In addition to Confiscation Proceedings, which are designed to recover assets representing the proceeds of crime following a criminal conviction, Part 5 of the Proceeds of Crime Act 2002 (POCA) provides enforcement agencies, such as the National Crime Agency (NCA), the Serious Fraud Agency (SFO) and the Financial Conduct Authority (FCA), the power to recover property obtained through unlawful conduct by way of civil proceedings in the High Court.
This power can be exercised even where no one has been convicted of a crime.
As these are proceedings pursued through the civil courts, the evidential requirement is lower than in criminal proceedings. The claimant prosecuting authority must prove its case ‘on the balance of probabilities’ rather than ‘beyond reasonable doubt’ as required in a criminal court. This distinction assists in cases where prosecuting authorities have difficulty establishing criminal conduct or where the property targeted is held by third parties.
Civil recovery proceedings are not intended to replace criminal proceedings where a prosecution is appropriate. They provide enforcement authorities with a powerful route to recover property where they contend that the property represents the proceeds of unlawful conduct or is intended to be used in unlawful conduct.
Such recovery proceedings can have serious and immediate consequences for individuals and businesses, even though they are civil rather than criminal in nature.
In this article, Nazaqat Maqsoom of KANGS comments upon the most frequently used POCA civil recovery powers.
The Law | Part 5 of The Proceeds of Crime Act 2002
Section 240.
This section enables:
- the enforcement authority, in civil proceedings to recover property which is, or represents, property obtained through unlawful conduct,
- property which is, or represents, property obtained through unlawful conduct or which is intended to be used in unlawful conduct, to be forfeited.
These powers are exercisable in relation to any property, including cash, whether or not any proceedings have been brought for an offence in connection with the property.
Section 241 describes ‘Unlawful conduct’ as:
- any conduct occurring in any part of the UK, if it is unlawful under the criminal law,
- any conduct occurring in any country, or territory outside the UK which is unlawful under the criminal law applying in that country or territory, and if it occurred in a part of the UK, would be unlawful under the criminal law of that part.
Interim Receiving Orders and Property Freezing Orders
Interim Receiving Orders
Where civil recovery proceedings are contemplated or underway, the High Court may make Interim Orders designed to prevent the property from being dissipated, transferred, sold, or otherwise dealt with before the case is resolved.
Under section 246 of POCA the court may appoint an Interim Receiver to take control of the property and safeguard it while the proceedings continue. The owner may be required to give up possession or control of the asset and cooperate with the Receiver in the conduct of his duties.
Property Freezing Orders
The NCA will normally seek a Property Freezing Order under section 245A of POCA which will freeze all assets suspected of being the proceeds of crime.
The Order will prevent the person against whom it is addressed from selling, transferring, disposing or in any way reducing the value of the asset pending the outcome of the proceedings.
Additionally, it will normally seek to freeze all bank accounts.
Recovery Orders
Section 266 of POCA provides that, if the Court is satisfied that any property is recoverable, it must make a Recovery Order vesting the property in the Trustee for Recoverable property.
Effectively, the criminal property is transferred to an enforcement authority for recovery.
Unexplained Wealth Orders
Unexplained Wealth Orders (UWOs) require an individual or organisation to explain the provenance of specified property or assets. They play an important role where investigations are conducted into the accumulation of suspicious wealth through money laundering or serious organised crime.
They are designed to assist the enforcement authorities gather information before deciding whether further proceedings should follow.
UWOs were introduced by the Criminal Finances Act 2017 and added to POCA, and they accompany, for example:
Forfeiture and Account Freezing Orders
Section 303O of POCA provides for the forfeiture of a scheduled listed asset under section 303B, which is recoverable property and intended for use in unlawful conduct. This includes items such as cash, precious metals, watches and art.
Section 303Z3 of POCA enables law enforcement to freeze bank accounts in respect of recoverable property suspected of representing criminal funds where a legitimate source cannot be proven.
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.
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