POCA WORK & ASSET FORFEITURE: An Introduction

Last year’s Directory Introduction reflected on the changes to the Proceeds of Crime Act 2002 (POCA) and its areas of growth and development over two decades. POCA is essentially a civil property statute in a criminal context dealing with difficult and overlapping issues (and often multiple competing jurisdictions). Although decisions of the appellate courts, early in POCA’s life, sought to endorse its clarity of language and operation, the converse is now true in practice. It is necessarily complicated, and has become more so as new sections are added – at the time of the last amendments, the statute was nearly twice its original size. In part this is a result of the need for law enforcement to evolve as the ways we hold assets evolve, and in part it is patching the chinks that once existed in the statute’s legislative armour. Where once there was restraint and cash forfeiture, there are now separate provisions and permissions to search for and seize cash, listed assets, the balances in bank accounts and property which may later be capable of restraint and freezing. It is no wonder that the Supreme Court described the Act as “complex and difficult to interpret” (Harvey [2017] AC 105).

This year saw a further two asset recovery cases reach the Supreme Court in June (making a total of 34 cases to trouble it, or its predecessor the House of Lords); no other area of law has occupied so much of the time of our most senior court since the Millennium. In Luckhurst [2022] 1 WLR 3818, the issue was whether assets can be released from a criminal restraint order to pay for legal costs in civil proceedings (such as for torts or equitable wrongs) founded on the same or similar allegations as those of the criminal offence. The Court determined that on the correct interpretation of s.41(4) POCA, legal expenses in respect of related civil proceedings are not precluded, but are controlled by the courts’ discretion in the same way as, for example, living expenses. The second was Andrewes [2022] UKSC 24, which decided that in a CV fraud case, whilst a confiscation order made in respect of the full net earnings would amount to "double disgorgement" (which would be disproportionate), it was proportionate to confiscate the difference between the higher earnings made as a result of the fraud and what the defendant would have made earned without fraud because if no order were made, the fraudster would be profiting from his/her crime. The Court also clarified that the burden of proving that it is proportionate to make confiscation order in the recoverable amount (see s.6(5)) is on the prosecution.

As noted previously in this section, a recurring theme is the misallocation by Parliament of complex civil law issues to the Crown Court which may not be equipped properly to decide them and may not be given the best assistance absent specialist advocates. The most recent example is Moore [2021] EWCA Crim 956, where the Court of Appeal took the view that the issues raised (common intention and ‘Quistclose’ trusts arising out of a commercial relationship) were best suited to the Business and Property Courts. A broadening area of work centres on the tensions that exist between POCA and insolvency as demonstrated by the recent case of CPS v Aquila Advisory Ltd [2021] UKSC 49, where the Supreme Court unanimously decided that the company’s property rights were not usurped by confiscation orders made against its directors. Such conflicts arise in many ways but particularly in restraint and confiscation, cash forfeiture and account freezing and forfeiture order proceedings. Similarly, in High Court proceedings involving fraud, company assets, freezing orders and tracing claims, conflicts often arise if POCA orders are in play. Specialist advocates are routinely required, and regularly instructed, by interested parties, the Official Receiver, Special Administrators, companies, third parties and of course the leading prosecution agencies.

Investigating agencies and prosecuting authorities are making increasing use of their civil recovery powers under POCA, both in relation to domestic investigations and in response to international requests for assistance. Recognising the increasing use of cryptocurrencies in unlawful conduct, in DPP v Briedis and Reskajs [2021] EWHC 3155 (Admin) it was held that cryptocurrencies, as cryptoassets, are capable of falling within the very wide definition of “property” in s.316(4)(c) POCA for civil recovery purposes. Given the peculiarities and nuances of cryptoasset ownership, tracing and movement, practitioners are seeing a tussle between law enforcement and suspects as – first – different methods of investigation and restraint are required in this novel and developing area, and – secondly – the evidential burden on suspects to document or disprove ownership proves elusive to grasp.

Practitioners have also observed the continuation of the growing trend to obtain in the Magistrates’ Court account freezing and forfeiture orders, together with cash seizure and forfeiture orders, presumably based firmly on the ease of obtaining at least the initial orders, as well as the significantly lower cost and lower civil standard of proof than required to prosecute criminals successfully on often similar facts in the criminal courts. As the cuts to justice continue, the volume, length and complexity of such cases is likely to increase, notwithstanding that a question arises as to whether or not the summary processes are being correctly engaged in all cases. This is worth considering, as the legislative intent was to allow law enforcement agencies to take “quick and effective action against funds held in bank accounts” where “their values are below the limits for civil recovery” (Ben Wallace, 2016). Yet it is now commonplace for forfeiture to be sought over accounts holding well above £10,000 - the threshold amount for civil recovery (s.287).

Moving to the Crown Courts, and the bread-and-butter instructions for practitioners in this field, we have seen a troubling increase in opportunistic or disproportionately inflated applications in cases prosecuted other than by the CPS, SFO or FCA. Those falling foul of Local Authority or more minor prosecution agency matters would be well advised to seek specialist assistance; in the maelstrom of POCA, principles are vital, and the outcome can be materially improved by early intervention and legal rigour.

One area to watch is going to be confiscating the assets of persons sanctioned under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA). SAMLA is the main legislative vehicle for the imposition of sanctions, including those against Russians or others connected to President Putin, following the invasion of Ukraine. It expressly provides for sanctions which comprise asset freezes, restrictions on dealing economically with sanctioned persons and the seizure of particular types of property; none of these measures amount to permanent confiscation. Legislative changes may emerge which will inevitably raise issues as to the vexed question of proportionality, and whether it is right confiscate property in disapproval of the political associates of the owner and to pursue UK foreign policy objectives.

by Kennedy Talbot QC, Martin Evans QC, Barry Stancombe, Fiona Jackson and Catherine Collins