Asset Forfeiture, Cash Seizures & Civil Recovery

Drystone Chambers has a number of specialists covering Asset Forfeiture, Cash Seizures and Civil Recovery cases.

A sea-change has taken place in the approach of enforcement agencies, namely the NCA, the SFO and the DPP, to asset forfeiture. Home Office guidance in June 2021 has underscored that non-conviction-based asset recovery powers might be used where formerly it had been taken for granted that only criminal proceedings would ensue.

The deployment of some of these powers has become relatively inexpensive. The Criminal Finances Act 2017 amended Part 5 of POCA to permit the power of forfeiture of any property obtained through unlawful conduct to be exercised by a Magistrates Court, or more simply still, by the giving of notice by a senior officer. However, interlocutory orders remain largely the preserve of the High Court.

All property obtained through unlawful conduct is ‘recoverable’ and therefore may be forfeited. Disposal does not prevent recovery, as the property may be traced through multiple hands. It only ceases to be recoverable upon being obtained in good faith and for value by a person with no knowledge, actual or constructive, of its tainted history.

To establish whether the property is indeed liable to forfeiture, the High Court has a number of powers at its disposal. These include a property freezing order, the effect of which is to prohibit any person ‘to whose property the order applies’ from dealing with it. The legislation permits the court concurrently to appoint a Receiver, who may be a member of staff of the enforcement agency. The potential for a conflict of interest is obvious.

In a case of any complexity, it is commonplace for the enforcement agency to apply for a disclosure order, requiring the provision of specified information and documents.

Most prominent to date, and conceptually allied to a disclosure order, is the unexplained wealth order (‘UFO’). To obtain a UFO, the High Court must be satisfied of three requirements:

1. that the respondent holds the property, and its value exceeds £50,000; and
2. that the respondent is a politically exposed person, or that there are reasonable grounds for suspecting that he or a person connected with him is or has been involved in serious crime; and
3. that the known sources of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property.

A politically exposed person is defined as having been ‘entrusted with prominent public functions by an international organisation or by a state other than the UK or another EEA state, or a family member or close associate of same, or otherwise connected’. The wife of the former chairman of a bank that was partly owned by a foreign state has been held to constitute such a person.

When granted, a UWO requires the respondent to provide a statement setting out his interest in the property, how it was obtained and such other information, including documentation, as may be specified in the order. Non-compliance will result in a presumption that the property in question is indeed recoverable and liable to forfeiture.

Cash is treated slightly differently from other forms of property. It may be seized immediately if there are reasonable grounds for suspecting that it is either recoverable property or intended by any person for use in unlawful conduct.

Since 2020, such seizures may be made not only by police, financial investigators and HMRC officers, but also accredited members of staff of the Ministry of Justice, in particular from the Prison and Probation services.

‘Cash’ includes postal orders, cheques, bankers’ drafts, bearer bonds and shares, gaming vouchers, casino tokens and betting receipts. Its detention may, on the order of a magistrates’ court, be extended for up to two years pending an application for its forfeiture. As an alternative, an officer of at least the rank of inspector or equivalent, may serve a ‘forfeiture notice’ upon the respondent. The effect of which is that if no objection is received within 30 days, the cash is forfeit without the need for a court order. Any person ‘aggrieved by the forfeiture’ (whether or not the respondent to the notice) has 30 days from the making of the order to apply to set it aside.

The advantages to the authorities of pursuing civil-based recovery – and corresponding disadvantages to the respondent/defendant – are considerable. Proof of unlawful conduct does not require the enforcement authority to identify a specific offence. An acquittal in related criminal proceedings is irrelevant. Evidence inadmissible at a criminal trial may be used. As Article 6(2) of ECHR does not apply, there is no presumption of innocence. And of course, being civil proceedings, the burden of proof is to the civil standard. Nonetheless, as recent caselaw illustrates, the High Court in particular continues to insist that these powers be narrowly construed and confined. The enforcement authorities do not always get their way.