Confiscation of Assets - the perils and the pitfalls
[February 10, 2003]
Over recent years the UK government along with many others in the Western world have greatly increased the powers of the State to inquire in to and seize assets which they believe to have been obtained from the proceeds of crime. It used to be the case that confiscation would only follow in cases of drug trafficking or serious fraud cases. However in recent years the scope and use of confiscation in the course of all criminal proceedings has increased greatly in successive pieces of legislation - culminating in the Proceeds of Crime Act 2002.
Click on the headings below to browse the sections...
In this first section we cover confiscation by the court by answering four key questions.
There will also be an Assets Recovery Agency which has power to take civil proceedings to recover the proceeds of crime or to tax income for which there are reasonable grounds to suspect income or gain are derived from crime. These are dealt with in the second section.
There will also be an Assets Recovery Agency which has power to take civil proceedings to recover the proceeds of crime or to tax income for which there are reasonable grounds to suspect income or gain are derived from crime. These are dealt with in the second section.
In this first section we cover confiscation by the court by answering four key questions. Click on a question to reveal the answer.
Can I have my assets confiscated by the court or other authorities?
Yes, if
• The Courts determine that you have a criminal lifestyle and
• They find that you have benefited from it
• The Courts determine that you have a criminal lifestyle and
• They find that you have benefited from it
Having a criminal lifestyle means any of the following
• You have been convicted of an offence which is a lifestyle offence - drug trafficking, money laundering, breach of copyright, pimping etc or
• You have been involved in a course of criminal activity, meaning that you have benefited from 3 or more offences of which you are convicted in the same proceedings or convicted on at least 2 separate occasions of offences from which you have benefited or
• You have been convicted of an offence which was committed over a period of at least 6 months and you benefited from those offences
Benefiting means merely obtaining property as a result of or in connection with the offences.• You have been convicted of an offence which is a lifestyle offence - drug trafficking, money laundering, breach of copyright, pimping etc or
• You have been involved in a course of criminal activity, meaning that you have benefited from 3 or more offences of which you are convicted in the same proceedings or convicted on at least 2 separate occasions of offences from which you have benefited or
• You have been convicted of an offence which was committed over a period of at least 6 months and you benefited from those offences
How much can they confiscate?
The court will begin by presuming that any property transferred to you at any time 6 years before the current proceedings was obtained as a result of criminal conduct, that any expenditure you made in that period was funded by criminal conduct, and that any property you held at any time since the date of conviction was obtained from criminal conduct. It will also assume no other party, such as your spouse or partner, has an interest in that property.
This means they start off with the presumption that all of your property is derived from criminal conduct and may be subject to confiscation.
Then the court will add to the above any gifts (called 'tainted gifts') you have made in the 6 years before commencement of the proceedings or gifts made at any time (ie longer than 6 years ago) if they were made from property obtained as a result of criminal conduct.
This is the overall total that the court can confiscate. The amount that will actually be confiscated is the total of property you hold at time of the confiscation proceedings plus any tainted gifts, less any amounts due for taxes, fines etc., up to the overall total.
In other words, if your assets are less than the overall total, they will all be confiscated and any gifts you have made over a long period of time may be added on to the amount of the confiscation order.
When can they confiscate?
The confiscation actually takes place when an order has been made by the court, following conviction and confiscation proceedings.
If a confiscation order is made and not paid it is often the case that the court will fix a period of imprisonment in default. If the period is served and a defendant comes in to funds within a period of 6 years it is still possible for the defendant to called to pay the amount of the confiscation order even though he or she may have served a period of imprisonment in default.
However, your assets may be at risk of being frozen by a Court order at the beginning of an investigation - even before charge - and kept frozen until the end of the trial and any confiscation proceedings on conviction. In some circumstances some monies will usually be allowed for living expenses from the frozen asset but the amounts are not usually over generous.
What steps can be taken to challenge or resist invalid attempts by the authorities to confiscate assests and what should I do if faced with the threat of confiscation?
As a confiscation follows a conviction the best course is to avoid the risk of conviction and lead a blame free and lawful lifestyle. If this rather simple advice comes too late then you should instruct specialist lawyers at the earliest opportunity. The prosecution have to comply strictly with procedural requirements and it may be possible to challenge their case for procedural irregularities - see R v JOHN PALMER (2002)[2002] EWCA Crim 2202, but see also R v DALJIT SINGH SEKHON & 6 ORS (2002) CA (Lord Woolf LCJ, Holland J, Keith J) 16/12/2002.
Claims as to benefit by the prosecution may be guestimates and exaggerated and can be the subject of challenge from expert forensic accountants, instructed by specialist lawyers. Contact a specialist fraud solicitor without delay if you face the prospect of confiscation proceedings.
a) If it discovers new evidence about a convicted person's assets that was not available at the time of the confiscation hearing, it can apply to the court for a restraint order and forfeiture
b) If the court at the confiscation hearing considered the defendant had no criminal lifestyle or did not benefit from criminal conduct, and the ARA finds new evidence about lifestyle or benefit not then available, the ARA can also apply for a restraint order and forfeiture
c) If it considers the benefit found or recoverable amount determined by the court is insufficient, it can apply to the court for reconsideration
Civil recovery by the ARA
The ARA can apply to the High Court to freeze assets or appoint a receiver to take control of assets which it can establish by 'a good arguable case' is derived from crime. Note that a good arguable case is a long way from 'more likely than not'.
There will then be a full hearing at which the ARA will seek a recovery order from the Court. The ARA must establish on the balance of probabilities - more likely than not - that the property is derived from crime. Note that they do not have to prove the guilt of the holder of the property nor that it was beyond reasonable doubt that the property was derived from crime.
Taxing Criminal Proceeds
The ARA can act as the Inland Revenue where it has reasonable grounds to suspect that a person's income or gains were derived from crime - it can then assess these to income, capital gains, corporation or inheritance tax. But unlike the Inland Revenue, the ARA does not need to identify the source of income in order to raise a tax assessment.
Anyone who is subject to investigation for or charged with crime from which there are proceeds needs to be aware of these new powers. It is clear that, put together with the impending new powers on reporting money laundering, the authorities have a very powerful set of weapons to discover and recover the proceeds of crime. If you run the risk of any such proceedings contact johnwilliams@banksidelaw.net or telephone 020 7654 0225 without delay.