POCA WORK & ASSET FORFEITURE: An Introduction
POCA Work and Asset Forfeiture
Toughness and tension
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, until recent years most of the judicial and legislative attention to POCA was 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 or she 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 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 rise of civil recovery
More recently, 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) added 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 expanded substantially the scope of the civil recovery regime, and the role played in it by the magistrates’ courts.
The changes introduced by the CFA prompted a number of high-profile news stories, invariably referencing the TV drama McMafia, along with eye-watering sums and exotic details of spending and (alleged) offending. Mrs Zamira Hajiyeva, recipient of the first UWO, along with a £1 million Cartier ring and £16 million worth of goods from Harrods, may have provided most value to the press thus far, followed by Vlad Filat, the former Moldovan prime minister whose son was the respondent to an account forfeiture order. Less welcome headlines for the authorities came with the high-profile discharge of the UWO against Baker and others, with a judgment (endorsed by a refusal of permission to appeal) that heavily criticised the analysis of the evidence carried out by the National Crime Agency (NCA). Despite a judicial review in Scotland that attempted to prompt a UWO against former US President Trump, they have remained a rare beast so far.
More options, more problems
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 enabled 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 prompted by 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 or her bank account affected in various ways – a restraint order in the Crown Court, a freezing order in the High Court or the magistrates’ courts, an extended moratorium period following an SAR, a UWO, or simply a decision by a bank (more mindful, no doubt, of its own POCA risks than its duty to its customer) – depending on the circumstances (and, importantly, the preference of the investigators). Without specialist advice, he or she may quickly stumble over a legislative quagmire that has been amended so much that it now rejoices in section numbers such as 303Z19.
The future for POCA
It was in this context that the Law Commission was asked to look at various aspects of POCA, starting with the consent regime, but quickly moving on to a ‘blank slate’ review of its provisions on confiscation. Its proposals on the former were predictably modest, perhaps of most interest to those who study details like the benefit of conduct (such as cannabis sales in Canada) that is lawful overseas but would be unlawful if it occurred here. It has been much bolder on the latter, recommending the return of judicial discretion and common sense to the confiscation process, while prompting some additional resource to enforcing those orders that can reasonably be enforced.
The problem with making changes to POCA, of course, is a political one. Any change that reduces the volume of SARs, or the amount nominally subject to confiscation orders, inevitably poses problems 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.
John Binns and Richard Sallybanks
BCL Solicitors LLP