In the UK the recovery of the proceeds of crime is regulated by the Proceeds of Crime Act (POCA) 2002.
This Act brought together two separate confiscation regimes, one was for drug trafficking offences and one was for other offences. This included several types of recovery such as criminal confiscation and civil recovery. It also extended the confiscation powers to include financial crimes and provided power to the courts to confiscate assets based on assumptions that the origins of the assets were from criminal activity.
Confiscation orders allow the conviction of offenders. The Act allows the recovery of proceeds gained either from offences for which the offender has been convicted or from their general criminal conduct. Such orders can be made where it is established that the offender has led a “criminal lifestyle“ and that such lifestyle was based upon the proceeds of criminal activity and the proceeds of crime. In such cases, all of the offender’s assets going back for six years can be treated as assets of the criminal conduct. This will be so unless the offender can prove otherwise. The value of the confiscation order will depend on two factors.
These are the amount of benefit gained from criminal conduct and the amount of assets available for confiscation. The smaller of the two amounts is used to calculate the confiscation order. The value of criminal benefit is calculated using the total revenues of the offender and not the net profits.
One of the problems for such actions to recover assets is the underuse of restraint orders to freeze assets quickly before offenders dissipate or dispose of criminal assets. The Serious Crime Act 2015 enhanced the provisions of the Act to make matters easier to apply for restraint orders.
Following the revelations of the Panama Papers and the use of “tax havens” to hide the assets of criminal activities, the Criminal Finance Act 2017 amended the Act. This introduced further powers to improve confiscation. This included the now famous Unexplained Wealth Orders.
In June 2020 in the case of National Crime Agency v Baker & Others  EWHC 822 (Admin) the Court of Appeal dismissed an application to appeal the discharge of three unexplained wealth orders. This was on the basis that any appeal had no real prospects of success, the ruling followed the High Court finding that there were serious errors in the National Crime Agency’s approach to obtaining and maintaining the orders.
The Court of Appeal held that the Respondents had not provided cogent rebuttal evidence showing that the property did not in fact belong to a person who was alleged to be connected and involved in serious crime.
In granting Unexplained Wealth Orders, the High Court must be satisfied that: –
1. The Respondent holds property worth over £50,000;
2. There are reasonable grounds to suspect that the Respondent’s lawful income would not be sufficient to purchase the property;
And that one of the following applies:
1. The Respondent is a politically exposed person or connected to a politically exposed person;
2. There are reasonable grounds to suspect that the Respondent is, or has been, involved in serious crime; or
3. A person connected with the Respondent has or has been, involved in serious crime.
Sections 1–2 of the Criminal Finance Act 2017 allows the High Court to grant an interim freezing order over the assets of the Respondent, allowing them what is often a short period of time to disclose how they legitimately came to own such assets. Where the respondent fails to comply there is a presumption that the property is the proceeds of crime for the purposes of any civil recovery proceedings.
The civil recovery proceedings route is much simpler, faster and a less expensive route for the authorities to recover the assets of criminal conduct that would normally take many years and cost substantial amounts of money. It also removes the high bar set for criminal proceedings.
If you would like to discuss any issues raised by this article or connected to it, please contact either Shahid Miah (partner) or Tajinder Barring (associate) at DBT & Partners on 0207 416 6745.