Background and summary of guidance on asset recovery (2009)
Background note: guidance issued by the Home Secretary and Attorney General under Section 2A of the Proceeds of Crime Act 2002
(This note explains the statutory background and purpose of the guidance issued under Section 2A - it is not part of the guidance itself.)
Section 2A
Section 2A of the Proceeds of Crime Act 2002 requires the Serious Organised Crime Agency and specified prosecuting authorities to exercise their functions under the Act in the way which they consider is best calculated to contribute to the reduction of crime. In accordance with section 2A, the Home Secretary and the Attorney General have given guidance to SOCA and the prosecuting authorities respectively to assist them in exercising their functions. They must have regard to the guidance in considering what action is best calculated to contribute to the reduction of crime.
The scale of organised crime in the UK is such that law enforcement and prosecuting authorities need to deploy all the legal powers at their disposal intelligently in order to maximise the impact of asset recovery on crime reduction. SOCA and the prosecuting authorities have a wide discretion as to how they do this, and it is essential that they retain the flexibility to take the best approach to each individual case as it arises. However, there is also a need to ensure that decisions are taken in a principled fashion, with the public interest as the primary consideration. Now that several authorities are entitled to use the civil recovery powers under the Act, there is further benefit in providing a framework of guidance to encourage consistency of approach.
The powers
The Act creates four asset recovery regimes each of which has its own features which are relevant in considering the best approach to take in any given case:
Confiscation follows conviction for an offence. In making an order the court must decide whether the defendant has a "criminal lifestyle", based on a number of legislative triggers, including specific types of offences. In cases which trigger the criminal lifestyle provisions, the court applies assumptions about property transferred to the defendant in the six years up to the day proceedings were commenced when assessing the "recoverable amount", unless the assumptions are shown to be incorrect by the defendant or there would be a serious risk of injustice if they were applied. Applying the assumptions may mean that a confiscation order is made in a larger sum than the proceeds of the specific crime for which the offender was convicted.
Where the court decides that the offender does not have a criminal lifestyle the court must decide whether the offender has benefited from his particular criminal conduct - the specific crime for which he was convicted.
Where the offender fails to pay the confiscation order they may be subject to a sentence of imprisonment (the "default sentence"). This is not an alternative to paying the order, and the order remains extant despite the serving of the default sentence.
Civil recovery is a form of non conviction-based asset forfeiture which allows for the recovery in civil proceedings before the High Court of property which is, or represents, property obtained through unlawful conduct. Importantly, the proceedings are against the property itself (in rem) rather than against an individual (in personam).
These proceedings are civil litigation and the civil standard of proof (the balance of probabilities) applies. The court, however, will still require cogent evidence in order to be satisfied that property is on balance more likely to be the proceeds of unlawful conduct than not. To prove that property was obtained through unlawful conduct, it is not necessary to prove the commission of a particular criminal offence by a particular person on a particular occasion. It is sufficient to prove that the property was obtained through offending of a particular type (drug trafficking, fraud etc). This cannot be done solely on the basis that the person holding the property has no identifiable lawful income to warrant their lifestyle. However, the absence of any evidence from the person to explain their lifestyle, or the giving of a false explanation, allows the court to infer that the source of the income was unlawful. As the action is against the property and not the person, the person who holds the assets which are the subject of the order might not be the person who carried out the unlawful conduct, and a civil recovery order is not a conviction or a sentence.
The cost and duration of civil recovery proceedings varies from case to case depending on the circumstances and complexity of the case. Civil recovery proceedings are often, due to their nature, contested and may in certain circumstances involve protracted litigation. In other cases however, an order can be obtained quickly and simply where the other party consents to it.
Cash forfeiture generally provides a simple and speedy non conviction-based magistrates' court procedure for recovering seized criminal cash. Any party wishing to contest the forfeiture must demonstrate to the court that the cash comes from a legitimate source.
Cash forfeiture usually sits outside criminal proceedings. However, a person knowingly having possession of criminal property commits a money laundering offence, so a cash seizure creates the potential for a criminal investigation which may result in the making of a confiscation order in a larger sum than the seized cash.
Criminal taxation is also a non conviction-based power, but it does not result in criminal property being recovered. Instead it allows tax to be charged on a person's income, profits or gains where there are reasonable grounds to suspect that they arise or accrue from criminal conduct on the part of that person or another.
Only SOCA is entitled to exercise the criminal taxation powers under the Act, but HMRC retains all its usual powers in respect of taxation. HMRC can issue tax assessments against taxpayers who may be linked to criminal activity as a means of disrupting their activity, without making any assertions regarding the link between the income or gain and the criminality. The issuing of a tax assessment by SOCA or HMRC is based on income or gain over a period of up to 20 years.
The guidance
As is required by section 2A, the guidance indicates that the reduction of crime is in general best secured by means of criminal investigations and criminal proceedings. The benefit of investigation with a view to prosecution should always be considered by a law enforcement agency faced with suspected criminality. Where offenders are tried and convicted in the criminal courts, and sentenced in line with the seriousness of the offence, this is generally the best and fairest way to serve the public interest and secure public confidence in the system of justice.
However, the guidance recognises the contribution to harm reduction that can be made by proper use of the non-criminal powers available under the Act. The guidance requires SOCA and the prosecuting authorities to consider using these powers where a criminal disposal is not feasible, and gives examples of the circumstances in which this might occur.
In cases where criminal investigation and prosecution is feasible, it may be deemed by the relevant authority that a non-conviction based approach is more desirable, taking into account the overriding considerations of harm reduction and the public interest. This is consistent with the approach taken in the Code for Crown Prosecutors to the decision whether or not to prosecute. The Code provides that a prosecution will usually go ahead unless there are public interest factors tending against prosecution which clearly outweigh those tending in favour, or it appears more appropriate in all the circumstances of the case to divert the defendant from prosecution.
The guidance is intended to remove any perception that the use of civil recovery can only ever be considered after a full criminal investigation has been completed and a decision not to bring a prosecution has been taken. There are circumstances in which the public interest may be best served by an early decision to use civil recovery powers rather than to pursue a criminal investigation. Again, the guidance gives examples. In a case where many people have played a part in a complex criminal enterprise, for instance, the need to ensure that the investigation and any future prosecution is manageable may mean that strategic decisions have to be taken at an early stage about the scope of the investigation. It may better serve the public interest to use civil recovery against peripheral participants who have enabled or facilitated the crime, rather than including them in the criminal investigation. Special care is needed to ensure that any decision not to pursue the normal criminal process can be regarded as reasonable. This is particularly the case where an individual or company consents to the making of a civil recovery order, as the impression might be created that they have avoided criminal liability solely because of their ability to pay the order.
In addition to discussing the circumstances in which use of the non conviction-based powers under the Act might be appropriate, the guidance sets out the circumstances in which the different powers may be used concurrently. It also sets out the principles that authorities should apply in considering whether or not to settle civil recovery proceedings for a sum less than that claimed.