The Proceeds of Crime Act is a complex piece of legislation which can be challenging to navigate. Here, in our guide, we’ll explain what the Act is and answer key questions surrounding procedures and sentencing in the Proceeds of Crime Act.
What are Proceeds of Crime?
‘Proceeds of crime’ refers to the assets, funds and property gained whilst undertaking criminal activity. Authorities such as The Crown Prosecution Service have the power to confiscate these assets thanks to the Proceeds of Crime Act.
What is the Proceeds of Crime Act?
The Proceeds of Crime Act 2002 (POCA) relates to the recovery and confiscation of proceeds made from criminal activities and money laundering. It addresses the confiscation and recovery of illegally-gained funds, property and assets, as well as the investigations into the offences. The legislation came into force on the 24th March 2003, meaning it only applies to POCA offences committed on, or after, that date.
Before the Proceeds of Crime Act, 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 POCA offences were committed before the 24th March 2003.
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 asks the court to proceed to the confiscation stage, potentially at a POCA court hearing. The Magistrates’ Court has no power to make confiscation orders; these can only be made by the Crown Court.
What is the Proceeds of Crime Act Process?
The first step in the Proceeds of Crime Act process is to determine how much a defendant should pay under a confiscation order. A confiscation order is an order of the Crown Court which calls for a convicted defendant to pay a particular amount of money to HMCTS immediately or within a fixed period.
To do this, there are two figures which need to be calculated – the benefit figure and the available amount:
- The benefit figure is the amount the defendant has gained as a result of criminal acts.
- The available amount is what funds, assets or property the defendant owns at the time of prosecution.
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 recoverable amount is equal to the defendant’s benefit from their criminal conduct – or the benefit figure – and this is the typical amount used for the confiscation order.
However, if the benefit figure is greater than the available amount, then the available amount is how much can be recovered.
What if I can’t pay the confiscation order?
The confiscation can be extended to six months in total if the convicted defendant shows to the court within a year of the confiscation order being made that there are exceptional circumstances.
Example of a Proceeds of Crime Act Confiscation
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.
Real-Life Case Study
Around 20 years ago, a man named John Darwin, attempted to fake his death to receive insurance payouts. Mr Darwin and his wife made it appear that he tragically died at Seaton Carew seaside in a canoeing accident. The benefit amount in his case was found to be £679,073.02. Mrs Darwin, who had claimed the life insurance policies in her husband’s name, repaid £500,000 under a separate confiscation order. Mr Darwin was ordered to pay £40,000 by the court using legitimately-obtained money from his pensions as a teacher and prison officer.
Will There Be a Court Hearing?
A POCA court hearing may take place if no agreement can be reached regarding the defendant’s financial benefit and the amount to be confiscated. Before a POCA court hearing takes place, evidence will be gathered from the defendant, a Proceeds of Crime Act lawyer, 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 regulated sector (such as banking or other financial services) can be convicted for failure to disclose money laundering if there are “reasonable grounds for knowing or suspecting” that it is going on in their place of work. If a person neglects to report fraudulent activity, they could face five years in prison.
What is the Maximum Sentence Under the Proceeds of Crime Act?
The maximum sentence for a Proceeds of Crime Act conviction is 14 years for crimes valued at over £1 million. Proceeds of Crime Act sentencing varies depending on the amount of money ordered to be paid under the confiscation order. A default sentence is set by the court in the event that the defendant doesn’t meet the terms of the confiscation order.
These maximum terms and default sentences are as follows:
|Amount of Money Ordered to be Paid
|Maximum Term for Proceeds of Crime Act Sentencing
|£10,000 or less
|More than £10,000 but no more than £500,000
|More than £500,000 but no more than £1 million
|More than £1 million
Our barristers are highly knowledgeable and experienced in the provisions of POCA and are ready to defend and guide you through the intricacy of court proceedings or appeals.
If your client is being investigated under the Proceeds of Crime Act and would like professional advice from a specialist Proceeds of Crime Act barrister, please contact us.