POCA Work & Asset Forfeiture: An Introduction

As forecast in the 2023 introduction by 33 Chancery Lane, the past year has seen a flurry of activity in the proceeds of crime and asset forfeiture arena.

Home Office statistics demonstrate that the sector is highly lucrative. Although assets recovered dropped by 29% in the year ending March 2024, they still generated GPB243.3 million, with GPB17.8 million paid as compensation to victims. Further, GPB885.9 million of assets were restrained, seized or frozen, representing an increase of 55% compared to the previous year. However, this is no time for complacency – once adjusted for inflation, the overall figures for proceeds of crime recovered show a slight downward trend.

Aside from these financial results, proceedings under the Proceeds of Crime Act 2002 (POCA) have also attracted significant media attention. In December 2023, a restraint order was granted over circa GPB75 million of assets linked to Baroness Mone and her husband Douglas Barrowman, in relation to the National Crime Agency (NCA) investigation into allegations of fraud and bribery related to contracts for masks and gowns during the COVID pandemic. That same month, the Crown Prosecution Service obtained a property freezing order over Bitcoin valued at more than GPB2 billion; believed to be the largest amount ever frozen under Part 5 of POCA. In September 2024, the Financial Conduct Authority (FCA) charged the first individual with unlawfully running a network of crypto ATMs without FCA registration

Indeed (and as predicted), crypto-assets have been a major focus. The Economic Crime and Corporate Transparency Act 2023 introduced new seizure, detention, freezing and forfeiture powers into POCA that are specific to crypto-assets. These are mirrored on those for cash, accounts and listed assets, but with a “twist” – for example, there is no provision for administrative forfeiture, and freezing orders over crypto-wallets can be extended beyond the usual two-year limit where there is an outstanding request for mutual legal assistance. A new Code of Practice on the Recovery of Cryptoassets has also been published to complement the new measures.

The money laundering decision in R (on the application of World Uyghur Congress) v National Crime Agency v Spotlight on Corruption [2024] EWCA Civ 715 generated widespread attention, dealing with a refusal by the NCA to investigate supply chains for cotton products manufactured by the Uyghur people in Chinese labour camps and imported into the UK for onward trade. The Court of Appeal ruled that the adequate consideration exception to Section 329 of POCA does not automatically “cleanse” funds of their criminal character. Aside from the obvious implications for transactions along the supply chain, the door has been left wide open for Part 5 POCA applications in respect of such monies.

More generally, POCA cases have featured regularly in the courts throughout 2024. In both R v Gross [2024] EWCA Crim 21 and R v Du [2024] EWCA Crim 713, the Court of Appeal addressed the level of knowledge or suspicion required for money laundering; in National Crime Agency v Feyziyev [2024] EWHC 501 Admin, the High Court dealt with the principles on an application to discharge a property freezing order. In the regulated sector, the decision in Solicitors Regulation Authority v Sa’id [2024] EWHC 1619 has provided some much-needed reassurance to those undertaking enhanced due diligence, re-emphasising the risk-based approach to such checks, and the scope for professional judgement.

It has not all been plain sailing. Unsurprisingly, POCA proceedings are not immune to the chronic delays suffered across the justice system. In R v Haden [2024] EWCA Crim 344, a series of 10 conjoined appeals, the Court of Appeal held that the confiscation postponement provisions under Section 14 of POCA 2002 are an enabling, rather than limiting, provision, that the court retains jurisdiction until confiscation is ultimately determined, and that extensions of time can be granted in exceptional circumstances (to be interpreted broadly), even when the application is made late, or not at all.

The interaction between civil and criminal proceedings remains a frequent complicating factor in proceeds of crime and forfeiture work, as demonstrated in two recent cases. In Financial Conduct Authority v Wealthtek LLP (In Special Administration) [2024] EWHC 424 (Ch), the High Court granted the FCA a 12-month stay of civil proceedings, where it was in the interests of justice to allow it to prioritise its criminal investigation, in circumstances where there was an almost identical overlap in the facts and matters relied upon in the parallel proceedings. In Ahmet v Tatum [2024] EWCA Civ 255, the Court held that there was nothing inherent in POCA to prevent a third party from turning to the civil courts to exercise their rights during the currency of confiscation proceedings; sometimes, civil and confiscation proceedings may co-exist.

Looking to the year ahead, legislative activity continues apace. The Criminal Justice Bill, currently at the Report Stage, promises extensive additions and amendments to POCA. In particular, a new “principal objective” is proposed – to “deprive the defendant of his or her benefit from criminal conduct, so far as within the defendant’s means”. The bill also seeks to simplify and codify current practice (for example, the risk of dissipation test for restraint), and to prohibit costs orders against prosecutors and accredited financial advisers in restraint cases, in the absence of unreasonable, dishonest or inappropriate behaviour (bringing this in line with the test applied in Part 5 POCA cases under R (on the application of Perinpanathan) v City of Westminster Magistrates’ Court [2010] EWCA Civ 40)). How many of these changes will ultimately make it into the final Act, and whether they will represent a pure “tidying” exercise, as opposed to real reform, remains to be seen.