Changes to confiscation law: part two

Previously, an applicant for a restraint order was obliged to show that they had 'reasonable cause to believe' that a benefit had been obtained from criminal conduct (section 40(2) of the Proceeds of Crime Act 2002 (POCA)). Now section 11 of the Serious Crime Act 2015 amends section 40(2) so that an applicant is only required to show that there are 'reasonable grounds to suspect' that a benefit has been obtained from criminal conduct. That obviously is a lesser hurdle for the applicant.

But, interestingly, the 2015 Act does not amend section 69(2) POCA, which forms the basis of the view that ordinarily a restraint order should be made only if there is genuinely a risk that assets will be dissipated. That approach has itself militated against the early obtaining of a restraint order in some cases.

Section 41 POCA is amended by section 46 of the Crime and Courts Act 2013 to require that every restraint order must be subject to an exception that enables relevant legal aid payments to be made out of assets restrained by the order. This will mean that where a confiscation order has been made and has been satisfied or discharged, property restrained under the order may be used to satisfy an outstanding legal aid contribution related to the criminal proceedings.

Time to pay

Previously, the Crown Court could initially allow a defendant up to six months to pay. A further six months, making a maximum of 12 months in all, might have been allowed on a further application. The new law reduces the initial period to three months at most, with a further three months available on application, making a maximum of six months in total.

Courts will also be able to provide for earlier payment dates for parts of the total sum - for example, where the available amount comprises money in a bank account and an interest in a residential property, the confiscation order could require payments from the bank account within, say, 14 days of the confiscation order with the balance due three months from the date of the order.

Courts will now be required to allow time to pay only where the defendant is unable to pay the full amount on the day the order is made. A further period may only be allowed where, despite having made all reasonable efforts, the defendant is unable to pay the amount by the due date.

The practical effect of this change is to further limit the current discretion of Crown Court judges to allow a defendant time to pay the confiscation order, with the result that interest and enforcement action will be triggered more quickly.

The 2015 Act substitutes a new section 11 POCA.

Default sentence for non-payment

Section 10 of the 2015 Act amends section 35 POCA so that the maximum default sentences read as follows:

• An amount not exceeding £10,000: six months;
• An amount exceeding £10,000 but not exceeding £500,000: five years;
• An amount exceeding £500,000 but not exceeding £1,000,000: seven years; and
• An amount exceeding £1m: 14 years.

Furthermore, where the confiscation order is made for an amount in excess of £10m, the usual provision allowing release at the halfway stage of a sentence will be disapplied. This means that a person who is the subject of a confiscation order in excess of £10m may be required to remain in prison for the full term of his default sentence. (This disapplication of early release is to apply where the default occurs on or after 1 June 2015 and so may apply in relation to an existing confiscation order.)

A new power is provided for the Crown Court to make a 'compliance order' under section 13A (subject to appeal under section 13B). These sections are inserted by section 7 of the 2015 Act. A compliance order is such order as the court 'believes is appropriate for the purpose of ensuring that the confiscation order is effective'.

A compliance order might, for example, restrict a defendant's ability to travel outside the UK.

Other changes

Other amendments that may be relevant to confiscation proceedings, made by the Policing and Crime Act 2009 and the Crime and Courts Act 2013, were brought into effect on 1 June 2015. Further details of those changes can be found in a Home Office circular issued on 22 May 2015. These changes principally concern the search, seizure and forfeiture of property (including cash), and applications to the Crown Court (rather than the High Court) for certain orders in relation to detained cash investigations.

David Winch is director of Accounting Evidence Ltd