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23 Essex Street, London WC2R 3AA

Tel : 020 7413 0353

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HH Judge Michael Hopmeier

11th -12th June 2018

Valletta, Malta

Effective Asset Recovery and Confiscation of

the Proceeds of Crime in the EU:

Challenges

The UNODC estimates that the sum of money laundered globally

amounts to between 2 and 5% of the global GDP or between

EUR 615 Billion and EUR 1.54 Trillion each year

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Michael Hopmeier 8

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Pre amble to Directive 2014/42/EU

Whereas:

(1) The main motive for cross-border organised crime, including

mafia-type criminal organisation, is financial gain. As

a consequence, competent authorities should be given the

means to trace, freeze, manage and confiscate the

proceeds of crime. However, the effective prevention of and

fight against organised crime should be achieved by

neutralising the proceeds of crime and should be extended, in

certain cases, to any property deriving from activities

of a criminal nature.

(2) Organised criminal groups operate without borders and

increasingly acquire assets in Member States other than

those in which they are based and in third countries. There is

an increasing need for effective international cooperation on

asset recovery and mutual legal assistance.

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(3) Among the most effective means

of combating organised crime is

providing for severe legal

consequences for committing such

crime, as well as effective detection

and the freezing and confiscation of

the instrumentalities and proceeds of

crime.

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Methods of Recovering Proceeds of Crime

in UK

• Confiscation Orders following criminalconviction.

• Civil Recovery Proceedings – non-convictionbased

• Forfeiture of Cash- non-conviction based

• Private Civil Proceedings brought by ClaimantState (including obtaining freezing orders-injunctions)- not dependent on MLA or govt cooperation

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THE NATURE AND PURPOSE OF RESTRAINT AND CONFISCATION ORDERS

The purpose of a confiscation order is to deprive criminals of the benefit they have gained from their criminal conduct.

The confiscation regime under The Proceeds of Crime Act 2002 ( POCA ) is designed to give effect to the principle that criminals should not profit from their crimes. It is not intended to be an additional punishment or fine. In CPS v N [2009] EWCA Crim 1573 the Lord Chief Justice made clear that the court was under a duty to give effect to that purpose.

The purpose of a restraint order is to ensure that assets are preserved which may subsequently be required to satisfy a confiscation order.

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Confiscation is not limited to serious fraud or financial crime.

Where a Defendant has benefited from his crime, whatever the nature of the crime, then confiscation proceedings can be appropriate.

Confiscation Orders are made in personam (against the defendant personally) rather than in rem (against specific assets).

Confiscation Orders may be satisfied from any assets, whether those assets are found to be the proceeds of crime or legitimately acquired. Accordingly, when a Crown Court makes such an order it is not directing that particular assets must be realised.

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‘Benefit’

• A person benefits if he ‘obtains property

as a result of or in connection with the

conduct’ [s.76(4)]

• pecuniary advantage ‘he is to be taken to

obtain as a result of or in connection with

the conduct …[is]….a sum of money equal

to the value of the pecuniary advantage.’

[s.76(5)]

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R V Muddassar [2017]EWCA Crim 382 conspiracy to supply Class A drugs -benefitassessed in drugs case where 14 drugs deals to undercover police officers, 20449 calls –calculation on averages and inferences upheld

R V Stephen Reynolds [2017] EWCA Crim 1455 where a company had been establishedfor the sole purpose of supplying goods to a local authority at inflated prices a judgehad erred in valuing the benefit to the offenders by reference to profit rather thanturnover.

R V Lee Alan Reid [2018] EWCA Crim 628 calculation of benefit arising from fraudulentlyobtained remortgage transactions where the property had originally been acquiredlegitimately using untainted funds and the offender had either repaid or had undertaken torepay the sum due under the remortgage.

R V Giedrius Gricevicius [2018] EWCA Crim 1061- calculation of benefit from large scaledrugs conspiracy and available assets. Proportionality.

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‘Recoverable amount’

s.7

• Benefit s.7(1) OR

• Available amount s.7(2)(a) OR

• Nominal order s.7(2)(b) OR

• ‘just amount’ s.7(3)

“Beneficial Interest” Cases -Third Party

Claims s10A POCA (inserted by Section 1 of SCA

2015)

Schedule 4 Para 19 SCA 2015

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Other orders (for default sentences see now S. 10 SCA

2015)

• Compensation- see R V Jawad [2013]EWCA

Crim 644, R V Beaumont [2014] EWCA Crim 621, R V

Lehair 2015 EWCA Crim 1324, R V Parkinson [2015]

EWCA Crim 1448 , R V Davenport [2015] EWCA Crim

1731

• Appoint enforcement authority

ss.34-36

• Time to pay s.11 (S 5 SCA 2015)

• Default period of imprisonment

ss.35,36

AMOUNT MAXIMIMUM TERM

£10,000.00 or less 6 months

£10,001 to £500,000.00 5 years

£500,001 to £1 million 7 years

More than £1 million 14 years

( R on application of Gene Gibson V Sec State for Justice 2015

EWCA Civ 1148 - enforcement of default sentence-credit for sums

paid-interest)

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Restraint orders S.40-47

• Criminal investigation

started

• Reasonable cause to

suspect that an alleged

offender has benefited ( S 11

SCA 2015 + monitor by reporting requirement

• S 12 continuation after quashed conviction)

Note breach may amount to perverting the course of

justice (R V Kenny 2013 EWCA Crim 1,R V Norman 2013

EWCA Crim 1397)

Ashford V Southampton County Council 2014 EWCA

Crim 1244

Ready Rentals Ltd V Ahmed [2016] EWHC 1996 –

Delay. Investigation 2009 Order July 2016

7. Orders for securing compliance with confiscation order

After section 13 of the Proceeds of Crime Act 2002 insert—

“13A Orders for securing compliance with confiscation order

(1) This section applies where the court makes a confiscation order.

(2) The court may make such order as it believes is

appropriate for the purpose of ensuring that the

confiscation order is effective (a “compliance order”).(3) The court must consider whether to make a compliance order—

(a) on the making of the confiscation order, and

(b) if it does not make a compliance order then, at any later time

(while the confiscation order is still in effect) on the application

of the prosecutor.

(4) In considering whether to make a compliance order, the court must, in

particular, consider whether any restriction or prohibition on the

defendant’s travel outside the United Kingdom ought to be imposed

for the purpose mentioned in subsection (2).

(5) The court may discharge or vary a compliance order on an application

made by—

(a) the prosecutor;

(b) any person affected by the order.

R V Pritchard [2017]EWCA Crim 1267 – must be justified. Length/terms

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It is not always possible to commence criminal proceedings where, for

example, the criminal offender has kept himself distant from the crime he is

controlling or is outside the UK. Also, there are occasions where a criminal

dies leaving recoverable assets or simply transfers them to a third party. In

such situations, where the Crown Prosecution Service has decided it is not

in the public interest to prosecute, the use of civil recovery to recover the

proceeds of unlawful conduct will be considered.

The powers under Part 5 of POCA 2002 can be exercised against any

recoverable property, whether or not criminal proceedings have been

brought

CIVIL RECOVERY

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CIVIL RECOVERY

Non-conviction based. Proprietary action on the

part of the state to acquire property in the hands

of a criminal or anyone else (not a bona fide

purchaser for value) and trace it into property that

represents the unlawfully acquired property- no

need for conviction, civil standard of proof

applies.

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SCHEDULE 17 Section 45

DEFERRED PROSECUTION AGREEMENTS

PART 1

GENERAL

Characteristics of a deferred prosecution agreement

1 (1) A deferred prosecution agreement (a “DPA”) is an agreement between a

designated prosecutor and a person (“P”) whom the prosecutor is considering

prosecuting for an offence specified in Part 2 (the “alleged offence”).

(2) Under a DPA—

(a) P agrees to comply with the requirements imposed on P by the agreement;

(b) the prosecutor agrees that, upon approval of the DPA by the court (see paragraph 8),

paragraph 2 is to apply in relation to the prosecution of P for the alleged offence.

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Effect of DPA on court proceedings

2 (1) Proceedings in respect of the alleged offence are to be

instituted by the prosecutor in the Crown Court by preferring a

bill of indictment charging P with the alleged offence (see

section 2(2)(ba) of the Administration of Justice (Miscellaneous

Provisions) Act 1933 (bill of indictment preferred with consent of

Crown Court judge following DPA approval)).

(2) As soon as proceedings are instituted under sub-paragraph

(1) they are automatically suspended.

(3) The suspension may only be lifted on an application to the

Crown Court by the prosecutor; and no such application may

be made at any time when the DPA is in force

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(4) At a time when proceedings are suspended under sub-

paragraph (2), no other person may prosecute P for the alleged

offence.

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www.newlawjournal.co.uk | 13 September 2013 Economic crime legal update

Time to agree terms?

Polly Dyer & HHJ Michael Hopmeier assess the

role & impact of DPAs at home & abroad

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UK-4 Main routes for overseas authorities to

obtain documents and to freeze assets in

criminal investigations

• Crime (International Co-Operation) Act 2003

• Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005.

• Criminal Justice and Data Protection (Protocol No 36) Regulations 2014.

• The European Investigation Order (Directive 2014/41/EU.

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(Acts adopted under Title VI of the Treaty on European Union)

COUNCIL FRAMEWORK DECISION 2006/783/JHA

of 6 October 2006

on the application of the principle of mutual recognition to confiscation

orders

Article 1

Objective

1. The purpose of this Framework Decision is to establish the rules under

which a Member State shall recognise and execute in its territory a

confiscation order issued by a court competent in criminal matters of another

Member State.

(c) ‘confiscation order’ shall mean a final penalty or measure

imposed by a court following proceedings in relation to a

criminal offence or offences, resulting in the definitive deprivation

of property;

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(1) A (2) A v DIRECTOR OF PUBLIC PROSECUTIONS [2016] EWCA Crim 96

PROCEEDS OF CRIME ACT 2002 (EXTERNAL REQUESTS AND ORDERS)

ORDER 2005 art.7, art.2, art.7(2)(a), art.55(1), art.9(7), art.7(2)(c), art.55, art.7(2),

art.9, art.7(2)(b), art.8

A restraint order had been properly made under the Proceeds of Crime Act 2002

(External Requests and Orders) Order 2005 in relation to UK bank accounts held by

two Kuwaiti nationals. There was no evidence of bad faith on the part of either the

Crown or the Kuwaiti authorities in seeking the order and there was a real

risk of dissipation of assets.

A V DPP [2016] EWCA Crim 1393 – on Criminal Justice Data Protection (Protocol

No.36) Regulations 2014- refusal to cancel registration.

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Thank you for your Attention

diolch i chi am eich sylw

HHJ. Michael Hopmeier