One of the principal objectives of the Serious Crime Act 2015 was to ensure that law enforcement agencies had effective legal powers to deal with the recovery of property derived from the proceeds of serious and organised crime.
In particular, the 2015 Act was designed to strengthen the operation of asset recovery by closing loopholes in the Proceeds of Crime Act 2002 (POCA), not least because the POCA has been under constant legal challenge from criminals who are continually seeking new ways to avoid its reach.
However, by virtue of section 1 of the 2015 Act, which inserted a new section 10A into the 2002 Act, this also changed the way in which the courts can determine third party interests in property in which the defendant also has an interest, thereby helping to protect the rights of wholly innocent third parties.
What was the law previously?
Before the introduction of section 10A, the POCA made no express provision for the court to deal with any third party interests in any realisable property which the court takes account of when determining the amount of a confiscation order.
Accordingly, a potentially innocent third party would have no involvement during the actual confiscation proceedings following the conviction of the defendant of a criminal offence, except where they were called as a witness.
Only once the confiscation order had already been made, could a third party make representations at the enforcement stage of the proceedings. It is at this point, given that a confiscation order is made for a sum of money rather than against specified assets held by the defendant, that the existence of any third party interest crystallises against specific property.
The net effect being that third parties had no right to make representations concerning the extent of their interest in particular assets before enforcement proceedings initiated by the prosecution.
Furthermore, waiting until enforcement to determine the extent of a third party’s interest in the defendant’s property could, in many cases, complicate, lengthen and otherwise frustrate the confiscation process.
What is the law as it now stands?
By virtue of section 10A, the position has changed in that third parties now have a right to be represented. This means that third-party interests can be taken into consideration at a much earlier stage in confiscation proceedings.
The new provisions state that where it appears to the court that a third party has, or may have, an interest in the property in question, and it is considered appropriate to do so, it can determine the extent of the defendant's interest in the property at the time the confiscation order is made. Further, the court can only make a determination if it has given a third party a reasonable opportunity to make representations, a right that also extends to the defendant.
As such, the law now allows a third party to state their claim to the asset in question at the investigation stage. They can make representations and call evidence to establish ownership, thereby reducing the risk of becoming entangled in subsequent litigation in the event that a confiscation order is made to include their property.
The new provisions also allow the court to make a decision on the facts when determining the confiscation order, rather than leaving such an important factor to a later date. One of the most common impediments to enforcing an order is the rights of third parties, whereby arguments will often be made that an order cannot be enforced because the property subject to the order is simply not owned in the proportion set out in the order or at all.
That said, and notwithstanding the enactment of section 10A, the legal position concerning confiscation proceedings and third party interests still remains somewhat ambiguous. In particular, the right to make representations is triggered by the court, i.e., only where it considers it appropriate to determine the extent of the defendant's interest in the property, and not by third parties themselves.
What happens in practice?
In considering whether it is appropriate under section 10A to determine the extent of the defendant’s interests in property, or having already decided it appropriate to do so, the Court has the power under s. 18A of the POCA to require a person it thinks might have an interest in specified property to provide information to help it make a determination.
Accordingly, the court may require the information to be given by a third party in a specified manner and before a specified date, where any failure to reply, or reply within the specified timeframe without reasonable excuse, will allow the court to draw an adverse inference against that third party.
Further, under section 18A the court also retains additional powers to deal with parties who do not comply with an order, including the possibility that a third party could face contempt of court proceedings for non-compliance.
It should also be noted that the grounds to appeal by a third party against a confiscation order are limited to where the person was not given a reasonable opportunity to make representations when the determination was made, or it appears to be arguable that giving effect to the decision would result in a serious risk of injustice to that person. As such, in most cases, the court's determination under section 10A will be conclusive.
Needless to say, the situation for potentially wholly innocent third parties remains perilous. While s10A of the POCA provides an opportunity for a person who holds an interest in the defendants’ property to make representations much earlier than before, this is entirely at the court’s discretion. As such, a confiscation order can still be made without taking into account the fairness or proportionality of the impact of that order on a third party.
Contact Our Confiscation Solicitors, London
If you are facing or affected by confiscation proceedings, whether as a convicted defendant or a third party with an interest in realisable property, you must seek specialist advice straight away.
Lewis Nedas' Criminal Lawyers have the expertise to guide you through this complicated process, helping to protect your financial interests.
We have one of the leading specialist POCA defence teams in the Country; we advise those facing POCA proceedings and those immediately affected by such orders, e.g. third parties, business partners and co-directors.
Our team includes specialist White Collar/Corporate Crime defence teams, highly ranked by the leading Legal ranking directories and are highly experienced when dealing with these proceedings, including AML, taxation, bribery and corruption, market offences, and have an in-depth knowledge of Prosecution agencies policies and behaviour.
Several other law firms have Dispute Resolution Departments comprising of corporate litigators and young barristers that deal with this field and are relative newcomers to this area of law. Not us, we have been dealing with these issues since the enactment of POCA 2002 and believe in early proactive defence, an approach that has proved to be very successful.
For further information please contact us on 020 7387 2032 or complete our online enquiry form.
