reasons. The first is that POCA defines literally all of the relevant concepts (starting, indeed, with ‘confiscation’ itself – many defendants are shocked to find that the order can effectively force them to part with even ‘clean’ assets), in a way that runs counter to most people’s (even most lawyers’) understanding of the words used. The second is that almost every important step in the process excludes the possibility of judicial discretion, often actively preventing judges from doing justice to the particular case, preferring instead to be seen to be inflexibly tough on the proceeds of crime.

The latter problem was resolved to an extent by the Supreme Court in the case of R v Waya [2012] UKSC 51, which for the first time imposed a requirement that judges should not make orders that represented a disproportionate interference with the defendant’s right to property. That requirement was then inserted into the words of POCA itself, but many were disappointed that Parliament did not also then grasp the opportunity for broader reform. Instead, the other provisions of the Serious Crime Act 2015 (SCA) made it easier to restrain assets pending confiscation, and increased the maximum default sentences available for defendants who failed to pay the sums ordered.

Since then, the focus of legislative change has been on other aspects of POCA, principally its regime for civil recovery of assets that represent the proceeds of (or, in some cases, are intended for use in) crime, without the need for a criminal investigation or conviction. The introduction by the Criminal Finances Act 2017 (CFA) of Unexplained Wealth Orders (UWOs) adds an intriguing potential first step to that process, by enabling the High Court to order a holder of property (in certain circumstances, including where they are a Politically Exposed Person (PEP), or suspected of involvement in serious crime) to explain their interest in it and how they came to acquire that interest. Provisions to enable the seizure, detention and forfeiture of certain personal assets, and the freezing and forfeiture of funds in bank and building society accounts, also have the potential to expand substantially the scope of the civil recovery regime, and the role played in it by the magistrates’ courts.

A less eye-catching, but potentially just as important, set of changes was made by the CFA to POCA’s ‘consent regime’, by which a person can obtain a defence to an act that would otherwise amount to money laundering by applying for consent to do it, and awaiting the end of a specified period. The new provisions enable multiple extensions of that period by the Crown Court, which could effectively block access to assets (absent even the grounds for suspicion necessary to freeze assets under other parts of POCA) for nearly eight months in some cases. The trigger for the process will typically be a Suspicious Activity Report (SAR) by a bank or other regulated-sector business, perhaps on the basis of a safety-first policy or a piece of compliance software.

The net effect of all of this is a public asset recovery regime that, having evolved in a piecemeal fashion, is increasingly complex and confusing even for investigators, let alone those on the receiving end. As an example, a PEP accused of corruption could now find his bank account affected by a restraint order, a freezing order in the High Court or the magistrates’ courts, an extended moratorium period following a SAR, or a UWO, depending on the particular circumstances and (importantly) the preference of the investigators. Without specialist advice, he may quickly stumble into a legislative quagmire.

In this context it is welcome that the Law Commission has been asked to look at various aspects of POCA, starting with the consent regime but quickly moving on to a ‘blank slate’ review of its other provisions, in particular those relating to confiscation. The review will take some time and there will no doubt be countless practitioners keen to share horror stories of how badly (not just for defendants) the system works in practice.

In terms of constructive proposals for change, there will doubtless be a great deal of consensus that much could be achieved at a stroke by allowing for greater judicial discretion in the process. Who could argue, for instance, with the proposition that the judge should be able to decide what assets a defendant truly has available to him, how much he has truly benefited from crime, whether he truly has led a criminal lifestyle (and if so, for how long), or whether he has truly hidden assets, or given them away, as a means of defeating the process?

The problem with this arguably common-sense approach, of course, is a political one. The result of such a change would be fewer confiscation orders made, in lower amounts, with fewer and lower default sentences being imposed on convicted defendants as a result of non-payment. While the resulting orders may be both fairer and easier to enforce, this may prove an unpalatably difficult set of reforms for the government, whose main objective in this area is likely to remain a very simple one: to send a clear message, not just to offenders but to the public at large, that crime does not pay.