Section 22 of the Proceeds of Crime Act 2002 will they come back for more?

3rd August 2018 Business Crime

The Proceeds of Crime Act 2002 (POCA) is a piece of legislation that is designed to strip those who have been convicted or pleaded guilty to certain criminal offences of their 'ill gotten' gains. For those who are convicted of offences in which they are considered to have 'benefited' from their criminal conduct, confiscation proceedings will likely be pursued. Examples being financial gain through the sale of drugs, fraud offences or the sale of counterfeit goods. At confiscation proceedings the court will determine the amount that the defendant has 'benefited' from criminal conducted, and secondly calculate the funds that they have available to pay back.

In the majority of cases, the second figure, also known as the 'available amount' is significantly less than the benefit figure. Questions are inevitably raised by defendants in respect of this difference and what may be an alarmingly high million pound benefit figure. Concerns may include, will I be required to pay this amount? Can the prosecution come back if I set up a business? If I inherit money? If I win the lottery?

Unfortunately for those who have are faced with a confiscation order, the answer is yes. Under section 22 of POCA, the prosecution are entitled to revisit the original confiscation order and now appear to be doing so on an increasingly regular basis.

What is an application under section 22 of POCA?

This area of somewhat harsh and punitive law permits the prosecution, where a confiscation order has been made in the past, to apply to the Crown Court to re-calculate a defendant's 'available amount'; in other words, a re-assessment of their current wealth. This will apply where the prosecution consider that an individual who was previously subject to a confiscation order now has further assets available to them to 'pay off' the outstanding benefit figure.

Once an application is made, the court will be required to consider whether it is just, taking into account all of the circumstances, to vary the confiscation order. The court is entitled to increase the amount that the defendant is required to pay, up to the total benefit figure.

When might an application be made?

At the time that an original confiscation order is made, defendants are often unfortunately under the impression that a confiscation order will never or rarely be revisited (for example if they win the lottery) and that this cannot be done after a certain timeframe. This is not the case.

An order may be revisited after any period of time, from two years to twenty years and beyond. It may be in a number of circumstances and certainly not confined to lottery wins. Applications are being made more commonly in instances where a property has increased in value and there is therefore equity belonging to the defendant. It may be that funds in a bank account have increased due to employment or a new business being set up, or a pension can now be accessed. A vehicle may have been purchased and the value of the vehicle now deemed as an asset that could be sold and paid towards the confiscation order.

In summary, the application is a reassessment of the defendant's current worth and assets and is not limited to particular assets, nor is it limited to a particular time frame.

What should I do if I receive an application to vary my confiscation order?

Where the prosecution consider it appropriate to make the application, they will in the first instance write to the individual concerned and remind them of the details of the confiscation order, along with a 'Consent Order' simply inviting the individual to agree that their confiscation order should be varied.

Legal advice and representation should be sought at the first opportunity. There are often grounds to contest the application and detailed and expert consideration should be given to the prosecutor's application.

How can I oppose the application?

The fact that a confiscation order that may have been met by an individual can later be re-visited, at any time, and in relation to any asset, is deemed by many as unfair and contrary to prospects of rehabilitation.

As in original confiscation proceedings, the burden falls on the defendant to disprove the prosecution's assertions regarding the 'new found wealth.' Whilst the legislation is draconian, there is scope to oppose the applications and therefore potential hope for defendants who may be stripped once again of their assets.

Cases concerning applications under section 22 of POCA have given consideration to assets that have been accumulated by 'hard work and legitimate enterprise'. In the case of R v Padda 2014[1] the court found that a judge should exercise discretion where a defendant had formed a legitimate business and accumulated funds.

It is arguable that greater scope was given for a section 22 application to be challenged following the recent case of R v Mundy 2018[2], in which the court refused permit a confiscation order to be re-visited. It was held that the court should take into account all relevant circumstances when deciding the issue. This might include the amount that is outstanding, the length of time since the original order and the impact that further payment would have. This may provide optimism to those facing a section 22 application, albeit the court found that such factors must be balanced against legislative policy of maximizing recovery from crime.

This doesn't seem fair!

In short, the Proceeds of Crime Act, and in particular the open-ended nature of section 22 of the Act is not fair. As alluded to, it deprives the opportunity to those who have served a sentence and met their original confiscation order to rebuild their lives. Whilst applications can be opposed on the grounds that funds were 'legitimately obtained' through hard work and legitimate income, the court's approach to such arguments remain discretionary and a grey area of law.

Moreover, the implications of an application and a confiscation order being successfully re-visited are significant and may lead to individual being forced to sell property and give up the entirety of their bank accounts or pension pot (for the second time). It is therefore imperative that expert advice and representation is sought.

If you are contacted by the Crown Prosecution Service in relation to a section 22 application, contact JMW's Business Crime department on 0345 872 6666.

[1] R v Padda [2013] EWCA Crim 2330

[2] R v Mundy [2018] EWCA Crim 105

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Catherine O'Rourke is a Solicitor located in Manchester in our Business Crime & Regulation department

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