Introduction
As the nation emerges from lockdown, we have all had time to consider the trends which law enforcement have been deploying to disrupt the flow of suspected criminal funds. One trend that has been noted at 5SAH is the modest but steady increase of the use of the POCA listed assets regime to seize, detain and ultimately forfeit assets such as gold, jewellery, watches and art.
While the powers are not new, having been enacted on 17 April 2018, as we approach the three-year anniversary of enactment it seems law enforcement are more comfortable in using them, and as the investigatory period is limited to two years, applications for forfeiture of the items will increase. Article by Barnaby Hone and John McNamara.
The Provisions
Listed assets
Under s.303B of POCA 2002 the following items can be seized:
- Precious metals (gold, silver or platinum whether manufactured or not);
- Precious stones;
- Watches;
- Artistic works (defined by section 4(1)(a) of the Copyright, Designs and Patents Act 1988);
- Face-value vouchers;
- Postage stamps.
The value of the item has to be over the statutory minimum of £1,000. If more than one item is seized, it is the aggregate value of all items seized that is relevant. That is particularly relevant to collections of watches where the value of individual items can vary significantly depending on condition and the presence of original boxing and paperwork.
Seizure and detention
For a relevant officer to seize an item they must believe the following three circumstances our met. First, it is a listed item. Second it is recoverable property. Third, the value of it is not less than the minimum. The officer can also seize property which contains part recoverable property, if it is impractical not to only seize part.
Importantly for those with experience of cash and account forfeiture orders, the time limits for initial detention in listed assets cases are different. The property can be initially seized for up to 6 hours, and a senior officer must then authorize a longer detention. This longer detention is for a period of 42 hours. After that time the seizure must be authorized by the Magistrates Court. The conditions for seizure in front of the Magistrates Court remain substantially the same. Making sure that these time frames are complied with will be an important area of challenge and one that members of 5SAH have enjoyed success in recently.
At the first hearing the Magistrates Court can seize the assets for up to six months. This can then be extended by six months tranches to up to 2 years in total under section 303L of POCA 2002. In these extensions hearing it is important to make sure that the correct service has taken place. Incorrect service has also been the source of a successful challenge by one member of 5SAH.
Forfeiture and realization
The test for forfeiting the property is the same as with cash and account forfeiture orders. There are however specific provisions on how associated and joint property should be dealt with. S.303Q provides provision for allowing third parties to agree to pay for an item or be reimbursed. So, if there is a property, such as a work of art, which has been part paid for by recoverable funds and part from legitimate funds, it can be either bought by the person with the legitimate half, or if it is realized a fair proportion will be provided to the legitimate owner. The parties will have to agree on what proportions of the proceeds should be received by each party.
Under s.303R, if there is no agreement as to how the item should be shared, the matter can be either decided on by the High Court, in cases where the property is worth under £10,000. If it is over this value, the decision has to be transferred to the High Court for judgment.
S.303R (11) also provides for the relevant court to make an order for compensation where there has been a loss suffered by the third party or there are exceptional circumstances. Under s.303W compensation can be claimed by the owner of the property if no order for forfeited is made.
Issues and trends
The use of these provisions will steadily increase. The ability of budget-strapped law enforcement agencies to disrupt and strip assets from individuals suspected of being involved or benefiting from criminality without having to secure a criminal conviction is attractive. The proceedings are quicker than a criminal trial, require less resourcing from a law enforcement perspective and ultimately are easier to prove on the civil standard of proof. This follows the trend we have seen in the increasing use of Account Freezing and Forfeiture Orders.
The impacts of Brexit are being felt by all investigators in cases where there is an international dimension. In relation to luxury watches, many of the big Swiss Watch Houses keep internal databases of reported stolen watches by serial number. In some cases, this may be a reasonable line of inquiry which a Respondent would expect a law enforcement agency to undertake. The impact of Brexit on mutual legal assistance (MLA) will make this a difficult task for investigators to undertaken expeditiously.
Counsel with experience of these cases can be a valuable asset in assisting with tactical considerations of how to use the procedural rules effectively, can advise on how to use discharge applications to put pressure on the Applicant, know where to press for disclosure, and how to prepare a clear and persuasive case to resist an application for forfeiture.
Barnaby Hone is a barrister with specialist expertise in all types of asset recovery and financial crime. He is ranked in Chambers and Partners and the Legal 500 for his knowledge within POCA, asset recovery, and forfeiture. Barnaby writes the chapters on International Asset Recovery and Terrorism Finance for Millington and Sutherland Williams on POCA.
John McNamara is a barrister practising in criminal law and all related areas. He is experienced in defending and prosecuting a range of proceedings arising from the Proceeds of Crime Act 2002 including restraint and confiscation, cash forfeiture, and account freezing and forfeiture hearings.
