Confiscation is an essential tool in the prosecutor’s toolkit to deprive offenders of the proceeds of their alleged criminal conduct; to deter the commission of further offences, and to reduce the profits available to fund further criminal enterprises.
An application for a Restraint Order may be made at any time following the commencement of the criminal investigation and at any stage of the criminal proceedings and will be considered if there are identified assets that may be required to satisfy a compensation order.
A restraint order may have the effect of freezing property anywhere in the world with the aim of preserving that property so it is available to settle any confiscation order that may be made. It may be made both against a defendant or a person under investigation together with any other person holding realisable property.
The judge may only grant a restraint order pursuant to s.41 if any of five conditions are satisfied.
The first condition is satisfied if a criminal investigation has been started in England and Wales with regard to an offence and there are reasonable grounds to suspect that the alleged offender has benefited from his criminal conduct.
The second condition is satisfied if proceedings for an offence have been started in England and Wales and not concluded, and there is reasonable cause to believe that the defendant has benefited from his/her criminal conduct.
The third condition is satisfied if the prosecutor has applied (or is likely to apply) to the Crown Court to (a) reconsider making a confiscation order when no such order was made, (b) reconsider making a confiscation when no such order was made and there is new evidence that the defendant benefited from his or her criminal conduct, (c) make a confiscation order where a defendant absconds after conviction or committal, (d) make a confiscation order where a defendant absconded more than three months previously but was neither acquitted nor convicted in commenced criminal proceedings and (e) there is reasonable cause to believe that the defendant has benefited from his criminal conduct.
The fourth condition is satisfied if the prosecutor has applied (or is likely to apply) to the Crown Court under s.21 to reconsider the benefit figure in a confiscation order and there is reasonable cause to believe that the court will decide that the amount found under the new benefit calculation of the defendant’s benefit exceeds the relevant amount.
The fifth condition is satisfied is the prosecutor has applied (or is likely to apply) to reconsider the amount available to satisfy a confiscation order, and there is reasonable cause to believe that the court will decide that the amount found under the new calculation of the available amount exceeds the relevant amount.
In all cases, regardless of which condition is being relied on, the prosecutor must be able to show there is a real, rather than fanciful, risk that assets may be dissipated if a restraint order is not made.
The amount of realisable property that can be restrained will depend upon the amount in which the confiscation order is likely to be made. The court will permit the prosecutor a degree of latitude in the assessment of the amount of benefit where enquiries into its extent have not yet been completed.
A defendant will be restrained from dealing with all of his assets if the prosecutor is going to ask the court to conclude that the defendant has a criminal lifestyle and has benefited from general criminal conduct.
Companies enjoy their own legal personality separate and distinct from the defendant. In normal circumstances, therefore, assets of a company do not constitute realisable property of the defendant. However, a long line of authorities have established that where a defendant is the controlling mind of the company, and it is a sham and/or has been used to facilitate the criminal conduct complained of, the court may ‘pierce the corporate veil’ of the company and treat it as the realisable property of the defendant.
The court will not, however, permit the restraint order to operate at the pre-conviction stage is such a way as to preclude the company engaging in legitimate trading activity. The restraint order will need to make provision for company assets to be released to facilitate such activity. In cases of particular complexity, an application for the appointment of a management receiver may be necessary.
In addition to a Restraint Order, a court may also make a Provision of Information Order.
A provision of information order requires the defendant to provide information to the prosecutor in a witness statement, verified by a statement of truth, about the nature, extent and location of all his realisable property. Such an order may be appropriate if the value of the defendant’s known assets do not correlate with the value of the property known to have been obtained by him or her.
In order to protect the defendant’s privilege against self-incrimination, provision of information orders are made subject to a strict condition that the statements may not be relied on in the criminal proceedings. However, if a defendant has been convicted, the provision of information statement may be relied on in the confiscation proceedings.
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Significant experience advising clients who are the subject of HMRC investigations and criminal prosecutions for tax-related offences, fraud and money laundering and other offences including:
- Serious and Organised Crime
- Fraud and Financial Crime
- Corporate Crime
- Tax Investigations
- Bribery & Corruption
- Insider Dealing
- Corporate Manslaughter and Health & Safety Law
- Cash Seizures, Restraint Orders and Confiscation Proceedings
Former international judge who presided in many complex serious and organised crime cases including complex financial crimes, tax evasion, money laundering, fraud and asset confiscation cases.