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Proceeds of Crime Guidance: Confiscation and Ancillary Orders - post POCA 2002

Revised June 2009

 

Principle

Confiscation Order

The purpose of confiscation proceedings is to deprive the defendant of the financial benefit that he or she has obtained from criminal conduct. To do this the court must decide whether the defendant, has a criminal lifestyle. If it decides that he or she does have a criminal lifestyle then Court calculates the benefit from general criminal conduct using the assumptions set out in the Proceeds of Crime Act 2002 (POCA). If it decides that he or she does not have a criminal lifestyle, the Court will instead calculate the benefit from particular criminal conduct (the actual offences of which the defendant is convicted).

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Guidance

Does POCA apply?

Were all of the offences charged or indicted in the proceedings committed after 23 March 2003? If the answer is yes, then POCA will apply. If the answer is no, then the earlier legislation will apply and prosecutors should refer to the guidance on the earlier legislation.

TIC's do not affect the choice of legislation and may date from before or after the commencement of POCA.

N.B.The effect of the transitional provisions is that POCA will not necessarily be the applicable law for the making of a confiscation order in every case where a restraint order has been made pursuant to the Act.Please refer to the Table of Transitional Provisions set out in the Proceeds of Crime: General Guidance in the Legal Guidance.

Identifying a POCA Confiscation Case

The following factors should be considered:

  • Does the defendant have a criminal lifestyle as defined in section 75 POCA?
  • Has the defendant benefited from general criminal conduct?
  • Has the defendant benefited from particular criminal conduct?
  • Has a restraint order been obtained? A restraint order can only be obtained to preserve assets for a confiscation order and so confiscation will usually be pursued. If, in exceptional circumstances, the reviewing lawyer takes the view that he/she will not make a confiscation application, the restraint order will have to be discharged urgently.
  • The likely amount of the confiscation order, the greater it may be, the more appropriate it will be to require the court to carry out a confiscation inquiry. Nevertheless, it may be sensible to obtain a nil or nominal order in a case where the defendant has benefited, so that an application can be made to increase the sum ordered, if it subsequently becomes apparent that the defendant has property.
  • If there is a victim, whether civil proceedings are being pursued. If they are and an injunction is in place freezing all the defendant's assets, confiscation is unlikely.
  • Bankruptcy of the defendant. If this has occurred, the defendant's assets will vest in the trustee in bankruptcy, the person responsible for settling the defendant's debts. Confiscation may not be viable.
  • The feasibility of enforcing a confiscation order if one were to be made.
  • The question of compensation should be left out of account when considering whether to treat a case as a confiscation case. Confiscation is not excluded if a compensation order in the criminal proceedings appears to be likely. Neither does confiscation cut across compensation. There is provision for compensatees to be paid out of sums realised under a confiscation order.

Confiscation and forfeiture orders compared
If the court can make a forfeiture order depriving the defendant of the major part of his assets, this is preferable to a confiscation order. A forfeiture order immediately deprives the defendant of title, whereas a confiscation order is only an order to pay a sum of money and is enforced as if it were a fine. If confiscation is invoked the court will not usually be able to make a forfeiture order.

For more information see the section on deprivation of property in Sentencing: Ancillary Orders elsewhere in the Legal Guidance.

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Defined terms

Criminal lifestyle

A person only has a criminal lifestyle (section 75) if the offence satisfies one or more of these tests:

  1. it is specified in schedule 2;
  2. it constitutes conduct forming part of a course of criminal activity; and/or
  3. it is an offence committed over a period of at least six months and the defendant has benefited from the conduct which constitutes the offence.

The criminal lifestyle test is not satisfied unless the defendant has obtained benefit of at least £5,000 in the cases of (2) and (3), however, the value of any TIC's in respect of offences started on or after 24 March 2003 will count towards this sum. TIC's in respect of offences committed before 24 March 2003 will only count towards the sum of £5,000 in respect of conduct forming a course of criminal activity based on at least two previous convictions on separate occasions over the last six years (section 75(3)(b)).

Schedule 2 specified offences

The following offences are specified in Schedule 2:

  • drug trafficking;
  • money laundering offence;
  • directing terrorism;
  • people trafficking;
  • arms trafficking;
  • counterfeiting;
  • intellectual property;
  • pimps and brothels;
  • blackmail;
  • an offence of attempting, conspiring, inciting, aiding, abetting, counselling or procuring an offence specified in Schedule 2.

A course of criminal activity

A course of criminal activity (see section 75(3)) is when the defendant:

  • has been convicted in the current proceedings of four or more offences on the same occasion, each of those offences having been committed after 23 March 2003 and from which he or she has benefited; or
  • has been convicted of one offence committed after 23 March 2003 from which he or she has benefited on this occasion and within six years of the start of the most recent proceedings been convicted on at least two separate occasions of an offence, which may have been committed before or after 23 March 2003 and from which he or she has benefited.

Criminal conduct

This is conduct, which is an offence in England and Wales or would be an offence if it had occurred in England and Wales (section 76(1)).

General criminal conduct

It is all of the defendant's criminal conduct.It is immaterial whether the conduct occurred before or after the passing of the Act or whether property constituting a benefit was obtained before or after the passing of the Act (section 76(2)).

Particular criminal conduct

Section 76 (3) sets out the definition of particular criminal conduct and it includes the offence(s) of which he or she was convicted, any other offences of which he or she was convicted in those proceedings and offences that the court will take into consideration when deciding his or her sentence.

The role of third parties in confiscation proceedings

Third parties have no locus in the confiscation proceedings until the enforcement stage. The Court will determine the recoverable amount based upon it's finding as to the value of the defendant's property.This may include a proportion of property owned jointly with others, in which case any finding by the Court as to the defendant's interest in that property will not be binding on third parties, as they will not have been a party to the proceedings. If the third parties wish to contest the extent of their interest, then they must raise this in the enforcement proceedings (See: Enforcement: Proceeeds of Crime)

Tainted gifts

Third parties may also become involved if they are the recipients of 'tainted gifts'. The term 'gift' includes a sale at a significant undervalue as at the date of transfer. The definition of'tainted gift' depends upon whether or not the defendant has a criminal lifestyle. A gift may be tainted whether it was made before or after the commencement of POCA (section 77(8)).

If the defendant has a criminal lifestyle and has therefore benefited from his general criminal conduct, it will be a gift made by the defendant

  • at any time in the period beginning six years before the date of commencement of proceedings; or
  • at any time if it can be shown to be property obtained as a result of or in connection with general criminal conduct or which (wholly or partly and directly or indirectly) represented in the defendant's hands property obtained as a result or in connection with his general criminal conduct.

If the defendant does not have a criminal lifestyle and the court is therefore concerned with calculating his or her particular criminal conduct, it is a gift made by the defendant at any time after the date on which the offence was committed and this will be the earliest date if there are two or more offences.Where there is a continuing offence, it will be any time after the first occasion when it is committed.If there are TIC's, it will be a gift made at any time after the date on which the earliest TIC was committed.

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Procedure

An overview

The main points of the scheme are:

  • The defendant is committed for sentence and/or for consideration of a confiscation order, or is convicted in the Crown Court;
  • The prosecutor asks or the Court considers it appropriate to consider making a confiscation order (Note: No written notice is required);
  • The court decides whether the defendant has a criminal lifestyle;
  • If he or she does have a criminal lifestyle the Court calculates the benefit from general criminal conduct using the assumptions;
  • If he or she does not have a criminal lifestyle, the Court will calculate the benefit from particular criminal conduct (the actual offences of which the defendant is convicted);
  • The Court determines the recoverable amount;
  • The defendant may prove that he or she cannot pay the recoverable amount (whether this is the calculation of general criminal conduct or the calculation of particular criminal conduct), but can pay the 'available amount'. If the defendant is able to prove this, then the recoverable amount will be equal to the available amount;
  • The Court must then make a confiscation order in the recoverable amount;
  • If the Court makes a confiscation order in the available amount, it must include a statement of its findings that sets out how it arrived at that amount;
  • If a victim has, or intends to start civil proceedings in respect of the criminal conduct, the Court has a discretion to decide whether or not to make an order;
  • On the application of the prosecutor, the Court may, if it thinks it appropriate, make a confiscation order against a defendant, who has absconded. In the case of a non-convicted defendant, the defendant must have absconded for a period of at least two years;
  • When the defendant ceases to be an absconder, the Court may vary the order;
  • Whether or not a confiscation order has been made, the prosecutor may apply within six years of the date of conviction for the Court to reconsider, where there is evidence which was not originally available to the prosecutor;
  • Both the defendant and the prosecution have a right of appeal (with the leave of the Court of Appeal) against the confiscation rulings.

What must the prosecutor do?

Commit confiscation cases to the Crown Court

Section 70 POCA needs to be read in conjunction with section 6(2)(c). Its effect is that a person may be committed to the Crown Court for confiscation proceedings following a conviction of any offence, indictable or summary, in the Magistrates' Court. Where the prosecutor asks the magistrates to do so, the court must commit the defendant to the Crown Court under this section.

Where the defendant is convicted of an either way offence, subsection (5) requires the Magistrates' Court to state whether it would have committed the defendant to the Crown Court for sentence anyway. This subsection is required because, under section 71, the Crown Court's sentencing powers following a committal for confiscation are normally limited to the sentencing powers the Magistrates' Court would have had in the same case.

Section 71 provides that, where a person is committed to the Crown Court for confiscation proceedings, the Crown Court will also assume responsibility for the sentencing process.

Ask the Court to proceed under section 6 POCA

Section 6 (3)(a) POCA provides that the prosecutor merely has to ask the court to proceed under section 6.Provided that the first condition is also satisfied, namely that the defendant has been convicted of an offence before the Crown Court, or committed for sentence or for consideration of the making of a confiscation order, the court must then go on to consider whether the defendant has a criminal lifestyle.

No formal written notice is served by the prosecution, as was the case in the Criminal Justice Act 1988.

Serve Prosecutor's Statement of Information

If the court is proceeding with confiscation, then the prosecutor must, when directed by the court, serve upon the court and the defendant a statement of information as soon as practicable.

Content in all cases

The information in this statement is provided by the financial investigation officer from his enquiries and should include (see Rule 5(2) of the Crown Court (Confiscation, Restraint and Receivership) Rules 2003 (SI 2003 No. 421)):

  • a signed declaration by the person making the witness statement to the effect that the witness statement is true to the best of his knowledge and belief and that he made the statement knowing that, if it were tendered in evidence, he would be liable to prosecution if he wilfully stated in it anything which he knew to be false or did not believe to be true;
  • the name of the defendant;
  • the name of the person by whom the statement is made and the date on which it is made;
  • where the statement is not given to the Crown Court immediately after the defendant has been convicted, the date on which and the place where the relevant conviction occurred.

Content where criminal lifestyle

The statement should include information that the prosecutor believes is relevant in deciding, whether the defendant has a criminal lifestyle, whether he or she has benefited from his or her general criminal conduct, and the extent of the benefit from such conduct.

The statement must also include information that the prosecutor believes is relevant to helping the court to make the required assumptions, or to decide that it may not make an assumption.

Content where no criminal lifestyle

If the prosecutor does not believe that the defendant has a criminal lifestyle, the statement of information is a statement of matters that the prosecutor believes are relevant in deciding whether the defendant has benefited from his or her criminal conduct, and details of the extent of the benefit from the conduct.

The prosecutor may tender further statements at any time or in a period specified by the court.

Consider the Defendants Response to Statement of Information

If the prosecutor has given a statement of information to the court, by virtue of section 17 POCA, the court may order the defendant to indicate in writing the extent to which he or she accepts the each allegation in the statement, and so far as he or she does not accept the statement give particulars of any matters he or she proposes to rely on.

If the defendant fails to comply with an order of the court he or she may be treated as accepting every allegation contained in the statement except any allegation in respect of which he or she has complied with the particular requirement, or any allegation that he or she has benefited from his general or particular criminal conduct.

If the defendant accepts an allegation, the court may treat that as conclusive in respect of the matters to which it relates.However, no admission that the defendant has benefited from criminal conduct is admissible as evidence in proceedings for an offence.

Consider whether to ask the Court to make a Disclosure Order

At any time during confiscation proceedings the court may, for the purpose of obtaining information to help it carry out its functions, order the defendant to disclose such information as the court may specify, and provide that information in the manner and within the time the court directs (see section 18 POCA).

If the defendant fails, without reasonable excuse, to comply with the court order the court may draw such inference, as it feels appropriate.

If the prosecutor accepts an allegation made by the defendant the court may treat the acceptance as conclusive of the matters to which it relates.

Ask the defendant to sign authorities

The prosecutor at the confiscation hearing should give the defendant the opportunity to sign authorities to allow the realisation of certain assets.

Apply for confiscation orders against abscondees

On the application of the prosecutor, the Court may, if it thinks it appropriate, make a confiscation order against a defendant, who has absconded (section 27 and 28 POCA). In the case of a non-convicted defendant, the defendant must have absconded for a period of at least two years.

Some provisions, either do not apply (section 10 POCA assumptions, for example), or may be modified in the case of an absconder (see section 27(5) and (6)). It will be necessary to consider what effect this may have on a particular case.

When the defendant ceases to be an absconder, section 29 POCA allows the Court to vary any order made by virtue of sections 27 and 28.

Check the content of the Confiscation Order

The Confiscation Order should include the following:

  • The amount of the Confiscation Order in sterling.
  • The date that the Confiscation Order is made.
  • The default sentence for non-payment of the Confiscation Order and that the service of a term of imprisonment in default will not expunge the debt and notice that that the enforcing magistrates court has no power to remit all or part of the order.
  • The time to pay should be specified on the Confiscation Order. To be deleted as appropriate:
    • Payment is required forthwith
    • Payment is to be made in full by......
    • Payments are to be made as follows.......
  • Interest is payable on the outstanding balance of the Confiscation Order from the date upon which the Confiscation Order is due to be paid. The rate of interest is the same rate as that for the time being specified in section 17 of the Judgments Act 1838. The rate is currently 8% per annum.

A schedule or schedules representing the Judge's Ruling(s) as to the benefit obtained, the realisable assets and their location is to be attached to the confiscation order. This schedule should be drawn up and agreed by both counsel.

Refer applications to reconsider a confiscation order

Whether or not a confiscation order has been made, the prosecutor (or in the case of a reconsideration of the available amount, the receiver) may apply within six years of the date of conviction for the Court to reconsider a decision not to make an order, or to reassess the defendant's benefit and/or the available amount (see sections 19 to 22. There must be evidence, which was not originally available to the prosecutor. Prosecutors should refer to POCA for the different bases upon which assessments are made on a reconsideration.

The decision as to whether to apply to the Crown Court for reconsideration of a confiscation order should be referred to a Level E, with advice taken from the CCU OCD.

Rule 7 of the Crown Court (Confiscation, Restraint and Receivership) Rules 2003 requires that applications under sections 19, 20, and 21 should be in writing and give details of the name of the defendant; the date on which and the place where any relevant conviction occurred; the date on which and the place where any relevant confiscation order was made or varied; the grounds for the application; and an indication of the evidence available to support the application.

The application must be lodged with the Crown Court and be served on the defendant at least 7 days before the date fixed by the court for hearing the application, unless the Crown Court specifies a shorter period.

Rule 8 of the Crown Court (Confiscation, Restraint and Receivership) Rules 2003 applies to section 22 applications for a reconsideration of the available amount and requires that the application should be in writing and may be supported by a witness statement. The application and any witness statement must be lodged with the Crown Court served at least seven days before the date fixed by the court for hearing the application, unless the Crown Court specifies a shorter period on

  • the defendant;
  • the receiver, if the prosecutor is making the application and a receiver has been appointed under section 50 or 52 of the Act; and
  • if the receiver is making the application the prosecutor

What must the court do?

Proceed under section 6 POCA

The Crown Court must proceed under section 6 POCA, if two conditions are met.

The first condition is that the defendant:

  • is convicted of an offence or offences in proceedings before the Crown Court; or
  • is committed to the Crown Court for sentence; or
  • is committed to the Crown Court with a view to a confiscation order being made.

The second condition is:

  • the prosecutor asks the court to proceed; or
  • the court considers it appropriate to do so.

Decide on the timing of the hearing - Postponement

A court may proceed with confiscation before sentencing or postpone the confiscation proceedings for a specified period. If the court postpones the making of the confiscation order it can sentence the defendant for the offence or offences. It must not impose any financial penalty or order as this may prejudice the making of a confiscation order. As a result it must not impose a fine, or a compensation order under s130 of the Powers of Criminal Courts (Sentencing) Act 2000 or a forfeiture order under the Misuse of Drugs Act 1971, or a deprivation order under the Sentencing Act 2000 or a forfeiture order under the Terrorism Act 2000.

Section 14(11) POCA states that a confiscation order must not be quashed only on the ground that there was a defect or omission in the procedure connected with the application for or the granting of a postponement.This section is intended to prevent some of the procedural problems encountered under the previous legislation.

A postponement may be obtained on application by the defendant, or prosecutor, or by the court of its own motion. By virtue of rule 6 of the Crown Court (Confiscation, Restraint and Receivership) Rules 2003, no hearing is required. The period of postponement should not be for more than two years from the date of conviction unless there are exceptional circumstances.

Where the defendant appeals against conviction, the postponement must not exceed three months from the date the appeal is finalised (if outside the two-year period) unless there are exceptional circumstances.

Once the proceedings have been postponed the court may then sentence the defendant but must not impose any fine or other financial order on him.

The defendant may be sentenced at any time during the period of postponement in order that sentence is not delayed pending confiscation. However, when sentencing, the court may not impose a fine or ancillary order during the postponement period because it needs to know the amount of the confiscation order before it does. The court may vary the sentence within 28 days of the end of the postponement by which time the amount of the confiscation order will be known and the court may make one or more such disposals. This allows for the forfeiture of drugs to be ordered in particular.

Decide whether the defendant has a criminal lifestyle

The court must then decide whether the defendant has a criminal lifestyle (section 6(4)(a) and section 75 POCA).Please refer to the definition of criminal lifestyle given above.

Calculate the benefit from the general or criminal conduct

The Court must (see section 6(4)(b) and section 8 POCA):

  • if it finds that the defendant has a criminal lifestyle, decide whether he or she has benefited from his or her general criminal conduct and, if he or she has benefited, calculate the benefit from general criminal conduct; or
  • if it finds that the defendant does not have a criminal lifestyle, decide whether he or she has benefited from his or her particular criminal conduct and, if he or she has benefited, calculate the benefit from particular criminal conduct.

The value of property

For the purposes of calculating benefit obtained as a result of general or particular criminal conduct, the value of any property obtained will be assessed as the greater of the following two values:

  • the market value at the time that the property was obtained adjusted to take account of changes in the value of money between the date that it was obtained and the date of the confiscation hearing; or
  • the market value as at the date of the confiscation hearing.

Property

Property is all free property wherever situated and includes money; all forms of real or personal property; and things in action and other intangible or incorporeal property.

Free property

Property is free unless an order is in force in respect of it under any of these provisions:

  • section 27 of the Misuse of Drugs Act 1971 (c. 38) (forfeiture orders);
  • Article 11 of the Criminal Justice (Northern Ireland) Order 1994 (S.I. 1994/2795 (N.I. 15)) (deprivation orders);
  • Part 2 of the Proceeds of Crime (Scotland) Act 1995 (c. 43) (forfeiture of property used in crime);
  • section 143 of the Sentencing Act (deprivation orders);
  • section 23 or 111 of the Terrorism Act 2000 (c. 11) (forfeiture orders); and
  • section 246, 266, 295(2) or 298(2) of POCA.

Make assumptions if the defendant has a criminal lifestyle

If the court finds that the defendant has a criminal lifestyle, then unless there is a serious risk of injustice, section 10 POCA requires the court to make the following four assumptions:

  1. any property transferred to the defendant at any time after the relevant day was obtained by him as a result of his general criminal conduct and at the earliest time he or she appears to have held it; and
  2. any property held by the defendant at any time after the date of conviction was obtained by him or her as a result of his or her general criminal conduct or at the earliest time he or she appears to have held it; and
  3. any expenditure incurred by the defendant at any time after the relevant day was met from property obtained by him or her as a result of his or her general criminal conduct, and
  4. for the purpose of valuing any property obtained or assumed to have been obtained by the defendant, he or she obtained it free of any other interests in it. You will also have decided that the court has to make these assumptions once it has decided that the defendant has a criminal lifestyle but should not make them if it thinks that there will be a serious risk of injustice.

Relevant day

This is the first day of the period of six years before proceedings were started, or where there are two or more offences and proceedings were started on different dates, the earlier of those dates.

Start of Proceedings

Proceedings are started when:

  • a summons or warrant is issued in respect of an offence;
  • a person is charged after being taken into custody without a warrant; or
  • a bill of indictment is preferred.

Date of conviction

The date of conviction is the date on which the defendant was convicted of the offence or where there are two or more offences and conviction was on different dates, the date of the latest.

If the Court does not make any of the required assumptions, it must record the reason(s) why an assumption was not made.

Human rights implications

The cases of R v Rezvi [2002] UKHL 1 and R v Benjafield [2002] UKHL 2 are authority for the proposition that similar assumptions imposed by the Criminal Justice Act 1988 and the Drug Trafficking Act 1994 are compatible with the European Convention of Human Rights.

Calculate the Recoverable Amount

If the court decides that the defendant has benefited from general criminal conduct or particular criminal conduct, it must assess the recoverable amount.

The recoverable amount is an amount equal to the defendants benefit from the conduct concerned.

If the defendant proves that shows that the available amount is less than that benefit accrued, then the recoverable amount will be assessed as the available amount or a nominal amount if the amount available is nil.

The available amount is the aggregate of:

  • the total value of all the defendants free property (at the time the confiscation order is made) minus the total value of any obligations that have priority; and
  • the total value (at the time the order is made) of any tainted gifts.

If the court decides to make an order in the sum of the available amount, the court must include a statement of its findings in the confiscation order.

Make an order in the sum of the Recoverable Amount

The Court must make an order in the sum of the recoverable amount unless a victim of the conduct has started or intends to start civil proceedings against the defendant in respect of loss, injury or damage sustained in respect of the conduct when the court has discretion by virtue of sub-section 6(6) POCA not to make a confiscation order. This is so that the victim is not prejudiced by any confiscation order.

Set the time to pay

The amount to be paid under a confiscation order must be paid on the date of the making of the confiscation order (section 11 POCA). If the defendant shows that he or she needs time to pay the confiscation order, the court may extend this time for payment for up to six months. Before granting either an application for an extension of time or an application for a further extension of time, the Court must give the prosecutor an opportunity to make representations.

Before determining time to pay, the Judge should wherever possible ascertain the defendant's estimated earliest date of release and set the time to pay accordingly.It is clearly preferable that time to pay should expire well before the EDR so as to enhance the prospect of effective enforcement.

Decide confiscation issues on the balance of probabilities

The standard of proof in relation to criminal lifestyle, benefit from general criminal conduct, benefit from particular criminal conduct and recoverable amount is on the balance of probabilities, i.e. it is more likely than not that the assertion is made out (see section 6(7) POCA).

Appeals

The prosecution have a right of appeal in respect of a confiscation order, or a failure to make a confiscation order to the Court of Appeal.A notice of appeal must be served within twenty-eight days and leave to appeal is required from the Court of Appeal. The procedure is set out in the Appeal Rules.

The prosecutor or the defendant may appeal a decision of the Court of Appeal to the House of Lords.

Any decision by the prosecution to appeal a confiscation ruling should be referred to a level E with advice sought from CCU OCD.

These rights of appeal do not apply to:

  • applications made to the Crown Court to reconsider the case where no confiscation order was made;
  • applications to the Crown Court to reconsider benefit where no confiscation order was made;
  • applications to the Crown Court for confiscation orders where the defendant has absconded (section 31 POCA).

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