The Proceeds of Crime Act 2002 (POCA) consolidated earlier legislation and extended the confiscation powers of the Court. POCA empowers the Court to confiscate the assets of anyone convicted of one or more criminal offences committed after 23 March 2003.
The Current System
In confiscation proceedings the Court determines the benefit which the defendant has derived from the offence. In cases involving serious crimes such as drug dealing, POCA requires the Court to make various assumptions about the defendant’s “benefit” from crime for the purposes of deciding whether the defendant has benefited from his or her criminal conduct and, if so, the extent of that benefit. The Court also considers the realisable assets of the defendant, as the amount confiscated will be limited to these if they are lower than the benefit derived from the offence.
Forensic Accountants’ Role
Forensic accountants can be involved in confiscation proceedings in the following ways:
- assessing the performance of a defendant’s business and evaluating other sources of income to establish the extent to which funds may have been derived from lawful sources;
- appraising evidence adduced by the “other side” in relation to the benefits alleged to have been obtained by a defendant;
- evaluating the assertions of the “other side” in relation to the realisable assets of a defendant; and
- examining documentation to establish if there is any evidence of hidden assets.
Examples of our involvement in confiscation proceedings include the following:
- A defendant who imported sports cars from Japan was convicted of conspiracy to import controlled drugs. He was alleged to have derived a total benefit of £8.9 million. We found that an excess of credits to the business bank account over the value of sales invoices could be explained by sales of cars with purchase documents but for which sales invoices could not be found. The amount confiscated was reduced considerably as a result of our work.
- In a case involving tax fraud in which we were involved, we examined transactions between the defendant and the company he controlled and found that some significant sums included by the Prosecution in the calculation of his benefit had in fact been paid out for business purposes, thus reducing the amount of the computed benefit.
- A defendant convicted of the large-scale smuggling of alcohol and tobacco was alleged to have transferred over £17 million to bank accounts in Pakistan. We examined detailed bank records and found examples of double-counting and areas in which the Prosecution relied on assumptions which were inconsistent with each other. As a result of this work there was a considerable reduction in the amount confiscated.
- A defendant was convicted of conspiracy to supply Class A drugs. We examined the Prosecution’s allegation in the confiscation proceedings that the defendant had hidden assets abroad. There was no documentation, for example, relating to bank accounts in tax havens and no reference to trusts or insurance policies. Moreover, the Prosecution’s contention that there was a shortfall between the defendant’s known assets and the profit he was assumed to have made from his criminal activities was not supported by any calculations.
As the authorities step up their efforts to confiscate the proceeds of crime, it will be increasingly important for defendants and their legal teams to ensure that evidence of sources of income and/or assets is well-organised and persuasive.
The information contained in our Newsletters is provided as general information only. It does not constitute professional advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. In addition, since the Newsletters were published in recent years, the information contained in them may not be applicable at the current time.