Confiscation Order

A confiscation order is an order of a criminal court, made after a defendant has been convicted, that deprives the defendant of the financial benefit gained from crime. Its purpose is to ensure that crime does not pay, and to remove money that might fund further offending. It is separate from, and additional to, the sentence imposed as punishment.

The term is used in the United Kingdom and many other common law and European jurisdictions. In England and Wales, the governing law is the Proceeds of Crime Act 2002. Confiscation depends on a conviction, which distinguishes it from civil recovery, where the state claims criminal property in the civil courts without one. In the United States, the equivalent post-conviction measure is criminal forfeiture, which sits alongside civil asset forfeiture.

Legal systems take one of two approaches. In a value-based system, such as that of England and Wales, the court calculates the monetary value of the offender's benefit and orders payment of that sum. The order is a personal debt owed to the state; it does not transfer any particular asset, and the offender may pay from any resources, whether or not they are connected to the crime. In a property-based system, the court orders the forfeiture of specific assets identified as the proceeds or instruments of the offence. Many countries combine both.

After conviction, the Crown Court must consider confiscation if the prosecutor asks or the court thinks it appropriate. The steps are as follows.

The court first decides whether the defendant has a criminal lifestyle, a term defined by statute to cover certain offences, such as drug trafficking and money laundering, and patterns of repeated offending. If so, the court assesses benefit from general criminal conduct and applies statutory assumptions: property received or spent by the defendant in the six years before proceedings began is presumed to derive from crime unless the defendant shows otherwise. If not, the court considers only the benefit from the offences of which the defendant was convicted.

The court then determines the value of the benefit, on the balance of probabilities. Benefit means the value of property obtained, not net profit, so expenses are not deducted. Finally, the court sets the recoverable amount. This equals the benefit unless the defendant proves that the assets available are worth less, in which case the order is made for the available amount. If further assets come to light later, the prosecutor can apply to increase the order.

Confiscation is only effective if assets still exist when the order is made. From the start of an investigation, prosecutors can apply for a restraint order, which prohibits the suspect and others from dealing with specified property. The court can require disclosure of assets and can appoint a management receiver to look after them. Investigators establish what the defendant owns and where it went through asset tracing, supported by forensic accounting, financial intelligence and requests to foreign authorities.

The defendant is given time to pay. If the order is not satisfied, interest accrues and the court can appoint an enforcement receiver to sell assets, seize money held in bank accounts and take other steps. The court also fixes a term of imprisonment to be served in default of payment. Serving the default term does not cancel the debt.

In practice, a large share of the total value of orders goes uncollected. Outstanding amounts include interest that has built up over many years and orders based on assets that were hidden, dissipated or moved abroad, or that never existed at the value assumed.

Confiscation of criminal proceeds is required by the main international instruments on crime: the United Nations conventions against drug trafficking, transnational organised crime and corruption, and the recommendations of the Financial Action Task Force (FATF), which call for powers to freeze, seize and confiscate laundered property, proceeds and instrumentalities. Enforcement abroad depends on mutual recognition arrangements, as within the European Union, or on mutual legal assistance treaties.

Confiscation is a central objective of anti-money laundering policy. Reports from banks, such as the suspicious activity report (SAR), and analysis by the financial intelligence unit (FIU) help investigators identify assets early.

The regime has been criticised from several directions. Because benefit is measured gross and assumptions apply in lifestyle cases, orders can exceed anything the offender actually gained or holds, which courts have had to temper with a requirement of proportionality. From the opposite perspective, critics point to low recovery rates and to the ease with which sophisticated offenders hide assets behind family members, a shell company or foreign structures, using the techniques of layering.

A review by the Law Commission of England and Wales recommended reforms to make orders more realistic and enforcement more effective, and legislation to implement changes has followed. Offences that commonly lead to confiscation include drug trafficking, fraud, bribery and tax evasion.

• Financial Action Task Force