Legal Guidance around confiscation proceedings
Posted on 5th April 2019
Receiving a sentence at the conclusion of criminal proceedings will often feel like the end of a long and distressing process. A defendant may feel that at the very least they can breathe a sigh of relief knowing that a line can be drawn in the sand and a new chapter can begin for them. Unfortunately for some, this new chapter is titled ‘Confiscation Proceedings’.
What are Confiscation Proceedings?
Following a criminal conviction, the Proceeds of Crime Act 2002 (POCA) allows the Court to make a confiscation order. The purpose of confiscation proceedings is to determine to what extent a guilty person has financially benefited from their offending.
At the end of these confiscation proceedings, the Court will make a confiscation order which compels the defendant to pay back money as close to that benefit as reasonably possible.
How does the Court work out the value of a confiscation order?
Stage 1 – Criminal Lifestyle
The first step is for the Court to decide whether the defendant has a ‘criminal lifestyle’. This has a specific meaning under POCA and it impacts how matters proceed.
The Court can deem a defendant to have a ‘criminal lifestyle’ if they satisfy one or more of three criteria:
i. The defendant is convicted of an offence specified within Schedule 2 of POCA, such as drug trafficking, money laundering, terrorism, people trafficking, counterfeiting, blackmail, prostitution or child sex;
ii. The defendant is convicted of an offence that forms part of a wider course of criminal activity; or
iii. The defendant is convicted of an offence committed over not less than 6 months, resulting in a benefit of at least £5,000.
Stage 2 – Benefit of Criminal Activity
The next stage is for the Court to determine whether the defendant has in fact benefited from criminal activity.
If the defendant is deemed not to have a ‘criminal lifestyle’, the Court will decide on the particular benefit arising from the offending conduct. This means that confiscation proceedings will only focus on the financial benefit obtained from offences dealt with at trial (or sentence if the defendant pleaded guilty).
If the Court does consider the defendant to have a ‘criminal lifestyle’, it will determine the benefit from the general criminal conduct. All criminal conduct will be investigated regardless of when it occurred.
POCA also imposes certain assumptions that the Court must adopt in ‘criminal lifestyle’ cases. This means that it is assumed that the following property arises from general criminal conduct and, therefore, must form part of the benefit value of the confiscation order, namely:
i. Any property transferred to the defendant since the beginning of the 6-year period prior to charge;
ii. Any property held after conviction; and
iii. Any expenditure incurred within the 6-year period prior to charge;
An assumption can be rebutted, but the onus is on the defendant to prove that the assumption is incorrect and the property in question was obtained from legitimate sources.
Stage 3 – The Recoverable Amount
The value of the benefit obtained is called the “recoverable amount”.
If any financial gain was obtained by legitimate means, it is important to provide evidence of that in order to avoid it forming part of the recoverable amount in the confiscation order. This is particularly important in ‘criminal lifestyle’ cases where the assumptions can escalate the value substantially.
Stage 4 – The Available Amount
The Court will make a confiscation order in the sum of the recoverable amount, unless the value of the defendant’s existing assets is less than the value of the recoverable amount.
The Court will consider what the defendant’s assets are and this is known as the ‘the available amount’. A confiscation order will be made to its value if it is less than the recoverable amount.
A word of caution should be noted at this point: a defendant may be required to meet the recoverable amount should their financial position improve in the future. For example, a defendant with no tangible assets may be ordered to pay £1 immediately because that was the available amount when the confiscation order was originally made. But if they were to come into money in the future which means they can settle the recoverable amount they will have to make further payments.
Stage 5 – Proportionality
Finally, the Court must ensure that the imposition of the confiscation order is proportionate, all things considered.
How quickly do I have to pay?
Once the confiscation order has been decided upon, the Court will usually order payment immediately. If the defendant can show the need for more time to pay, a period of 3 months may be given to do so.
In exceptional circumstances, it is possible to apply for a further 3-month extension to the time limit. This must be done within that initial 3-month period. For this reason, it is important for the defendant to maintain contact with their lawyer, particularly if they are in difficulty raising the required funds.
There is no jurisdiction to extend beyond those 6 months.
What happens if I do not pay on time?
Once the time limit lapses, daily interest will begin to accrue at 8%. The interest becomes part of the confiscation order and has to be paid.
If a defendant fails to make payment, enforcement proceedings will be brought in the magistrates’ court.
Broadly speaking, these proceedings are about enforcing the payment. Inquiries will be made into why the monies have not been paid back and when payment can be expected.
Ultimately, if the monies are not paid back a defendant can go to prison in default.
If the anticipated assets of a defendant are no longer adequate to settle the confiscation order, an application to vary the original order to the Crown Court should be considered.
Default Terms of Imprisonment
When the original confiscation order is made, the Court will specify a default term of imprisonment in the event the defendant fails to comply and during the enforcement proceedings, the Magistrates’ Court have the power to send a defendant to prison for non- compliance.
However, serving the default period does not eradicate the debt; payment is still expected upon release.
The prosecution can also, or in the alternative, ask the Court, to appoint receivers. These are debt collectors that will confiscate or manage the assets a defendant may possess in order to settle the debt owed.
What can I be doing to ensure the confiscation order is fair?
The assumptions made in criminal lifestyle cases can make a confiscation order an overwhelming prospect. The value of the alleged benefit could be very high and defendants face the possibility of having to sell everything they own in order to settle it.
Confiscation proceedings may sound like a step-by-step process with the Court doing most of the decision-making but, in practice, this is far from the case. It is the primary role of your legal team to ensure that a confiscation order is not overvalued.
The prosecuting authority could be making assertions about your lifestyle or the value of your assets. These have to be scrutinised and if they can be challenged, evidence gathered to do so.
Failure to scrutinise what the benefit truly was and how much a defendant can afford to pay back will result in repercussions that impact a defendant’s life for longer than a sentence imposed by the courts. It is always important to obtain legal advice at any stage of confiscation proceedings.