The authorities have often found it difficult to seize and forfeit assets that they suspect to be the proceeds of crime.
Seizing cash, however, has not been too problematic. Under the Proceeds of Crime Act 2002 (POCA), law enforcement agencies have had the power to seize money if they have reasonable grounds for suspecting that it is the proceeds of crime. It is a power that the authorities have been able to use extensively; leading to it even being described as draconian by some critics. Certainly, anyone faced with having their money seized can face huge difficulties in holding on to it.
The problems that have been encountered by the authorities regarding seizure and forfeiture have come when any suspected proceeds of crime have been turned into assets other than cash. The law used to give the authorities few options other than to go after the money.
This problem faced by the authorities, however, now looks to have disappeared. The Criminal Finances Act, which came into effect on September 2017, gives the authorities the ability to locate, seize and forfeit valuable items other than cash. A whole new range of assets can now be the subject of seizure or forfeiture.
Gems and precious metals, items of jewellery and watches, works of art and items that represent monetary value, such as gift vouchers and even gambling chips, can now be seized or forfeited. The authorities convinced the law makers that such items should all be considered moveable assets: objects that someone buys with the cash proceeds of crime in order to disguise and relocate their criminal income.
Under the terms of the Act, any such items that are subject to seizure must have a value of £1,000 or more. As with current cash seizures, any attempt to seize such items must be subject to oversight by the courts and the authorities will have to show that they have reasonable grounds to suspect that the items are the proceeds of crime.
One major issue that the authorities may have to overcome when looking to seize such items is the question of ownership. With cash seizures, the process of linking the money to the person can be relatively straightforward.
When it comes to other assets, issues such as establishing a person’s ownership and complications regarding joint or third party ownership can make it more difficult to establish a link between that property and alleged criminal activity.
This has been acknowledged by the Act: it states that if someone has a lawful, legitimate interest in the property that is the subject of an attempted seizure, the seizing authority could possibly find themselves in a position whereby they could have to pay the third party for their stake in the asset. But while, on paper, this seems a logical approach, this principle could be immensely difficult to apply. Reaching agreement on the amount a person should be compensated for their stake in a seized item could prove a lengthy legal exercise in its own right.
Such problems could, arguably, dissuade the authorities from pursuing any seizure where there is possible third party involvement.
The Act also gives the authorities greater civil recovery powers regarding the freezing of bank accounts. They can currently be frozen by courts at the request of the likes of the Serious Fraud Office (SFO), Crown Prosecution Service (CPS) and the National Crime Agency (NCA).
Under the terms of the Bill, the minimum amount that can be subject to freezing is £1,000. In addition, HM Revenue and Customs (HMRC) and the Financial Conduct Authority (FCA) will join the SFO, CPA and NCA in being able to request that courts freeze bank accounts.
Going hand in hand with the ability to freeze bank accounts is the Act’s introduction of unexplained wealth orders (UWO's). Imposing a UWO on someone who cannot provide proof that they obtained their assets legally is a huge step when it comes to seizure.
A UWO requires a person to explain the source of the wealth that enabled them to have, for example, a million pound in the bank or a handful of expensive properties. Failing to respond to the Order or giving an inadequate response to it will see the authorities use existing POCA civil recovery procedures to take those assets off the person.
An important point to note here is that neither criminal nor civil proceedings need to have started for a UWO to be put in place. For a UWO to be brought, it is merely enough for the authorities to have reasonable grounds to suspect an individual is involved in serious crime.
To learn more about Unexplained Wealth Orders view our online guide.
Such measures are the reason why the Act is being viewed as a major boost to the authorities’ powers when it comes to seizure and forfeiture.
Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, civil recovery, cryptocurrency and high-stakes commercial disputes.