Proceeds of crime

Money laundering is defined as an act which constitutes an offence under ss 327, 328 and 329 or an agreement or attempt to commit such an act.  Convictions for s.327 and s.328 offences attract the “lifestyle” assumptions under POCA and are subject to the confiscation regime.  A conviction for the s.329 offence does not attract the lifestyle assumptions.

Under all three provisions the Defence team will be looking to see if the prosecution can prove, beyond a reasonable doubt, that the property comes from criminal activity and/or that the accused knew or suspected that the property was criminal.  If the prosecution cannot prove those elements then the prosecution should stop an investigation/prosecution or, if the matter goes to trial, the accused will be acquitted.

In addition to those basic elements, each offence has slight differences:

s.327 – we will be looking to undermine the prosecution assertion that the accused did one or more of the following:

• Concealed, disguised, converted, transferred or; removed from England and Wales;
• property;
• which was a benefit from criminal conduct; and
• that the defendant knew or suspected that the property represented a benefit from criminal conduct.

s.328 – we will be looking to undermine the prosecution assertion did one or more of the following:

• entered into or became concerned in an arrangement;
• which s/he knew or suspected facilitated (by whatever means) the acquisition, retention, use or control;
• of criminal property;
• by or on behalf of another person

s.329 – we will be looking to undermine the prosecution assertion that the accused did one or more of the following:

• acquired, used or possessed;
• property;
• which was the benefit of criminal conduct.
• and that s/he had the necessary knowledge or suspicion that the property represented a benefit from criminal conduct.

Depending on the circumstances of each case, we will build the defence using forensic tools available to us, and the network of professionals that we use to trace funds, analyse bank accounts

Yes.

If your company is subject to money laundering provisions (known as the regulated sector) then under s.338 of POCA you will not be committing an offence if you make an authorised disclosure to a constable, a customs officer or a nominated officer.  If you have a suspicion about a client, or a specific transaction then a suspicious transaction report (STR) should be made; if the STR is not made, but there was an intention to make it and there is a reasonable excuse for it not being made this will also be a defence.

If you have a company, or business, it is important to ensure you have a money laundering audit to ensure that your systems and procedures are up to scratch.  The Financial Crimes Authority is increasingly moving towards a more robust approach to prosecutions in this area. Freemans’ specialist team will be able to assist you in this regard.

This will depend upon the severity of the offence. With one exception all three offences carry the same sentence range of up to 14 years imprisonment or a fine or both. As part of the sentence process, the prosecution can ask for a confiscation order under POCA:

The exception relates to the confiscation proceedings – a conviction for the s.329 offence does not attract the POCA lifestyle provisions.

If the amount is less than £1,000 and you have not been convicted of an offence then no they cannot.

If you have been convicted of an offence, or the amount was more than a £1,000 in cash then in certain circumstances your money can be taken.  Whether or not you can get it back will depend on a number of factors.

Civil recovery proceedings are proceedings whereby an enforcement authority can pursue a civil recovery order (CRO) and associated interim orders freezing property on the basis that the property in question was obtained by or in return for unlawful conduct.

CROs facilitate the recovery of the proceeds of crime without the need for a conviction and therefore for an offence to be proven to the criminal standard. All that is required is for the court to be satisfied on the balance of probabilities that property, which is the subject of the application, is or represents the proceeds of unlawful conduct.

A CRO applies directly to the property upon which the CRO has been made. It vests in a trustee in civil recovery from where it can be liquidated or sold. In this way, it is different from the exercise of powers under POCA to make a Restraint Order or a Confiscation order.

The power to obtain civil recovery is currently available to the National Crime Agency, the SFO, the Crown Prosecution Service and the Revenue and Customs Prosecutions Office.

Civil recovery proceedings are brought before the High Court, rather than the criminal courts and accordingly the rules of civil as opposed to criminal procedure and evidence apply.

If you are subject to a CRO, and you give a written response to the order, the National Crime Agency are still  able to satisfy the High Court on the balance of probabilities that the asset was indeed obtained with the proceeds of criminal activity, the property will be confiscated and sold with the liquidated value paid to the estate.

In January, new powers designed to help UK Law Enforcement act on corrupt assets came into force. If an enforcement authority, most likely to be the National Crime Agency, obtains an Unexplained Wealth Order from the High Court, the person named in the order will be required to explain the source of the funds which enabled him or her to purchase the asset. This can be anything from a residential or commercial property of high value to items of jewellery, antiques and luxury cars.

The Court has various investigative powers it can exercise at the request of the Financial Investigator and the Crown.

The Court has power to make:

1. DISCLOSURE ORDER

This will require you to reveal details of all your property and assets.

2. RESTRAINT ORDER

Courts dealing with Confiscation orders are increasingly encouraging the prosecution to apply for restraint orders early on in an investigation.

At the outset as soon as a criminal investigation begins, the police may apply for a Restraint Order against you. A Restraint Order allows the police to freeze your bank accounts and other assets.

If you are served with a Restraint Order you must seek legal advice immediately.

Freemans’ fraud lawyers are experts in determining the following:-

• Should the Restraint Order have been made?
• If yes, is it proportionate i.e. the order should  only cover the  amount of money under investigation or charge
• If properly made, Freemans’ lawyers will advise you on the effects of the order, apply to vary the same and if necessary appeal any decision against varying the order where appropriate.

See details of a case where we successfully defended an appeal by the Crown to the court of appeal in respect of a variation ordered by the crown court.

3. DETENTION AND FORFEITURE ORDERS?

• A Detention and Forfeiture Order can be made for any cash seized (amounts seized from you under these orders may be included later if a Confiscation Order is made against you).

If you are subject to such an order, we recommend you speak to one of our lawyers urgently. We have a good success record in dealing with these orders at an early stage where monies are seized under money laundering regulations. We will work proactively with you to determine the provenance of the monies with a view to negotiating a return of all or some of the seized funds.

POCA sets out the process to be followed when a Court is considering making a confiscation order.

There are pre-conditions which must be met:-

1. Proceedings against you must have taken place in the Crown Court or committed from the Magistrates Court to the Crown Court either for sentence or for the purpose of a Confiscation order.
2. The Crown Prosecution Service must ask the Court to proceed with a Confiscation Order against you if the Court considers it appropriate to do so.
3. If it is asserted that you have a criminal lifestyle, then assumptions apply when determining the extent of your benefit. If no criminal lifestyle applies then the Court considers what benefit you derived from your particular conduct as opposed to criminal conduct and will calculate benefit on the value of the offences convicted of.

The confiscation process begins as soon as a prosecutor requests it or the court believes it to be appropriate.  If the Prosecution requests it the Court must proceed.

The Confiscation procedure begins in the Crown Court after a Defendant has been sentenced.

Unlike ordinary criminal cases, the standard of proof in any POCA case, for all parties is the balance of probabilities, a lower threshold than beyond reasonable doubt.

Ordinary rules of criminal evidence also do not apply so, for example, hearsay evidence is admissible.

Once the Court determines that a Confiscation Order can be made, the following steps must be followed:-

SECTION 18 POCA

A Financial Investigator prepares a S18 notice which is served on you requiring you  to reply to that notice setting out all aspects of the Defendant’s financial affairs.

SECTION 16 POCA

Prosecutors will look at your lifestyle and your known assets. They will consider relevant information and any evidence of a lavish lifestyle, e.g. expensive homes, furnishings, cars, holidays, jewellery and other assets.

The Section 16 statement will set out:-
•    the relevant facts of the underlying conviction
•    summarise your financial circumstances
•    what is believed to be is the benefit, the recoverable and available amount
•    the amount of the confiscation order requested
•    It will clearly state if the Prosecution believes that you have hidden assets or if you have made tainted gifts.

An example is if you transfer property to another person for a consideration for a value which is significantly less than the value of the property at the time of the transfer.

The Financial Investigators preparing the Section 16 Statement lack any accountancy    background. Discrepancies can therefore arise in the claims made by them which may include grossly inflated calculations of benefit and the amount available for confiscation due for instance to double accounting of receipts and expenditure.

At Freemans Solicitors, our expert lawyers will instruct forensic accountants who examine these aspects in detail thus setting out challenges when we come to preparing your Section 17 Response to the Section 16 Statement.

SECTION 17 POCA

This is your response setting out the extent to which you accept each assertion and the particulars of any matters that you propose to rely on.

The burden of proof is on you to prove your case on a balance of probabilities.

We help you do this. We will take statements or request production of information from your accountants, banks and any other witnesses who are able to support your case.

We will methodically and aggressively challenge the assertions made by the Prosecution to ensure that we establish a legitimate provenance of your monies/assets.

We instruct a range of experts including:-

• Forensic accounts
• Lawyers
• Drugs experts
• Experts in valuation of land, jewellery and antiques.

We have achieved considerable success in reducing figures that the Prosecution have sought to confiscate by our proactive work in minimising the available amount.

We regularly challenge and often before going to Court for a final contested hearing, come to an agreement with the Prosecution to bring the proceedings to a conclusion.

See for example.

The Crown were seeking a confiscation order in millions. We successfully negotiated a settlement of £300,000.

Failing agreement, once all the evidence has been gathered the Court sets a final hearing date for the Confiscation Hearing.

Both parties are entitled to file replies and counter replies to the statements of information they intend rely on.

At this hearing witnesses and experts can be called to give evidence. Your legal team will have every opportunity to challenge evidence and to call witnesses on your behalf.

After which both parties will present their closing arguments before a decision is made on the Confiscation Order.

CONFISCATION ORDERS

Lord Bingham succinctly explained the confiscation regime by way of a three-stage test in May [2008] UKHL 28:

(1) Has the defendant benefited from relevant criminal conduct?

(2) If so, what is the value of the benefit so obtained? In assessing benefit, what matters is whether someone has obtained money, not whether they have retained it.

(3) What sum is recoverable from the defendant?

If you abscond before a verdict is delivered and are convicted in your absence, the Court can still make a Confiscation Order in your absence.

“Permitted period” is defined in s.14 (5) as being a period of two years starting with the date of conviction. We can apply to extend this.

PROPORTIONALITY

You are entitled to ask the court to make an order that is proportionate.

The aim of POCA is to remove from the criminals the proceeds of their crime, not as an additional punishment.

Yes: Section 10 (a)

This enables anyone with a third party interest in a property or a business to enable them to make a claim that they have an interest in a property or asset. This most commonly applies to a spouse who may claim to have a 50% claim in a matrimonial home or a business partner who will claim to have a share in the business. Section 10(a) provides a mechanism whereby the third party can address the Court at the stage when an order is made in the Crown Court to assert their interest.

The amount to be paid under a Confiscation Order must be paid on the date of the making of the Confiscation Order. If you need time to pay the Confiscation Order, the Court may extend this time for payment for up to three months, upon application by your legal team.

ENFORCEMENT PROCEEDINGS

If the Confiscation Order is not paid within the given time then enforcement proceedings will be commenced against you in the Magistrates Court.

If you do not pay the Confiscation Order then the Magistrates can commit you to serve the default sentence.

The default sentence for non-payment is consecutive to the sentence imposed for the offence for which you were convicted.

It is open to both you and the Prosecution to appeal a Confiscation Order. You may wish to appeal if it is considered that the order is manifestly excessive or wrong in principal. The Crown may apply to increase the order in limited circumstances.

You may also apply to the Court for a certificate of inadequacy if you can prove that you have insufficient means to pay the order.

INTEREST OUTSTANDING ON BALANCES

The position on unpaid sums for Confiscation Orders is that interest is payable on the unpaid amount of the Confiscation Order. 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 itself. This interest is added by operation in law and the Court has no jurisdiction to waive payment.