I. Criminal Asset Recovery

Many of the powers of investigation in relation to criminal asset tracing and recovery are to be found in the provisions of the Proceeds of Crime Act 2002 (POCA). Under Part 8 of POCA applications can be made for the purpose of a criminal confiscation: these include Production Orders, Search and Seizure Warrants, Customer Information Orders and Account Monitoring Orders.

POCA expands and replaces the scheme set out in Part II of the Drug Trafficking Act 1994 which provides for the seizure and forfeiture of cash which is being imported into or exported from the United Kingdom, and which represents the proceeds of, or is intended for use in, drug trafficking. The new scheme applies to cash related to all unlawful conduct and also provides for the seizure of such cash inland.

A summary table of Part 8 powers and who may apply for them is set out underneath.

1. Tracing

Production Orders

These allow financial investigators to obtain information about an alleged defendant's financial affairs, most usually his or her bank accounts. A Production Order (see section 345 POCA) requires the person in possession or control of the material to produce it to an appropriate officer to take away, or give an appropriate officer access to it within the period stated in the order. This is usually seven days unless the judge decides that a longer or shorter period is appropriate.

A production order does not automatically give a right of entry onto premises. If a production order requires a person to give an appropriate officer access to material, section 347 POCA allows the judge, on application by an appropriate officer, to make an order to grant entry. This order requires any person entitled to grant entry to the premises to allow an appropriate officer to enter those premises to obtain access to the material.

A production order cannot require the production of, or grant access to, material that is legally privileged or excluded material. Section 348(2) POCA defines privileged material as being any material, which the person would be entitled to refuse to produce on grounds of legal professional privilege in proceedings in the High Court.

Search and Seizure Warrants 

A search and seizure warrant (see section 352 POCA) authorises an appropriate officer to enter and search the specified premises, and to seize and retain any material found which is likely to be of substantial value (whether or not by itself) to the investigation for the purposes for which the warrant is sought.

A search and seizure warrant is only appropriate where:

• a production order has not been complied with and there are reasonable grounds for believing that the material is on specified premises;
• it would not be appropriate to make a production order because it is not practicable to communicate with any person against whom the production order may be made;
• entry to the premises will not be granted unless a warrant is produced; or
• the investigation would be seriously prejudiced unless an appropriate person arriving at the premises is able to secure immediate entry.

A search and seizure warrant does not confer the right to seize privileged or excluded material (see section 354 POCA).

Customer Information Orders

On the application of a constable, customs officer or accredited financial investigator, if they are a senior appropriate officer or are so authorised by one, the Crown Court may make a Section 363 customer information order that a financial institution, on receipt of a notice in writing, provide the customer information requested.

Customer information in relation to a person and a financial institution is information about whether a person holds or has held account(s) at a financial institution solely or jointly with another.

If such accounts are or have been held, the definition of customer information is set out in Section 364 (2) and will include the account number or numbers; the person's full name and date of birth; the most recent and any previous address; the date or dates of account opening and/or closing; such evidence of identity obtained by the financial institution for the purpose of the money laundering regulations; the personal details (name, date of birth, addresses) of joint account holders; the account numbers of any other accounts to which the individual is signatory and the details of the other account holders.

Incorporated and Unincorporated Associations

If the specified person is a company, limited liability partnership or similar body incorporated or established outside the UK, then customer information is defined in section 364 (3) and will include the account number or numbers; the person's full name; a description of the business which the person carries on; the country or territory in which it is incorporated and any company number, any VAT number assigned to it; its registered office and previous registered offices; the date or dates of the account opening and/or closing; such evidence of identity obtained by the financial institution for the purpose of the money laundering regulations; and the full name, date of birth, current and previous addresses of account signatories.

Criminal Offences

A financial institution commits an offence contrary to section 366(1) if without reasonable excuse it fails to comply with a requirement imposed on it under a customer information order punishable on summary conviction to a fine not exceeding level 5 on the standard scale.

A financial institution commits an offence contrary to section 366(3) if, in purported compliance with a customer information order, it makes or recklessly makes a statement which it knows to be false or misleading in a material particular punishable on summary conviction to a fine not exceeding the statutory maximum, or on conviction on indictment to a fine.

Account Monitoring Orders

An account monitoring order (see section 370) lets the police observe/monitor the transactions in an account for up to 90 days at a time. The order is available for both confiscation and money laundering investigations, and will specify the manner and timescale for the information to be given.

Cash Seizure

Since 30 December 2002, under Section 294 POCA 2002, a customs officer or a constable may seize cash at the borders or inland if he has reasonable grounds for suspecting that the cash is recoverable property or intended for use in unlawful conduct and if the sum seized is in excess of £1,000. This exercise of this power is subject to a new Code of Conduct.

Seized cash may not be detained for more than 48 hours except by order of a magistrate. A magistrate may make such an order if he is satisfied that there are reasonable grounds for the officer's suspicion and that the continued detention is justified for the purposes of investigating its origin or intended use. The magistrate may also make an order for continued detention if consideration is being given to the bringing of criminal proceedings, or if such proceedings have been commenced and not concluded. Monies detained would in most cases be paid into an interest bearing account pending the outcome of proceedings.

The magistrates' court may release the cash in response to an application by the person from whom the cash was seized on the grounds that it is not recoverable property and is not intended for use in unlawful conduct. Secondly, a customs officer or a constable may release cash or any part of it after notifying the justice or magistrates' court if satisfied that the detention can no longer be justified.

Section 300 enables the magistrates' court to order the forfeiture of cash or any part of it if satisfied that it is recoverable property or is intended for use in unlawful conduct. Cash forfeiture proceedings are civil proceedings and the civil standard of proof will apply.

Home Office Summary Table of Powers

2. Freezing

Restraint

A restraint order has the effect of freezing property anywhere in the world that may be liable to confiscation following the trial and the making of a confiscation order. It may be made both against the defendant or person under investigation, and any other person holding realisable property. The object in each case is to strike a balance at the interlocutory stage between keeping the defendant's assets available to satisfy any confiscation order which may be made in the event of conviction and meeting the defendant's reasonable requirements in the meantime ( Re Peters [1998] 3 All ER 46, CA).

The Court's jurisdiction to make or vary restraint orders is closely analogous to the High Court's jurisdiction to make or vary "freezing injunctions" (formerly Mareva injunctions). The Proceeds of Crime Act 2002 (POCA) allows for a restraint order to be made at any time after an investigation has been started (previously, although a restraint order could be made at the investigative stage, it was only possible to do so where charges were anticipated).

The court can also appoint a Management Receiver, who is an officer of the court appointed on the application of the prosecutor, to manage the defendant's assets pending the making of a confiscation order in cases where the defendant's assets are of a nature that require active management and the defendant is either unable to manage the assets (perhaps because he is in custody), or the court is unable to trust the defendant to manage the assets properly.

When should an Application for a Restraint Order be made?

The decision whether or not to apply for a restraint order and if so, the timing of that application are important strategic decisions in the case and should only be taken after careful consideration of the effect on the case both at the investigative or prosecution stage.

An application for a restraint order in respect of an offence begun after 24 March 2003 may now be made at any time after an investigation has commenced in England and Wales as to whether such an offence has been committed.

Clearly, from the time that a suspect has been served with the restraint order, he/she will be aware of the criminal investigation and may be in a position to abscond and/or to destroy evidence or otherwise interfere with the course of the investigation. It will necessarily fall upon the investigator to weigh up the advantages and disadvantages of an early application.

A prosecutor should provide the investigator with early advice as to whether in law there is sufficient basis for an application for a restraint order to be made and, if there is insufficient evidence, what additional material is required to ensure a successful application..

Generally, it will be in the public interest to make an application, where the investigation is not likely to be compromised to a significant extent; where there are reasonable grounds to suspect that the defendant has benefited from criminal conduct; and there is a real (rather than fanciful) prospect that not insubstantial realisable assets will be dissipated, unless a restraint order is granted.

The Conditions

The Preconditions

A restraint order is made on the application of the prosecutor or an accredited financial advisor at the discretion of the court. An accredited financial investigator is a person accredited by the Director of the Assets Recovery Agency (ARA) to exercise Part 2 powers and will usually be an employee of the police force financial units (FIUs) or of Customs and Excise.

An application by an accredited financial investigator must be authorised by:

• a police officer not below the rank of Superintendent;
• a Customs officer of similar rank, or;
• an accredited financial investigator designated by the Secretary of State.

The judge may only grant a restraint order pursuant to section 41 POCA if any of the five conditions set out in section 40 is satisfied.

The first condition

A restraint order can be obtained if a criminal investigation has been started in England and Wales with regard to an offence and there is reasonable cause to believe that the alleged offender has benefited from his criminal conduct.

Section 88 (2) POCA defines criminal investigation as being an investigation, which police officers or other persons have a duty to conduct with a view to it being ascertained whether a person should be charged with an offence.

Criminal conduct is conduct that either constitutes an offence in England and Wales or would constitute such an offence if it occurred in England and Wales. An alleged offender will be taken to have benefited from his criminal conduct if he obtains property as a result of or in connection with the conduct.

The second condition

An application for a restraint order may also be made once proceedings for an offence have been started in England and Wales and not concluded, and if there is reasonable cause to believe that the defendant has benefited from his/her criminal conduct.

Proceedings are started once a warrant or summons in respect of the offence is issued by a justice of the peace under Section 1 of the Magistrates' Court Act 1980 , or when a person is charged with the offence after being taken into custody without a warrant, or when a bill of indictment is preferred in accordance with Section 2(b) of the Administration of Justice (Miscellaneous Provisions) Act 1933.

The second condition will not be satisfied and the application for a restraint order will be refused if the Court believes that either there has been undue delay in continuing the proceedings, or if the prosecutor does not intend to proceed.

The third condition

A restraint order may be granted if the prosecutor or the Director of ARA has applied or will apply for the Court to either reconsider making a confiscation order, to reconsider the benefit figure, to make a confiscation order where a defendant absconds after conviction or committal, or to make a confiscation order where a defendant absconded more than two years previously but was neither acquitted nor convicted in commenced criminal proceedings.

The Court must also be satisfied that there is reasonable cause to believe that the defendant has benefited from his/her criminal conduct.

The fourth condition

An application for a restraint order may be made if the prosecutor or the Director of ARA has commenced or will commence an application for the Court to reconsider the benefit figure in an earlier confiscation order, and if there is reasonable cause to believe that the Court will decide that the amount found under the new benefit calculation of the defendant's benefit exceeds the relevant amount.

The fifth condition

A restraint order may be granted if the prosecutor or Director has applied or will apply for the Court to reconsider the amount available to satisfy a confiscation order, and if there is reasonable cause to believe that the Court will decide that the amount found under the new calculation of the available amount exceeds the relevant amount.

The third, fourth and fifth conditions will not be satisfied if the Court believes that either there has been undue delay in continuing the application, or the prosecutor or the Director does not intend to proceed (see section 40 (7) (8)).

The extent of a restraint order 

The amount of realisable property that can be restrained will depend upon the amount in which the confiscation order is likely to be made. The Court will permit the prosecutor a degree of latitude in the assessment of the amount of benefit where enquiries into its extent have not yet been completed.

A defendant will be restrained from dealing with all of his assets ("general restraint") if the prosecutor is going to ask the Court to decide whether the defendant has a criminal lifestyle and has benefited from general criminal conduct.

If the prosecutor is not alleging that the defendant has a criminal lifestyle and the Court is going to be asked to decide whether the defendant has benefited from his particular criminal conduct, a defendant will be restrained from dealing with specific assets which together total in value the amount of his benefit from particular criminal conduct ("specific restraint")

Where the amount the defendant has benefited from particular criminal conduct exceeds the value of all his assets it will be appropriate to restrain the defendant from dealing with all of his assets.

Any person who holds assets jointly with the defendant may be specifically restrained from dealing with those jointly held assets. The recipient of a tainted gift may be restrained from dealing with any free property they hold up to the current value of the gift.

Realisable property

Realisable property is defined in section 83 as any free property held by the defendant and any free property held by the recipient of a tainted gift.

The term "property" is defined in section 84 and covers all property wherever situated and includes money, real or personal property, a thing in action, or other intangible or incorporeal property.

A person holds property if he holds an interest in it. A person obtains property if he obtains an interest in it, and one person transfers property to another, if the first one transfers or grants an interest in it to the second. References to an interest, in relation to property other than land, include references to a right (including a right to possession).

If the defendant or the recipient of a tainted gift has any interest in the property, the whole of the property is realisable property and may be restrained.

Free property

Property is free property (see section 82) unless it is the subject of:

• a forfeiture order either under the Misuse of Drugs Act 1971 or the Terrorism Act 2000,
• a deprivation order under the Powers of Criminal Courts (Sentencing) Act 2000.

an interim receiving order, a recovery order or an order for the detention or forfeiture of seized cash under the civil recovery provisions of the Proceeds of Crime Act 2002.

Tainted gift

A gift is made if the defendant transfers property to another person for a consideration whose value is significantly less than the value of the property at the time of the transfer.

A gift will be tainted (see Section 77 POCA 2002) if the defendant made it at any time after the date on which the offence concerned was committed, or the earliest date if two or more offences are alleged to have been committed.

Where the Crown Court has decided that the defendant has a criminal lifestyle, any gift made by the defendant to any person in the period beginning six years before the commencement of proceedings is caught together with any gift made at any time if the property gifted was obtained by the defendant as a result of or in connection with his general criminal conduct or represents property obtained by him as a result of or in connection with his general criminal conduct.

Although a court can apply the wider definition of tainted gifts at the restraint stage, if it is clear at that time that the defendant does not have a criminal lifestyle and that therefore the narrower definition will apply at the confiscation hearing, the court will have to take this into account when making the restraint order.

If the court decides that the defendant has a criminal lifestyle the definition of a tainted gift is even wider as a gift will also be tainted if:

• it was obtained by the defendant as a result of or in connection with his general criminal conduct, or
• it represents property obtained by him as a result of or in connection with his general criminal conduct.

Management Receivers

When may the Court appoint a management receiver?

Section 48(2) POCA gives the Crown Court discretion to appoint a management receiver in respect of any realisable property to which a POCA restraint order applies.

Managing may include selling the property or any part of it or interest in it, carrying on or arranging for another to carry on any trade or business the asset of which are part of the property and incurring capital expenditure in respect of the property. The court may confer on the receiver such powers set out in section 49 as are appropriate to the case.

When should consideration be given to the appointment of a receiver?

A management receiver should be considered where the defendant's assets are of such a nature that they require active management. It may be that the defendant is in custody and can't manage the assets himself or that the circumstances of the case suggest that the Court cannot trust him to manage the assets.

An obvious example where the appointment of a management receiver would be appropriate is when a defendant's asset includes a business that needs to be operated in order to preserve its value e.g. a defendant is arrested for money laundering, he trades as an ice-cream maker, he is remanded in custody and his stock, business and livelihood is at risk of dissipation. The appointment of a management receiver would protect the defendants' assets and manage them pending the resolution of the criminal case against him.

Other examples are where management receivers have been appointed to operate haulage businesses, factories and bureau de change. They may deal with letting houses, or finishing a partially completed development and securing property.

A third party may me forced to give possession of the defendant's "realisable property" to the Receiver but must first be given a reasonable opportunity to make representations to the court.

Exceptions

The costs incurred by a defendant in mounting his defence to the criminal proceedings that he faces may not be met from the receivership property.

Receiver's costs

The costs of the management receiver are paid from the assets that he is managing (see section 49 (1) (d)), even where the defendant is ultimately acquitted. If there is insufficient to pay the Receiver's costs then the prosecutor, who will have indemnified the Receiver as to his costs, will pay any remaining costs.

Restraint or freezing under the Proceeds of Crime Act 2002 ("POCA")

When is POCA applicable in relation to making an application for a Restraint Order?

• All applications for ROs in cases where offences were committed after the date POCA came into force, namely 24 March 2003, will be made to the Crown Court.
• Any applications: a) commenced in the High Court; b) relating to an offence committed before POCA came into force; or c) relating to an offence committed over a period which spans 24 March 2003, continue to be brought in the High Court under the applicable regime.

Obtaining a Restraint Order under section 40 of POCA

By virtue of section 40(1) a Crown Court may make a RO if any of the following 5 conditions are satisfied:

1) A criminal investigation has been started in England and Wales with regard to an offence, and there is reasonable cause to believe that the alleged offender has benefited from his criminal conduct – s.40(2) (a) and (b).

• The term 'Criminal Investigation' is defined in section 88(2) of POCA. This definition extends to investigations covered by all prosecuting authorities, not just the police.

2) Criminal proceedings have been started in England and Wales and not concluded, and there is reasonable cause to believe that the Defendant has benefited from his criminal conduct – s.40(3) (a) and (b).

• It is the second condition, which is likely to be the provision under which most applications for ROs under POCA will be brought.
• The term 'proceedings for an offence have been started' is defined in section 85(1) of POCA and mirrors section 41(2) DTA.
• Section 85(3) – (6) define the term 'proceedings are concluded'. For the most part, this will be when a CO is satisfied. The RO may remain in force until no further sums are due under the CO.

3) An application for re-consideration has been made by the prosecutor under sections 19, 20, 27 or 28 and has not been concluded, or the court believes such an application is to be made, and there is reasonable cause to believe that the Defendant has benefited from his criminal conduct – s.40(4)

• It is section 40(4) which gives the Court jurisdiction to make ROs to prevent assets being dissipated whilst applications are pending relating to fresh evidence where no CO has been made or COs have been made against absconding defendants.

4) An application has been made by the Prosecutor (or the Director of ARA) under s. 21 of POCA, which has not been concluded, for a re-consideration by the Court of the benefit and increase in the Confiscation Order accordingly in light of evidence not available at the time the original CO was made – s.40(5).

5) An application has been made by the Prosecutor, the Director of ARA, or an Enforcement Receiver, under s.22, which has not been concluded, to increase the Confiscation Order in light of evidence that the Defendant's realisable property exceeds that found to be available at the time of the Confiscation Order being made - s.40(6).

• Note that the increase sought cannot exceed the amount calculated to be the Defendant's benefit.

General Information on obtaining Restraint Orders under POCA 2002

• Only the Prosecutor, the Director of ARA, or an accredited financial investigator may apply for a RO.
• The application may be made ex- parte. However the Prosecutor should consider whether a without notice application is in fact justified – is there a real risk of assets being dissipated?
• As with the DTA and CJA, an application to the Crown Court under POCA should be made in writing together with a draft order and supporting witness statement detailing the grounds for the application. The applicable rule is Part 59 of the Criminal Procedure Rules 2005.

Can a Restraint Order under POCA be subject to exceptions/conditions?

• Like the both the DTA and CJA, POCA allows the Crown Court to impose exceptions to the RO with conditions – section 41(3).
• Such exceptions may include the release of reasonable living expenses and reasonable legal expenses – s.41(3)(a).
• However, s.41(4) imposes strict limits on the Court’s powers with regards to release of funds to meet reasonable legal expenses. Its effect is to preclude the release of funds for the purpose of both defending the criminal proceedings with which the restraint proceedings are associated, and the Restraint Order proceedings themselves. It further precludes the release of funds to meet the costs of any appeal in such proceedings.
• The rationale behind this is the legislative intention that Defendant should be entitled to have legal aid to defend proceedings.

Other provisions of a Restraint Order under POCA

• s.41(6) and (7) – the Court is able to continue to make disclosure and repatriation orders in the same way as the High Court to ensure that the RO is effective.
• s.42(3) covers applications to vary or discharge ROs. These may be made by the person who applied for the Order or anyone affected by it. Two days written notice is required to be given to the person who applied for the RO – see Rule 59.3 of the Criminal Procedure Rules 2005.

Variation, Discharge and Appeal

• Rules 59.3 and 59.4 of the Criminal Procedure Rules 2005 deal with the procedure to vary or discharge Restraint Orders. Such an application can be made by the Prosecutor and any party affected by the order and must be made in writing on at least 2 days notice. It must be served on the other party and all affected third parties. An appeal against a decision not to vary or discharge the Order goes to the Court of Appeal.
• Under s 43(1) POCA the Prosecutor may appeal the court’s refusal to make a RO.

Applications from a Foreign Jurisdcition

POCA provides for the Crown Court in the UK to have power in an appropriate case to make a restraint order freezing the assets of a person who is either being prosecuted or under investigation, pending the outcome of the case and the decision whether or not those assets are to be confiscated on the grounds that he has benefited from criminal conduct.

Section 444 authorises the making of delegated legislation to enable similar restraint orders to be made on applications received from foreign countries who are undertaking a criminal investigation or where there are criminal proceedings in train. Such delegated legislation has been made, and is to be found in the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005, SI 2005 No 3181 ("the External Requests Order"). By Article 7(2) of that Order, read with section 447 of the Act, the Crown Court has power to make a restraint order in such a case at the request of any foreign country's criminal investigator if:

• (i) a criminal investigation with regard to an offence has been started in the foreign country from which the request comes [Article 7(2)(b)];
• (ii) there is reasonable cause to believe that the alleged offender has benefited from his criminal conduct [Article 7(2)(c)]; and
• (iii) property is identified in England and Wales which there are reasonable grounds to believe may be needed to satisfy any order which may be made by a court in the foreign country for the recovery of specified property or of a specified sum of money [Article 7(2)(a) with s 447(7)].

3. Confiscation/Forfeiture

Once an offender is convicted and, either the prosecutor has asked the court to proceed under Section 6 POCA 2002 or the court has decided to of its own volition, the judge has to decide whether the defendant has a 'criminal lifestyle'.

Certain offences are designated under Section 75 and Schedule 2 as 'lifestyle offences', which results in the court having to make assumptions regarding the defendant’s assets, income and expenditure over the six years preceding the date that the proceedings were commenced. The court has to give its reasons if it does not apply the assumptions.

Once the court has determined that the defendant has a criminal lifestyle it then has to decide whether he has benefited from his general criminal conduct and assess the amount of that benefit. The court then applies the assumptions and determines the amount of benefit from that general criminal conduct. It must then decide the recoverable amount, including property held by the defendant anywhere in the world, and make a confiscation order in that sum.

Where it decides that he does not have a criminal lifestyle, it decides whether he has benefited from his particular criminal conduct in relation to the offences for which he has been convicted and assesses his benefit. A confiscation order is then made in a sum of money up to the value of the property obtained as a result of or in connection with his criminal conduct.

The purpose of a confiscation order, namely to deprive the defendant of the proceeds of his or her crime, is only fulfilled once the order is paid. A confiscation order is a debt owed by the defendant to the Crown. The defendant can choose to pay the order voluntarily, but if he or she fails to pay the order, compulsory enforcement action can be taken.

All confiscation order payments, however enforced, go to the Treasury through the enforcing Magistrates' Court.

The CPS play an active role in the enforcement of confiscation orders by making applications to the Crown Court for the appointment of enforcement receivers and/or by requesting the listing of applications at the Magistrates' Court to activate the default sentence of imprisonment where the defendant fails to pay the confiscation order.

When is payment due?

The amount to be paid under a confiscation order must be paid on the date of the making of the confiscation order (section 11 Proceeds of Crime Act 2002 (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. If within the six months the defendant applies to the court for a further extension of this time and the court finds that there are exceptional circumstances, it can extend the time for a further 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.

What sum is due?

Interest is payable on the unpaid amount of the confiscation order, to encourage prompt payment. If the confiscation order is not paid by the due date, the amount of interest is added to the confiscation order and is treated as if it were part of the order (section 12 POCA).

The rate of interest is that specified in section 17 of the Judgments Act 1838 and is currently 8%.

Interest is not payable if an application to extend time to pay has been made by the defendant within twelve months of the making of the confiscation order and has not been determined by the court.

Who may enforce a confiscation order?

The Director of ARA or the Magistrates' Court is responsible for the enforcement of a confiscation order. In cases where the Director of ARA is not responsible for enforcing the order, the prosecutor can apply to the Crown Court for the appointment of an enforcement receiver to realise the defendant's assets, and/or to the Magistrates' Court for an enforcement hearing, so that the court can activate the sentence imposed in default of payment of the confiscation order.

The Director of ARA

Section 34 of POCA requires the court to appoint the Director as the enforcement authority for a confiscation order if:

• the Court made a confiscation order after being asked to do so by the Director;
• the Court made a confiscation order after being asked by the Director to reconsider the case where no confiscation order was made;
• the Court of Appeal, or the Crown Court at the direction of the House of Lords, made a confiscation order as the result of an appeal by the Director;
• before the Court made the confiscation order, the Director applied to the Court to appoint him as the enforcement authority for the order.

The Magistrates' Court

The Magistrates' Court has the ultimate responsibility of enforcing a confiscation order and it will enforce the order as if it were a fine. Nevertheless, the Magistrates' Court is not the preferred enforcer in cases involving the realisation of assets outside the jurisdiction, real property, or enforcing against property held in the names of third parties.

Magistrates' power to obtain monies from banks and building societies

POCA makes specific provision for cash held by banks and building societies, in order to ensure that effective enforcement of confiscation orders occurs quickly.

A Magistrates' Court may order a bank or building society to pay the money to the Justices' Chief Executive towards satisfaction of the confiscation order if any of the following conditions occurs:

• money is held by a defendant in an account which he holds with a bank or building society; or
• money has been seized by a constable under section 19 of PACE 1984 and is held by a police force in an account which it holds with a bank or building society; or
• money has been seized by a customs officer under section 19 of PACE 1984 and is held by the Commissioners of Customs and Excise in an account which they hold with a bank or building society; and
• the money has been restrained by a restraint order; and
• a confiscation order has been made against the defendant; and
• the Director has not been appointed as the enforcement authority for the confiscation order; and
• an enforcement receiver has not been appointed in relation to the money; and
• the period granted by the Court for payment of the confiscation order has expired.

If the bank or building society fails to comply with such an order, the Magistrates' Court may order it to pay an amount not exceeding £5000 and this money will be treated as payment towards the confiscation order (see section 67 POCA).

The Prosecutor

As the Director of ARA is only likely to be appointed in complex cases, perhaps involving foreign properties, and as the Magistrates' Court is best equipped to recover sums of money from bank accounts or other straight forward cases, it will fall upon the prosecutor to enforce cases involving the realisation of the defendant's assets by applying to the Crown Court for the appointment of an enforcement receiver.

The decision to appoint an enforcement receiver

The prosecutor, rather than the Magistrates' Court, should normally take primary responsibility in cases in which there is an existing restraint order and/or where the realisable assets include real property, assets held in the names of third parties (e.g.limited companies) and where there are assets outside of the jurisdiction.

The CPS gives the receiver an indemnity to make good any shortfall of the receiver's costs after the defendant's assets have been realised. Clearly, if the costs of hiring the receiver are likely to be in excess of the amount that is likely to be realised, a receiver should not be appointed. This may be a particularly pertinent issue in cases where there has been no restraint order, as some assets may have been dissipated prior to the appointment of the receiver.

Although the application to court is made by the prosecutor, once appointed, the receiver is an officer of the court and will be separately represented on future hearings.

The role of third parties

Third parties have no right to be heard on a criminal confiscation hearing. The Crown Court will determine the defendant's interest in property held by third parties, whether this property is held jointly, is a tainted gift, or is property otherwise held in the names of third parties. The Court at the confiscation stage is only tasked with determining the amount of the defendant's free property, in order to calculate the recoverable or available amount in which to make an order for a sum of money and is not concerned with the property itself. Any determinations as to the defendant's interest at that stage cannot be binding on third parties, as they are not parties to the proceedings (see Re Norris [2001] UKHL 34).

Third party assets may be restrained and/or at the enforcement stage, action may be taken by a receiver to realise property, in which third parties may be claiming an interest. Third parties are entitled to have their claims determined by a court, although not as a part of the confiscation proceedings.

Resolution of third party interests

The court may order anyone who has possession of realisable property to give it to the receiver and may order anyone who holds an interest in realisable property to pay the receiver the amount of any interest held in the property by the defendant or the recipient of a tainted gift. Once that payment is made, the interest of the defendant or the recipient of the tainted gift in the property is extinguished. Before such orders are made, the Crown Court (Confiscation, Restraint and Receivership) Rules 2003 (SI 2003 No. 421) require that the defendant or the recipient of the gift must be given notice of the hearing and will, therefore, be able to make representations to the court.

The defendant, or the recipient of a tainted gift, may apply to the court for an order that any property that cannot be replaced should not be sold. Such an order made under section 69(4) POCA may be revoked or varied.

Section 62(3) POCA provides that any person affected by the action or proposed action of a receiver may apply to the Crown Court for an order giving directions as to the exercise of the receivership powers. The court may make such order as it believes appropriate.

Any person affected by an order appointing or giving powers to a receiver may also apply to the Crown Court to vary or discharge the order by virtue of section 63(1)(c) POCA.

Section 69(3) POCA provides that in exercising the powers given to the court and/or to a receiver, the powers must be exercised with a view to allowing a person other than the defendant or a recipient of a tainted gift to retain or recover the value of any interest held by him;

• in the case of realisable property held by a recipient of a tainted gift, the powers must be exercised with a view to realising no more than the value for the time being of the gift;
• in a case where a confiscation order has not been made against the defendant, property must not be sold if the court so orders under subsection (4).

The matrimonial home

A confiscation order is an order to pay a sum of money and may be enforced against any property held by the defendant, even if some of that property was legally obtained. Accordingly, the matrimonial home may be seized and confiscated, if the defendant fails to pay. Subject to the operation of Section 31 of the Family Law Act 1996, this may result in the eviction of other family members.

The court may not, however, order the realisation of any share in the matrimonial home owned by the spouse or partner, unless it can be shown that the share was a tainted gift (see R v Buckman [1997] 1 Cr.App.R.(S.) 325).

Inadequacy of available amount

If the defendant or enforcement receiver applies to the Crown Court to vary the order the court must calculate the available amount. If it finds that the available amount is inadequate to pay the amount outstanding under the confiscation order the court may substitute the amount that it thinks just (section 23 POCA).

The court must disregard any inadequacy that it believes is attributable in whole or in part to anything done by the defendant to preserve property held by the recipient of a tainted gift in order to prevent it from being used to pay the confiscation order.

Discharging the confiscation order

In exceptional circumstances if less than £1,000 remains to be paid under the confiscation order and a Justices' Chief Executive applies to the Court for the discharge of the order, the Court may consider whether the available amount is inadequate.

If the Court finds the available amount to be inadequate to meet the amount remaining to be paid, and if this is due to fluctuations of currency exchange rates for foreign currency or due to any other reason specified by the Secretary of State, the Court may discharge the confiscation order.

If only a small amount remains outstanding (£50.00 or less) and a Justices' Chief Executive applies to the Court for the discharge of the order, by virtue of section 25 POCA, the Court may discharge the confiscation order.

Enforcement abroad

Realisable property is often held abroad. If a confiscation order has not yet been made, but any one of the five conditions for the granting of a restraint order have been satisfied and the prosecutor or the Director believes that realisable property is situated outside the United Kingdom, the prosecutor or the Director may send a request for assistance to another country via the Secretary of State to prohibit any person from dealing with realisable property and/or to sell realisable property and apply the proceeds in accordance with the law of that country (see section 74 POCA).

If the property is sold by the requested country, the money raised from that sale remains in the requested country, but the remaining balance of the amount ordered to be confiscated will be reduced by the amount raised by the sale.

4. Repatriation

Illicit cash can be confiscated by the U.K. authorities in the absence of a foreign or UK conviction, and returned on an application to Court by that foreign Government.

II. Civil Asset Forfeiture

Civil Recovery or Non-conviction based asset forfeiture exists in the UK. There a system of civil recovery, which enables the recovery in the civil courts of assets obtained as a result of crime where there is no prosecution/conviction. This system enables the Assets Recovery Agency (See above) to apply to the High Court to recover property obtained through unlawful conduct in England, Wales and Northern Ireland. In Scotland, this power is exercised by the Civil Recovery Unit of the Crown Office.

If a case is to be considered for adoption for civil recovery, it must meet the following criteria:

• The case must normally be referred by a law enforcement agency or prosecution authority.
• Criminal prosecution must have been considered and either failed or proved impossible to complete.
• Recoverable property must have been identified and have an estimated valued of at least £10,000.
• Recoverable property must include property other than cash or negotiable instruments (although cash is recoverable if it is in addition to other property).
• There must be evidence of criminal conduct that is supported to the civil standard of proof, i.e. on the balance of probabilities.

In addition, the potential impact of successful civil recovery action in terms of crime reduction must be considered.

There may be circumstances in which this system can be used to assist a requesting country, even in circumstances where no such system exists in the country making the request.

However, the UK reserves the right to refuse requests on the basis of reciprocity. There are no mandatory relevant bilateral or international agreements and so the UK retains full discretion on whether to accede to such requests for assistance. Please see below in the section on MLA for more detailed information on this point.

III. Civil Law Suits

Although a significant part of some of the freezing and recovery of assets can take place in civil asset forfeiture, it is also possible to recover assets by using the United Kingdom's Civil Law.

The civil procedure, despite the reforms introduced by the new Criminal Procedure Rules, is still perceived by some to be slow and expensive, as the Claimants (the party bringing the proceedings) have to employ private law firms. However, civil actions can also be extremely productive in circumstances where the defendants are dead, have fled the jurisdiction or where companies are involved.

The civil courts in the U.K. have powerful weapons at their disposal, including the power to order disclosure of relevant documents, including suspicious activity reports, due diligence documentation etc., by third parties (such as banks, financial advisers, lawyers, accountants etc), which can assist in obtaining evidence and tracing assets. Such Disclosure Orders can be subject to an order prohibiting those making disclosure from revealing this fact to any potential defendants.

Another useful tool is the Anton Piller order, which allows for the search of premises and seizure of evidence without prior warning being given to the occupant so as to ensure the preservation of incriminating evidence, but this has effectively been superceded by a statutory Search Order introduced by the Civil Procedure Act 1997.

To further ensure that a defendant cannot dissipate assets and frustrate any judgment, a plaintiff can apply, without a defendant’s knowledge, for a 'Mareva' injunction, that is a freezing order over a defendant’s assets up to the value of the claim, provided that the plaintiff has a good arguable case, that there is a real risk that a defendant would dissipate his assets and that the U.K. has jurisdiction to determine the case.  In certain circumstances, this Order can be in such terms as to have world-wide effect, although this would require the obtaining of further freezing orders in the relevant foreign judicial systems.

The following represent some examples of the successes achieved by some in civil proceedings in the UK:

Over recent years the liquidators of the Bank of Credit & Commerce International (BCCI) have, largely through civil action in the UK and other jurisdictions throughout the world, successfully tracked down over 70% of assets hidden and dissipated by BCCI. Although the liquidators have spent several hundred million dollars in legal and accountancy fees to date, they have increased the dividend payable to creditors from an initial forecast of 15% to 70%. It is difficult to foresee any Government in the world being prepared to spend that kind of money in pursuing and tracing assets world-wide on behalf of looted organisations or states. It is however a very striking example of the efficacy of well resourced professional work in obtaining tangible results1.

In May 2001 the Government of Nigeria began a civil action against its former ruler Sani Abacha and about one hundred of his associates. Within a matter of months the civil recovery process had secured a large number of bank records from over 20 banks and led to the freezing of approximately £50 million. The use of banking orders made in ex-parte civil proceedings was a valuable weapon in this discovery process.

Furthermore, in May 2007 the Government of Zambia succeeded in civil proceedings against a number of claimants including the former President of Zambia Frederick Chiluba and secured an order against the claimants for over £23 million. The fact that some of the bank accounts were in London, some of the conspiracy to steal from the Zambian State took place in London and the fact that London law forms were used to launder some of the monies was considered a sufficient nexus for a successful application to be made.