Cash forfeiture is the process whereby money that has been seized by authorised individuals, such as the police or financial investigators, can be forfeited to the state following a hearing in the Magistrates’ Court under Part 5 of the Proceeds of Crime Act 2002. Other agencies which utilise these powers include HMRC, the Serious Fraud Office, and immigration officers.
The cash will initially be seized for up to 48 hours, and this can be extended by a Magistrates’ Court for up to six months if there are reasonable grounds for suspecting that the cash is either recoverable property (such as the proceeds of criminal conduct) or is intended to be used by any person for use in criminal activity. In due course, the Magistrates’ Court can order that the cash be forfeited if it is satisfied that the cash is either recoverable property or intended by any person to be used in unlawful conduct. If such an order is made, those affected can apply to the Crown Court for the case to be appealed by way of a rehearing. The High Court may also hear a subsequent appeal in some circumstances, particularly if there is a question of law to be determined. The relevant procedural rules can be found in the Magistrates’ Courts (Detention and Forfeiture of Cash) Rules 2002.
Those affected by such applications should be aware that despite the relatively informal nature of Magistrates’ Court proceedings, the amounts of money involved can be significant (in the year ending 2019 £51m was recovered under these proceedings). Also, the money will be forfeited if the applicant can meet a relatively low threshold, and establish their case ‘on the balance of probabilities’. This means that it is vital for the respondent to an application to be properly represented from the outset and build a cogent case as part of their defence if they are to be successful. Cash forfeiture proceedings can involve complex issues such as beneficial ownership and trusts, as well as the detailed analysis of evidence and the use of forensic accountants, therefore it is important that legal representatives in such cases are experienced in both criminal and civil law, and the relevant regime under the Proceeds of Crime Act 2002.
Relevant decisions of the High Court include the fact that where large quantities of cash are involved, the Court is entitled to be inherently suspicious of that fact: R(Merida Oil Traders Ltd) v Central Criminal Court and others [2017] EWHC 747 (admin). It should also be noted that whilst the unlawful conduct must be identified, the specific criminal offence need not; establishing general criminal conduct will be sufficient (Director of the Assets Recovery Agency v Green [2005] EWHC 3168 (Admin)). Unlawful conduct can include conduct occurring in another country which is unlawful in both that country and the UK, and the evidence of conviction from another jurisdiction will be powerful evidence of this: Director of the Assets Recovery Agency v Virtosu and other [2008] EWHC 149.
In addition to the above, there also exists an administrative procedure whereby cash can be forfeited without a court order. This can be achieved by a senior officer serving a forfeiture notice on the person from whom the cash was seized and any person who has been identified as having been affected. If no objection is made within the period given for objecting (this is normally 30 days), the cash will be forfeited.
If cash has been administratively forfeited, those affected can apply under s297A Proceeds of Crime Act 2002 for an order to have administrative forfeiture set, for example if they were not given proper notice of the intention to take that course of action. An application to set aside administrative forfeiture must be made within 30 days of the period for objecting ending, but this can be extended if there is an exceptional reason for the delay. At a hearing to set aside the forfeiture, the court will ask whether the cash could be forfeited by way of the usual court order as set out above.
If an objection to administrative forfeiture is made, then 48 hours is given for the cash to either be released or for a formal application to be made for forfeiture under the provisions as set out above.
It is not unusual for cash forfeiture proceedings to run concurrently with criminal investigations. HMRC have begun to rely on a Court of Appeal authority, Mote v Secretary of State for Work and Pensions [2007] EWCA Civ 1324, to support the progression of civil cash forfeiture despite the existence of a parallel criminal case. In Mote, Richards L.J. held that the fact that the prosecution would receive an opportunity to rehearse their case did not in of itself give rise to any serious prejudice to a respondent:
'In general, as it seems to me, the fact that the prosecution has had a previous opportunity to rehearse its case cannot be said to give rise to substantial prejudice to the defendant in a subsequent criminal trial. If it were otherwise, it would provide a ground of objection to a retrial in criminal proceedings where the jury have been unable to agree in the first trial or where a conviction in the first trial has been quashed on appeal. If this were a point of substance, I would also expect it to have been mentioned in the previous cases.' [36]
It is vital, therefore, that any contested cash forfeiture proceedings take into account the fact that anything said or done in them may affect a current or future criminal investigation, and that those affected ensure that their position is protected at all times. The lawyers at Scarmans have extensive experience of all aspects of cash forfeiture, account freezing orders, confiscation, civil recovery, and related criminal and civil proceedings, so that our clients can be sure that their interests are protected beyond the immediate case that they face. The team at Scarmans have acted for both the prosecution and defence in the whole range of proceeds of crime proceedings, including ulta-high value matters involving the NCA and HMRC.