What is the Proceeds of Crime Act?
What is the purpose of the POCA act? The Proceeds of Crime Act (POCA) came into force on the 24th March 2003 and relates to the recovery and confiscation of proceeds made from criminal activities and money laundering.
Before the Proceeds of Crime Act 2002 came into force, the law on confiscation was governed by the Drug Trafficking Act 1994 and the Criminal Justice Act 1988. These Acts still apply to confiscation proceedings where the criminal offence is committed before the 24th March 2003.
The Proceeds of Crime Act only applies to offences committed on, or after, the 24th March 2003. The law on confiscation orders is governed by Part 2 of the Proceeds of Crime Act 2002.
How does the Proceeds of Crime Act work?
Proceeds of Crime Act 2002 proceedings must be commenced where:
1. A defendant is convicted of an offence in proceedings brought before the Crown Court or where a defendant’s case is committed to the Crown Court for sentence; and
2. The prosecution asks the court to commence POCA proceedings or the court considers it appropriate to commence POCA proceedings.
POCA proceedings are mandatory where the prosecution ask the court to proceed to the confiscation stage. Confiscation orders can only be made by the Crown Court. The Magistrates’ Court has no power to make confiscation orders.
The POCA process
When determining how much a defendant should pay under a confiscation order there are two figures which need to be calculated – the benefit figure and the available amount.
Once the benefit figure and the available amount have been calculated the confiscation order can be made. Using the benefit figure and the available amount a final figure, known as the recoverable amount, is calculated. The confiscation order is then made in the sum of the recoverable amount.
The starting point is that the recoverable amount is an amount equal to the defendant’s benefit from his criminal conduct. Therefore, as a starting point, the benefit figure is the recoverable amount. However, if the available amount is less than the benefit figure the recoverable amount is equal to the available amount.
Here’s an example of a POCA / Confiscation case:
A defendant is convicted of supplying drugs.
The benefit from this defendant’s criminal conduct is found to amount to £1,000,000. The benefit figure is therefore £1,000,000.
The defendant is immensely wealthy and the value of his current assets amounts to £5,000,000. The available amount is therefore £5,000,000.
The recoverable amount, in this case, is £1,000,000. This is because the recoverable amount is equal to the benefit figure. The defendant cannot be required to pay more than he has benefited from his criminal conduct.
What is a POCA hearing?
A POCA hearing may take place if no agreement can be reached regarding the defendant’s financial benefit and amount to be confiscated. Evidence will be gathered from the defendant, experts, and third parties.
What is the Proceeds of Crime Act negligence test?
The Proceeds of Crime negligence test means that someone working in a sector (eg. banking or other financial services) can be convicted for neglecting to report money laundering if there are “reasonable grounds for knowing or suspecting” that it is going on in their place of work. If a person fails to report fraudulent activity, they could face five years in prison.
If you are being investigated under the Proceeds of Crime Act and would like professional advice contact us.