The Commonwealth of Australia's Proceeds of Crime Act 2002 is a powerful tool that allows the government to confiscate property connected to alleged criminal activities. However, the name of the Act is misleading — it extends far beyond what might traditionally be considered the "proceeds of crime" and can impact a wide range of assets, including those not directly involved in criminal activity. Understanding and defending against the Proceeds of Crime Act is especially crucial in these situations. This guide provides an overview of the types of orders the Commonwealth may obtain under this Act and how you can defend against or mitigate the impact of these orders.
The process of applying for one of these orders is simple and usually occurs ex-parte (without the knowledge of the person whose property is being effected), and it is then the responsibility of the respondent person to have their property freed from these orders. Below we will explore the various types of orders that the Commonwealth may obtain, as well as how to defend or mitigate against these orders.
Freezing Orders
Freezing Orders are utilised by the Commonwealth to freeze bank accounts of suspected people and, if granted, they prevent financial institutions from allowing withdrawals and transactions from the frozen accounts. These orders can only be made for an initial period of 3 days.
Obtaining Freezing Orders
There are 2 key criteria that must be satisfied for a Court to make a Freezing Order:
- There must be reasonable grounds to suspect that the money in the account is the proceeds of a certain offence;
- That if the order is not granted, there is a risk that some or all of the money will be transferred from the account;
These orders can be applied for either in person or by online application, and are easily obtained due to the low threshold required to obtain them.
Varying Freezing Orders
Freezing orders can cripple individuals and businesses, and given how easy they are to obtain, it is often necessary for suspected people to vary freezing orders. A Magistrate may order a variation on the following bases:
- so that an individual can meet their reasonable living expenses, or any of their dependants;
- so that the reasonable business expenses of the person can be paid;
- so that a specific debt that was incurred in good faith can be paid.
Variations may not be made to meet the legal costs of a person defending an action brought under the POCA.
Revoking a Freezing Order
For a freezing order to be revoked, a Magistrate must be satisfied that 'it is in the interest of justice' to revoke it.
Freezing orders are often sought just prior to the Commonwealth making application for a Restraining Order.
Restraining Orders
Unlike freezing orders, a restraining order can be applied to any form of property and may be granted for any duration. These applications are also heard ex-parte and prevent the disposal or handling of the property.
There are two broad categories of restraining orders that may be applied for. Suspect-based orders are made when an individual is suspected of committing an offence, and allow for the restraint of any property owned or controlled by the suspected person. Property-based restraining orders are sought when a specific asset can be connected with an alleged offence.
Restraining orders can be sought prior to a person being charged, or during the course of a proceeding. For this reason, it is important to get legal advice as soon as a person has an inclination that the police may be considering applying for a restraining order.
Property Covered
It must also be noted in defending against the Proceeds of Crime Act that the property which may be restrained is not limited to that which is legally owned by the suspected person, but includes any bankruptcy property, property belonging to another person that is under the "effective control" of the suspected person, and property which belongs to another person which is suspected to be the proceeds of a relevant offence.
This broad categorisation of subject property means that it is often necessary for family members of accused people to obtain legal advice as well in order to prevent their assets being inappropriately swept up in an application.
Revocation
In order to free property from a restraining order, a Revocation Order may be sought. There are two key bases for revocation. The first basis requires that there be 'no grounds' for the making of the order in the first instance. This is an incredibly high threshold for a suspected person to satisfy and requires that the original court that granted the order did so without reason.
Secondly, a revocation order may be brought on the basis that it is in the 'interests of justice' to do so. This is a broad basis of revocation which often relies on procedural deficiencies in the investigation, or application, for the original restraining order. If evidence was obtained illegally, or the court was misled by the applicants, revocation may be granted.
Importantly a revocation application must be made within 28 days of notification of a restraining order, and time extensions are extremely limited.
Exclusion Orders
If a restraining order has been granted over property, or an application has been made on notice and not yet granted, an owner of that property may apply for its exclusion from any forfeiture order.
The specific basis of the exclusion varies depending on the type of order, however the most common basis for exclusion when defending against the Proceeds of Crime Act includes that the property was not obtained as a result of unlawful activity and that the property does not belong to the suspected person and is not subject to their effective control.
Forfeiture Orders
A forfeiture order is a final order that, as the name suggests, requires an individual to permanently surrender their property to the Commonwealth. These orders are often conviction-based, but they can also be granted in circumstances where the suspected person has not been found guilty of an offence, but the Court is satisfied on the balance of probabilities that a person has engaged in an offence, or the property is the proceeds of an offence.
Obtaining Forfeiture Orders
In order to grant a conviction-based forfeiture order, a Court must be satisfied that the property to be forfeited is the proceeds of one or more offences. Importantly, the quashing of a conviction will not automatically lead to the quashing of a forfeiture order, and the Commonwealth may apply to have the forfeiture order confirmed.
To grant a non-conviction-based Forfeiture Order, a Restraining Order covering the property must have been in force for at least 6 months, and the Court must be satisfied on the balance of probabilities that 'the relevant grounds' for making the order are satisfied. The 'relevant grounds' vary depending on the type of restraining order relied upon. For a conduct-based restraining order, the Court will need to be satisfied that the person has engaged in conduct constituting one or more serious offences, whilst a proceeds-based order requires that a Court be satisfied that the proceeds are the result of one or more indictable offences.
Mitigating the Impact of Forfeiture Orders
A court may make an order excluding property from a civil Forfeiture Order if it is satisfied that the applicant's interest in the property is not the proceeds of unlawful activity, and not the instrument of a serious offence. For conviction-based forfeitures, the Court must be satisfied that the applicant's interest in the property is not the proceeds of the offence that formed the basis of the application. This distinction may seem trivial but has a substantial impact on the course of applications.
Individuals who have had their property forfeited may be able to apply for a Compensation Order, requiring the Commonwealth to compensate them from any property seized that is untainted by alleged offending and derived from legitimate means.
In certain circumstances, dependents which rely on forfeited property for their maintenance can seek an order from the Court requiring the Commonwealth to pay the dependant a portion of the forfeited property.
Automatic Forfeiture
Automatic-Forfeiture occurs without the need of a Court order, and will occur automatically when property is already restrained and a person is found guilty of a serious offence. Forfeiture will occur 6 months after conviction unless action is taken to exclude the property from forfeiture.
Automatic-Forfeiture may be avoided or mitigated on the same basis as Forfeiture Orders, that is, via Exclusion Orders or Compensation Orders.
If it can be shown that an applicant has an interest in property which has been Automatically-Forfeited, and that interest was lawfully acquired, a Court may make a Recovery Order which allows for the transfer back of a property interest that automatically vested in the Commonwealth.
Pecuniary Penalty Orders
Whilst the previous orders discussed attach to specific pieces of property, the Court can also make a Pecuniary Penalty Order which requires a person to pay an amount which is calculated to reflect the benefits gained from alleged unlawful activity.
These orders must be granted by a Court if it is satisfied that either a person has been convicted of an indictable offence and has derived a benefit from that offence, or that the person has committed a serious offence (on the balance of probabilities). This second test may still be satisfied even if a person is criminally acquitted of the offence alleged, a threshold which is concerningly easy to satisfy.
To stop a Pecuniary Penalty order from being made, you must be able to separate the financial gain from the offence alleged, or to satisfy a court that the offence did not occur in the first place.
Unexplained Wealth Orders
Unexplained Wealth Orders allow for the creation of a debt to the Commonwealth for the assets that a person cannot show were acquired lawfully. When an application is made, it falls to the respondent to prove, on the balance of probabilities, that their wealth, or a portion of it, was not acquired illegally. If an order is made, it creates a debt that is to be paid to the Commonwealth. Again, in certain circumstances, a Court may allow for some money to be paid to dependents of those against whom an order has been made.
Information Gathering Powers
The orders discussed above are assisted by broad information gathering powers vested in the Commonwealth. These powers allow for:
- The forced examination of persons;
- The forced production of 'property tracking documents';
- Notices to financial institutions which require them to advise the Commonwealth of the details of an account holder, and their financial history;
- Monitoring orders requiring financial institutions to monitor their client's activities and provide those details to the Commonwealth;
- Search and seizure powers which allow the Commonwealth to search premises, and seize property, or evidence which may relate to suspect property.
Defence and Mitigation
The Proceeds of Crime Act 2002 grants the Commonwealth extensive powers to seize assets from individuals suspected of criminal activities, as well as their friends, family, or business associates. However, these powers are not absolute, and there are legal avenues available to defend against or mitigate the impact of these orders.
At Doogue + George Criminal Defence Lawyers, we have the expertise and experience to represent and assist those facing the potential loss of their property under the Proceeds of Crime Act. If you believe you may be subject to one of these orders, or if an application has already been made against you, time is of the essence. Contact us today for a confidential consultation and expert legal advice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
