Proceeds of Crime

Everyone wants to make crime pay. Those who commit acquisitive offences do so with a view to gain. Amongst other ambitions, those who prosecute do so with a view to confiscating those gains, not least because the proceeds of confiscation defray some of the costs of the criminal justice system, and through the Asset Recovery Incentive Scheme, the budgets of the investigative and prosecuting authorities themselves.

The means by which recovery in criminal cases is achieved is usually to be found in Part 2 of the Proceeds of Crime Act 2002. POCA, as it is universally known, has few friends. It is draconian by design, the justification for which is the belief that only overtly punitive measures can force the guilty to part with the fruits of their labour. To underscore the point (and thereby demonstrating what it truly thinks of the judiciary), Parliament legislated to deny all judicial discretion. If the conditions are met, a confiscation order must be made in the sum assessed. Compassion has no place.

At the heart of POCA is the concept of ‘benefit’. Reflecting (some of) the caselaw, this can be defined as the notional market value of the gross receipts of proven or assumed offending. Benefit so calculated will often exceed the amount the defendant actually received. Nonetheless, POCA obliges the court to make a confiscation order in that sum, unless and to the extent that the defendant can prove he doesn’t have it.

Unsurprisingly, a draconian discretion-free scheme has led to the making of orders that a significant number of defendants are unable to meet. Since every order is accompanied by a default sentence of imprisonment, the result has been a further increase in the prison population.

Prompted by the Supreme Court in 2012, Parliament finally acknowledged that POCA might cause injustice and therefore required amending. This could have been achieved by the insertion into the statute of a judicial discretion, similar to that which exists in nearly every other aspect of sentencing. Instead, Parliament ordained that henceforth confiscation orders should ‘not be disproportionate’ – POCA section 6(5)(b).

Disproportionate to what? Parliament did not say. Subsequent caselaw broadly suggests that in practice, the test of proportionality is whether the confiscation order accords with the purposes of POCA, namely stripping the guilty of the proceeds of crime. Since this is no more than a restatement of the status quo prior to the amendment, it is hardly surprising that nearly every order made is said to be ‘proportionate’. Rarely has a safeguard proved less effective.

Since the inception of POCA, five particular areas of potential injustice have loomed large, and despite modest reform brought about by the courts, continue to do so.

The first is the assessment of benefit in multi-handed cases. Where three defendants are convicted of, say, the theft of £1m, the benefit of each is …. £1m. How can this be? The rationalisation is that the order will not be enforced to the extent that, between the three defendants, £1m has been paid. So if D1 pays £1m, D2 and D3 need pay nothing. Conversely, if D1 pays £333,333 whilst D2 and D3 pay nothing, all three will serve two-thirds of the default sentence.

Second: hidden assets. The term itself does not appear in POCA. The concept derives from the burden placed upon a defendant to prove he does not have the means to pay his benefit as assessed. If he fails to prove this and yet his identified assets are inadequate, the asset shortfall is considered to be ‘hidden’. This legislative device occasionally proves successful. More commonly, it too leads to the implementation of a default sentence.

Third: the criminal lifestyle provisions. The effect of these is to trigger a rebuttable assumption that the totality of a defendant’s assets, together with all his receipts and expenditure over the previous six years, derive from (unprosecuted) criminal conduct and hence constitute his benefit for the purposes of confiscation. Were such measures confined to the career criminal, the obvious risks of injustice thereby arising might be thought worth taking. Yet the legislation is so broadly drafted that it catches many who are astonished to find themselves so treated.

Fourth: the complex tainted gift provisions. The effect of these is that the market value of assets transferred by the defendant after the commission of the offence, whether by way of gift or at an undervalue, must be included as available for confiscation, regardless whether he can in fact get them back. Where the defendant is deemed to have a criminal lifestyle, these provisions can bite upon gifts made up to six years earlier, and in certain circumstances, gifts made at any time. The result? Unpaid or underpaid orders and further imprisonment.

Fifth: the defendant’s lifelong obligation. Where the defendant has persuaded the court that he does not have available assets equal to his benefit, he thereafter remains liable, as may his estate on his death, to pay the difference. Should the defendant on his release from custody manage to turn his life around, he will always be at risk of an application by the prosecuting authority for a revised order under section 22 POCA, seeking the value of his lawfully acquired assets. POCA can make a mockery of ‘going straight’.

It is far from obvious that POCA has achieved any of its core objectives. Crime has not reduced. Money laundering, if the NCA’s annual figures are anywhere near correct, has substantially increased. Prosecutors can all too easily obtain unrealistic confiscation orders, causing defendants to serve yet further time in custody.

This is an unhappy and unhealthy state of affairs.