Proceeds of Crime Act 2002, Part 5: Civil Recovery or Criminal Recovery?

Part 5 of the Proceeds of Crime Act 2002 (or POCA 2002) enables enforcement agencies to recover property which has been obtained through unlawful conduct or organised crime, such as money laundering. This right can be exercised by the National Crime Agency (NCA) or another authority whether or not any proceedings have been brought in relation to a criminal offence.

Any kind of property owned by the defendant may be seized through a confiscation order, so long as its value is less than or equal to the original amount the defendant is suspected to have received through unlawful activity.

The guidance given by the Home Office and Attorney General states that criminal prosecution must be considered as a first priority before a civil recovery. Prosecuting authorities are advised regarding which approach will best serve to reduce crime, and they are encouraged to allow criminal proceedings to take priority.

If criminal proceedings are not found to be within the public interest, or if criminal proceedings fail as a result of insufficient evidence, for example, only then may civil recovery proceedings be considered.

Civil Recovery or Criminal Recovery – a Step by Step Guide

The Starting bit

At the start of the assets recovery process, any assets or property believed to constitute or represent proceeds of crime will be made the subject of a Property Freezing Order (PFO). The person subject to the PFO defendant may not interact with the assets frozen unless with the permission of the prosecuting authority and crown court or they will be considered in Contempt of Court.

The types of property froze vary depending on the individual case but they can include houses, cars, bank accounts to less obvious items such as expensive paintings.

The limitation act applies and therefore prosecuting authorities cannot recovery orders property beyond 20 years unless it can be demonstrated that has been deliberate concealment of facts relevant to the case.

The case will be determined by the High Court and the standard of proof for determining decisions in these cases is based on the “balance of probabilities” rather than the criminal standard of “beyond a reasonable doubt”. The consequences of the PFO will be that your bank account will be prevented from being used by you and any property you own will not be able to be sold, refinanced or utilised in any way as to diminish its value without the permission of the prosecuting authority and the court.

The middle bit – Varying the PFO:

The job of your solicitor for the interim stage of the proceedings whilst the civil recovery proceedings are being determined is to vary the order so as to allow the ordinary course of events of your personal and business life to continue to prevent your business from being disrupted and your ordinary living expenses to be met. The PFO is not designed to disrupt these aspects of your life.

Funding via legal aid is not available, however, these proceedings do permit monies frozen in bank accounts to be released in order to pay for legal expenses as well as personal expenses. If you win, you can get your costs back.

Once you are served with the PFO, you will be able to discharge it (launch a challenge to it), however, this has to be with care and upon expert legal advice as you will need to present a good argument to do so before the High Court. You may instead or in tandem, make an application to vary certain aspects of the PFO.

Any assertions made in the PFO about alleged acts of unlawful conduct will need to be carefully analysed fully considered responses will need to be prepared as well as to any allegations assertions of financial impropriety such as false tax returns, false mortgage applications or lack of income trail or tax returns.

Detailed and meticulous preparation is crucial. DBT & Partners has the first-hand experience of dealing with various cases which will help you as we have had successful outcomes due to such experiences.

In our experience, prosecuting authorities clearly have a policy of settling civil recovery cases and it is vital that such negotiations are done with care and by a solicitor with a proven track record of handling such negotiations. They require an understanding of not only the nature of the assertions made but also how to argue against such assertions.

The end bit:

If you win you can claim for the costs of your legal fees as well as compensation. This is decided by the court in circumstances where the recoverable property is determined as not being so and there is a discontinuance successfully challenged without agreement.

Contact our Business & Tax solicitors team for full support and advice.