PROCEEDS OF CRIME TIMELINE

The following table provides an incomplete timeline of the development of the main Acts in the UK concerned with the confiscation and forfeiture of the proceeds of crime, to provide an overview and set the current regime in context.  The references are to provisions concerned with England and Wales, and generally speaking the same or corresponding provisions provide for a matching regime in Scotland and Northern Ireland.

UK PROCEEDS OF CRIME TIMELINE

1980 The Operation Julie House of Lords’ decision in a case involving an LSD “factory” where around £750,000 had been traced and thought to be the proceeds of drug trafficking.  A confiscation order had been made under the Misuse of Drugs Act 1971 (MDA).  The provisions in the MDA allowed anything related to an offence to be forfeited.  The order was quashed because the defendants were convicted of conspiracies and not of an offence under the MDA.  The Lords also held that the forfeiture provisions of MDA only applied to physical items used to commit the offence and that choses in action and other intangibles were not caught by the Act
1985 The Hodgson Committee recommends that courts should be empowered to confiscate the proceeds of crimes for which defendants had been convicted.  This led to the DTOA
1987 Drug Trafficking Offences Act 1986 (DTOA) empowered the High Court to seize the proceeds of drug trafficking
1988 Criminal Justice Act 1988 (CJA) introduced to extend the powers found in the DTOA to other non-drug related indictable offences[1] plus a small number of summary offences.  The CJA regime was seen to be somewhat less draconian than that under the DTOA (and DTA), although these differences were largely removed in 1995
1991 The Criminal Justice (International Co-operation) Act 1990 (CJICA) allowed for interest to be added to unpaid confiscation orders, and for a prosecutor to apply for an order to be increased where further property was identified
  CJICA also introduced a power for customs officers to apply to a magistrates’ court for forfeiture of cash linked to drug trafficking and being imported or exported
  1st EU Money Laundering Directive comes into force (implemented from 1994 in the UK).  It applied to financial institutions and required member states to make money laundering a criminal offence.  It was to be incorporated into UK law via the Criminal Justice Act 1991, the Drug Trafficking Act 1994 (DTA) and the Money Laundering Regulations 1993 in 1994
1994 The DTA consolidated and replaced the earlier legislation: the DTOA, as amended, and CJICA.  It also implemented many recommendations of the Home Office Working Group on Confiscation
  EU 1st Money Laundering Directive comes into effect.  The main impact of the Directive was to require financial institutions to verify the identity of all customers opening business relations with them (and to keep records of their identification).  Staff had to be trained in anti-money laundering practices and suspicions of money laundering had to be reported through a designated officer (usually referred to as the money laundering reporting officer or MLRO)
1995 The Criminal Justice Act 1993 and Proceeds of Crime Act 1995 removed many of the differences between the regimes under the DTA and CJA
2000 Cabinet Offices Performance and Innovation Unit report: “Recovering the Proceeds of Crime” concluded that existing legislation not fit for purpose and confiscation orders only made in 20% of drug trafficking cases, and 50% of those not enforced
  Operation Moneypenny took place from September 1999 to February 2000 between the customs authorities of the then 15 Member States of the EU.  It monitored cash movements across the EU’s internal and external borders in excess of €10 000.  It informed a draft EU Regulation and the eventual Cash Control Regulation
  The Terrorism Act 2000, which was intended to reform and extend previous counter-terrorist legislation and put it largely on a permanent basis[2].  Part 3 of the Terrorism Act 2000 criminalises terrorist financing and makes it an offence to: use, possess, or raise funds for the purpose of terrorism, or enter into arrangements to provide funds or property for that purpose
  The Terrorism Act 2000 includes provisions that allow the court, where a person is convicted of a section 15, 16, 17 or 18 offence, to make a forfeiture order; and the court may also order the forfeiture of any money or other property, which wholly or partly, directly or indirectly, is received by any person as a payment (or other reward) in connection with the commission of offences under sections 15 to 18.
  The Terrorism Act 2000 also included cash seizure powers, subsequently replaced by the Anti-Terrorism, Crime and Security Act 2001, including the power for police, customs officers and immigration officers to seize cash at borders and to seek forfeiture of the cash in civil proceedings (being modelled on provisions in the DTA but also applying to cash being taken from Northern Ireland to Great Britain and vice versa)
2001 The Anti-Terrorism, Crime and Security Act 2001 replaces the seizure of cash powers in the Terrorism Act 2000 – an authorised officer may seize and detain any cash to which this section applies if he has reasonable grounds for suspecting that it is terrorist cash.  The seizure may be undertaken even if it is not reasonably practicable to seize only that part of the cash believed to be terrorist cash.  The Act also broadened investigative powers and introduced account monitoring orders.  It also provided the power to freeze the assets of overseas residents and includes a mechanism for forfeiture of cash used for the purposes of terrorism, in civil proceedings before a magistrates’ court.

The Terrorism Act 2000 continues to define terrorist property, deal with money laundering, and provide additional powers of forfeiture

  2nd EU Money Laundering Directive comes into force (being implemented in the UK from 2004).  It extended AML obligations to a defined set of activities provided by a number of service professionals, such as independent legal professionals, accountants, auditors, tax advisers and real estate agents. It was incorporated into UK law via POCA and the Money Laundering Regulations 2003
2002 EU Commission “Proposal for a Regulation of the European Parliament and the Council on the prevention of money laundering by means of customs cooperation” provided for a cash detention regime where cash was entering or leaving the EU.  This would be to complement the provisions of the money laundering Directives
2003 Proceeds of Crime Act 2002 (POCA) replaced DTA and CJA; with enhanced powers and a new power to seize cash[3] (n.b. cash might have been liable to seizure as evidence under the Police and Criminal Evidence Act 1984 (PACE)[4]).

POCA extended the range of relevant financial crime and other offences for which confiscation orders could apply.  It also simplified the law, providing for one regime where all hearings conducted in the Crown Court and appeals dealt with in the Court of Appeal and House of Lords (now the Supreme Court).

POCA also introduced a new power of civil asset forfeiture (civil recovery), allowing for civil proceedings to recover the proceeds of crime without a need for a criminal conviction

  The EU 2nd Money Laundering Directive comes into effect.  The main change it brought about was the extension of AML legislation to a wider circle of financial and credit institutions, money services businesses, firms providing legal or accountancy services, casinos, estate agents, and some dealers in high-value goods.
2005 The EU Cash Control Regulation entered into force on 15th December, to take effect from 15th June 2007
  3rd EU Money Laundering Directive comes into force.  It extended due diligence measures to beneficial owners, recognising that such measures can be applied on a risk-based approach, and required enhanced due diligence to be undertaken in certain circumstances.  It was incorporated into UK law by the Money Laundering Regulations 2007 and the Terrorism Act 2000 (Amendment) Regulations 2007 (TACT regulations 2007) and Proceeds of Crime Act 2002 (Amendment) Regulations 2007 (POCA Regulations 2007) in 2007
  POCA amended by the Serious Organised Crime and Police Act 2005, amendments include providing for magistrates’ courts to be able to make confiscation orders, for up to £10,000 (anything over that must continue to go to the High Court)
2007 The EU Cash Control Regulation came into effect, requiring declaration of cash of €10,000 or more entering or leaving the EU when being carried or taken in person.  It applied to all EU Member States.  The requirement also applied to cash moving between the UK and the Crown Dependencies, which were outside the EU for the purposes of money laundering[5]
  3rd Money Laundering Directive takes effect in the UK
2012 UK government announces plans to introduce Deferred Prosecution Agreements to help prosecutors combat corporate offending including fraud, money laundering and bribery
2014 Deferred Prosecution Agreements introduced by means of the Crime and Courts Act 2013, being available to SFO and CPS.
2015 EU agrees the 4th Money Laundering Directive, to take effect in 2017
  Further amendment of POCA, this time by means of the Serious Crime Act 2015 to give effect to recommendations of the Serious and Organised Crime Strategy and 2 recommendations on asset recovery made by the Joint Committee on the Draft Modern Slavery Bill in its April 2014 report – that the test for obtaining a restraint order be amended to make it less stringent and stronger sanctions for non-payment of confiscation orders.  Other amendments include those concerned with determination of third party interests, where a defendant absconds before the end of a trial, and providing for compliance orders to secure compliance with a confiscation order
2016 EU Commission proposed new rules for cash detention when entering or leaving the EU, extending controls to unaccompanied cash such as cash sent in postal parcels or freight consignments, precious commodities such as gold, and to allow for action on amounts lower than the declaration threshold of €10,000, provided that there are indications of criminal activity
2017 Criminal Finances Act 2017 (CFA) introduces unexplained wealth orders, permitted applications for the orders, subject to a £50,000 threshold, where are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent (who can be a PEP[6]) to obtain the property.

The CFA also contains provisions providing for the seize and forfeit precious metals, precious stones, watches, artistic works, face-value gift vouchers and postage stamps where they have grounds to suspect they are the proceeds of crime; and the government said it planned to amend the existing cash seizure provisions to allow the seizure and forfeiture of gambling chips and ticket-in-ticket-out vouchers.

The CFA also contains provisions dealing with the power to freeze and forfeit the proceeds of crime held in bank accounts

  The 4th EU Money Laundering Directive comes into effect.  Its changes include requiring a register of beneficial owners, a risk-based approach to customer due diligence, enhanced measures for “local” PEP.  The Directive was implemented in the UK via the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
2018 EU 5th Money Laundering Directive comes into force, with Member States having until 2019 to implement it.

[1]  Being indictable, rather than summary, offences indicates that the offences involved were the more serious ones.  However, the CJA did extend to a small number of summary offences where the benefit accruing to the defendant were likely to be unusually high.

[2]  But it was amended and supplemented many times, starting with the Anti-Terrorism, Crime and Security Act 2001.

[3]  Police, customs officers or accredited financial investigators can seize cash in excess of £1,000 if they have reasonable grounds to suspect it is the proceeds of crime or that it would be used in a criminal conduct.  The seizure is, in fact, detention for a limited time (initially 48 hours, with extensions possible), though, on application, a magistrates’ court can order forfeiture if proven, on the balance of probabilities, that the cash is the proceeds of crime or that it would be used in a criminal conduct.  POCA was amended by the Policing and Crime Act 2009 to allow for forfeiture without a court order in uncontested cases.  Note that the cash seizure, detention and forfeiture process is a civil procedure and does not require the suspect to be charged or convicted of a crime, although it can run in parallel with a criminal investigation.

[4]  For example, if the cash has been contaminated with drugs; or if the suspect is arrested for money laundering or in relation to other offences where the money can be shown to be evidence of those offences, e.g. theft or deception.

[5]  The Crown Dependencies introduced corresponding legislation of their own.

[6]  Politically exposed person.

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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