Policy paper

Government response to the Law Commission’s review of confiscation

Published 25 October 2023

Applies to England and Wales

Background

In 2018, the Home Office commissioned the Law Commission of England and Wales with a project to review Part 2 of the Proceeds of Crime Act 2002 (POCA) to make recommendations for reform of the confiscation regime in England and Wales. The law on confiscation enables the state to deprive offenders of the proceeds of their criminal conduct.

A terms of reference for this review was agreed between the Law Commission and Government. The terms established that the review aimed to improve the process by which confiscation orders are made, to ensure the fairness of the confiscation regime, and to optimise the enforcement of confiscation orders. This included:

• To analyse and address the most pressing problems with the law on confiscation including compensating victims, frequent unrealistic orders, ineffective incentives and sanctions; restraint powers and enforcement;
• To explore and assess a range of solutions to these problems including alternatives to a value-based regime, options for a specialist forum, preventing the dissipation of assets; and
• To simplify, clarify and modernise the law on confiscation.

The terms required the Law Commission to produce a report making both recommendations for the amendment of the current legislative regime, and recommendations for the creation of a new confiscation regime through legislation, alongside considering non-legislative avenues for reform.

The Law Commission’s project

Work commenced on the project in November 2018. In September 2020, the Law Commission published a consultation paper with provisional proposals for the reform of Part 2, POCA 2002. The Law Commission received over 100 responses from stakeholders across the criminal justice system which helped inform the recommendations made.

The Law Commission’s findings

In November 2022, the Law Commission published its final report containing 119 recommendations for reform of the confiscation regime across 8 Parts and 22 chapters. This included recommendations on matters to be considered before a confiscation order is made, during the making and enforcement of the order, and post-enforcement.

Government response

This document outlines the government’s response to the 119 recommendations. It mirrors the structure of the Law Commission’s final report, responding to the recommendations chronologically. To inform the response, the Home Office has consulted widely across government, law enforcement, civil society, legal practitioners, and academia. The government will seek to legislate on this topic when parliamentary time allows.

Part 1: Objective of the Act

Chapter 2: Objective of the Act

1. Chapter 2 of the report provides an overview of the objectives often associated with the confiscation regime. It recommends that the objective of Part 2 of the Proceeds of Crime Act 2002 should be placed on a statutory footing. The objective should be “to deprive a defendant of their benefit from criminal conduct, within the limits of their means” and bodies exercising powers under Part 2 of POCA 2002 should pursue this objective. The Law Commission observes that punishment, compensation, deterrence, and disruption may be consequences of the regime but should not be stated aims. See recommendations 1 to 4 of the report.

Response to the Law Commission

2. We agree with the Law Commission’s view that Part 2 of POCA would benefit from the inclusion of objectives set out in legislation. This will make the intention of the legislation clear to practitioners and the public, ensuring that the legislation is used in accordance with its established aims.

Part 2: Preparing for the confiscation hearing

Chapter 3: Timetabling

3. Chapter 3 contains a set of recommendations which aim to promote early consideration of confiscation issues and active case management. The Law Commission recommends that:

a. A defendant must be sentenced before confiscation proceedings are resolved, unless the court directs otherwise.

b. The prohibition on financial, forfeiture and deprivation orders being imposed prior to the making of a confiscation order is removed. Where a court imposes a financial, forfeiture or deprivation order prior to making a confiscation order, the court must take such an order into account when determining the confiscation order.

c. The current 28-day period within which the Crown Court is permitted to vary a financial or forfeiture order, be extended to 56 days from the date on which a confiscation order is imposed. The purpose of this recommendation is to align the variation period with that applicable in substantive criminal proceedings.

d. Confiscation legislation should no longer refer to “postponement”. Instead, “drift” in confiscation proceedings should be managed through a statutory requirement that confiscation proceedings are started within a prescribed time, as well as active case management following the commencement of confiscation proceedings.

e. A timetable for confiscation proceedings must be raised as a matter before the court by the completion of the sentence hearing. Errors or amendments may be addressed (respectively) by applying the slip rule within 56 days of sentencing or through amendment of the timetable.

See recommendations 5 to 9 of the report.

Response to the Law Commission

4. We are supportive of the recommendations in Chapter 3 which could make the law clearer and make court processes more efficient. There are clear benefits to establishing a greater emphasis on confiscation in the criminal justice system earlier than is currently the norm; and ensuring that cases are actively managed.

5. We agree that a defendant must be sentenced before confiscation, but that flexibility should be maintained to cater for the most complex cases. This formalises the current practice.

6. There would be some merit in removing the absolute ban on financial, forfeiture and deprivation orders, being imposed prior to the making of a confiscation order particularly to prioritise compensation. This would enable victim compensation to be awarded far earlier in the process than at present in most cases, and introduce flexibility to the process where those orders would ordinarily be available with evidence of criminality. Although there is benefit in the proposal, this change must be considered in more detail to understand the practical considerations where these orders, particularly financial orders, are made prior to a confiscation order.

7. We welcome the recommendation to extend the time afforded to vary a financial, forfeiture or deprivation order within 56 days, to be consistent with the “slip rule”. This flexibility would ensure errors have sufficient time to be corrected thereby avoiding unnecessary appeals.

Chapter 4: The Exchange of Information

8. Chapter 4 contains recommendations aiming to facilitate the exchange of information between the defendant and the prosecution, as well as with the court, to contribute to a more efficient management of confiscation proceedings. The Law Commission recommends:

a. Multiple recommendations addressed to the Criminal Procedure Rules Committee to provide timetables for the provision of information and service of statements; different timetables are suggested depending on whether a confiscation case is categorised as “complex” or “non-complex”; and discretion for the court to amend these timetables on application of the parties.

b. That the court should ensure that the defendant understands the consequences of non-compliance with the obligation to provide information in the confiscation proceedings.

c. The prosecutor’s statement of information (section 16, POCA 2002) should comprise certain information, to assist the court in understanding the prosecutor’s position and arguments. In return, the content of the defence response to the prosecutor’s statement of information should reflect the content prescribed for the prosecution.

See recommendations 10 to 15 of the report.

Response to the Law Commission

9. Aligned to our views on the recommendations in Chapter 3, we see merit in proposals to introduce new, clear processes and frameworks set out in legislation, and Criminal Procedure Rules and Practice Directions as to how the courts should approach confiscation. We agree that the recommendations could provide clarity and reduce the number of appeals - which ultimately delay enforcement of orders.

10. We agree that there should be a requirement for confiscation proceedings to start in a prescribed time and be managed according to their relative complexity to manage delay and ensure that confiscation orders are better prioritised in the sentencing process.  To address the misapprehension that confiscation is an adjunct to sentencing procedure, it would also be sensible to ensure timetables are raised before the completion of the sentencing hearing where possible.

11. Across chapters 3 and 4 of the report the Law Commission recommends that Criminal Procedure Rules should (i) prescribe timetables, in principle to be set by the court on sentencing, (ii) prescribe statements of information and of response, and (iii) require explanation (and hence encouragement) to the defendant to participate. Rules accommodating all these elements will be devised by the Rule Committee, but flexibility in any default timetable will be required and flexibility in provision for when that timetable should be discussed and imposed by the court.

Chapter 5: Early Resolution of Confiscation

12. Chapter 5 recommend the introduction of a two-stage process for the “Early Resolution of Confiscation” (“EROC”) to take place after the exchange of information and before the confiscation hearing to facilitate the early resolution of proceedings. It recommended that stage one would be an EROC meeting, and stage two would be a hearing during which a judge considers approving any agreement.

13. To support this, the Law Commission recommends that the timetabling for the preparation of a confiscation hearing should include the EROC process, unless the court is satisfied that it will serve no useful purpose to do so. The Law Commission’s further recommends that agreements reached outside the EROC structure should be subject to a process which is comparable to the EROC hearing. This means that defendants would remain free to present a consent order at any stage outside the formalised EROC process.

See recommendations 15 to 23 of the report.

Response to the Law Commission

14. A key objective of any future reforms to the confiscation regime should be to streamline the process wherever possible. An EROC process would formalise existing practice of agreeing orders. We recognise the benefits of standardising what is a collaborative process and see merit in prescribing the attendant of relevant parties such as the financial investigator and where relevant, third parties. Fast-tracking agreed orders and narrowing the issues in dispute would save court time and could avoid protracted enforcement proceedings.

15. The government will therefore work with the Law Commission and practitioners to scope the optimal EROC process.

16. If suitable primary legislation is enacted then appropriate supplementary rules will be devised by the Rule Committee, under the jurisdiction of the court, and the legislative competence of the Criminal Procedure Rules.

Chapter 7: Forum^{[footnote 1]}

17. Chapter 7 observes that confiscation proceedings are usually highly complex and require significant judicial expertise. Therefore, it makes recommendations to ensure that confiscation proceedings are heard in the appropriate forum and by judges with sufficient experience:

• The Crown Court retains jurisdiction for confiscation proceedings. Crown Court judges have the required specialised expertise and experience to deal with confiscation cases. Judicial continuity is also desirable, since a judge who has sentenced the defendant will have already a good understanding of the relevant facts of the case.
• Appropriate training is offered to judges hearing confiscation cases.
• The prosecution should make a non-binding indication on the Plea and Trial Preparation Hearing Form and at the Plea and Trial Preparation Hearing (PTPH) as to whether they envisage any complexities if the case progresses to confiscation. This is intended to facilitate the allocation of an appropriately experienced judge to conduct both the trial and the confiscation proceedings.
• In connection with the above, the Criminal Practice Direction on allocation should be updated so that where complex confiscation proceedings are identified at the PTPH stage, this is considered during allocation.
• That additional training in confiscation may be offered to Crown Court judges. This system will assist the Resident Judge in allocating complex confiscation cases by identifying a pool of judges with a higher level of training.

See recommendations 24 to 28 of the report.

Response to the Law Commission

18. The judiciary of England and Wales is independent of government.  To preserve that independence, the Lord Chief Justice, the Senior President of Tribunals, and the Chief Coroner have statutory responsibility for training of the judiciary, under the Constitutional Reform Act 2005, Tribunals, Courts and Enforcement Act 2007 and Coroners and Justice Act 2009 respectively. Those training responsibilities – including the provision of live training, online resources and publications such as the Crown Court Compendium – are exercised through the Judicial College. It would therefore not be appropriate for that training to be directed by external bodies or by the government. The Judicial College regularly reviews training and updates it where necessary.

Part 3: Benefit

Chapter 8: Defining and apportioning benefit

19. Chapter 8 covers the determination of the defendant’s benefit from crime. The Law Commission recommends a two staged test that would first consider what a defendant has “gained” as a result of their conduct and secondly whether a defendant had a limited power to control or dispose of that gain. The definition of “gain” should include: keeping what one has; getting what one does not have; and gains that are temporary or permanent.

20. Chapter 8 also recommends the apportionment of benefit and that any issue relevant to the defendant’s intention with regard to the gain should be raised by defendants in their response to the prosecutor’s statement. See recommendations 29 to 34 of the report.

Response to the Law Commission

21. We share the Law Commission’s view that that the calculation of a defendant’s benefit has real significance for the confiscation regime and acknowledge that the current processes for the calculation of benefit are perceived to lead to the imposition of inconsistent and unrealistic confiscation orders that do not reflect a defendant’s actual “benefit” from crime. Although the government is of the view that this criticism more accurately describes the operation of the regime in the early years, rather than current practice.

22. We therefore see merit in an approach that would not lead to all funds passing through the hands of a defendant being treated as his or her benefit from crime, as a starting point.  Clarity could eliminate the need for practitioners and the courts to have to find inventive but complex ways to apply the confiscation regime in a just way to achieve Parliament’s original intention. However, we do not consider that the introduction of the recommended two-staged test for the calculation of benefit would bring this clarity. It is unclear how the concept of “gain” would truly differ from “obtaining” in practical terms.

23. Rather than introduce new and unfamiliar concepts into the regime, the government will explore whether changes could be made within the parameters of the existing regime. For example, whether amendments to the definition of “obtain” (in section 76 of POCA) could be introduced to include the concept of temporary gains.

24. In regard to the recommendations concerning apportionment, we acknowledge that the aim is to provide the court with greater discretion to make findings as to whether there were separate benefits obtained between multiple defendants. However, we do not consider that the proposed primary legislative change is required.

25. First, the current law already provides a degree of flexibility; the court is not compelled to make a finding that multiple defendants are liable for the same criminal gain.

26. Second, it is the government’s view that any reforms to the confiscation regime should simplify and clarify the law. Adopting apportionment as the default position would mean law enforcement agencies are required to undertake complex investigations to understand the roles played by individuals involved in the offending and to understand what has become of the full benefit. We share stakeholders concerns that the proportion of criminal assets obtained by each defendant is likely to be uniquely within their knowledge. Such investigations would therefore be both time consuming and resource intensive. They would lengthen the time taken to both make and enforcement confiscation orders. This would be of particular concern in cases where there are victims, where prompt resolution of proceedings is of the utmost importance. We do not therefore accept the recommendation to move to a model for apportionment.

27. To support the court in the exercise of its existing discretion to make findings of separate benefits obtained between multiple defendants, we agree that requirements for a defendant to promptly make any assertion that benefit has been shared with another during the preparation of the confiscation hearing would be valuable. We therefore accept this recommendation and appropriate rules will be devised by the Rule Committee.

Chapter 9: Benefit in Criminal Lifestyle Cases

28. Chapter 9 makes recommendations in relation to the “criminal lifestyle” provisions:

• The addition of two offences to Schedule 2 of POCA, namely: keeping a brothel; and environmental offences related to unlawful waste disposal.
• Harmonising the number of offences for both parts of the course of criminal activity trigger to three.
• Including convictions for offences from which the defendant has attempted to benefit when considering relevant offences which trigger the criminal activity course.
• The financial threshold be increased from £5000 to reflect inflation and be reviewed by the Secretary of State every five years.

See recommendations 35 to 39 of the report.

Response to the Law Commission

29. We support the crux of the recommendations in Chapter 9. However, we do not consider it helpful to increase the financial threshold to £5000 adjusted for inflation. We note the Law Commission’s reason for consulting on this was due to a lack of reasoned justification behind the £5,000 figure currently adopted. Given the clear lack of consensus among stakeholders on the appropriate values consulted on by the Law Commission, we are not convinced the rationale for adopting any other figure would be justified.

Chapter 10: Applying the Criminal Lifestyle Assumptions

30. Chapter 10 addresses the application of the criminal lifestyle provisions. To inject some flexibility into the confiscation regime the Commission recommends some discretion regarding the application of criminal lifestyle provisions and that this change should be supported by guidance issued by the Director of Public Prosecutions.

31. Chapter 10 makes two further recommendations in respect of the “serious risk of injustice test”:

• clarification to ensure that in determining whether there would be a serious risk of injustice if the assumption were applied, the court should consider any oral or documentary evidence; and if documentary evidence is not put before the court, the reason why documentary evidence was not put before the court.
• The test should not be limited to preventing a risk of double counting, but instead should include consideration of any relevant factors which would cause a serious risk of injustice if an assumption were made.

See recommendations 40 to 43 of the report.

Response to the Law Commission

32. Given the significance of benefit for confiscation proceedings we see merit in some discretion regarding the application of criminal lifestyle provisions and agree this could be vested in prosecutors.

33. In respect of guidance, we recognise that the confiscation regime is a technical and complex statute. While a core objective of any legislative reform would be to introduce simplicity where possible, it is a matter of fact that confiscation engages a number of different areas of jurisprudence, such that some degree of technical knowledge will be required to apply various provisions.  The need for guidance will be considered in the round and would be administered by the appropriate authority.

34. We note the strong support for the recommendation to clarify the application of serious risk of injustice, specifically in relation to applying the property held assumption (s.10(3) of POCA), to have a broader and more natural interpretation of the phrase. We therefore support this recommendation.

Chapter 11: Assets Tainted by Criminality

35. Chapter 11 recommends that principles developed in the case law related to tainted gifts should be incorporated into either Criminal Procedure Rules or a practice direction, in order to make the law clearer and more accessible. See recommendations 44 and 45 of the report.

Response to the Law Commission

36. The Law Commission’s suggested compendium of case law and principles, and suggested summary of the principles applicable to the treatment of assets held jointly by the defendant and others, is desirable. However, the Rule Committee doubts whether Criminal Procedure Rules, which are secondary legislation, will prove an appropriate or practicable location for the extended summaries that the Law Commission anticipates.

Part 4: Recoverable Amount

Chapter 12: Recoverable Amount

37. Chapter 12 makes recommendations concerning the recoverable amount that the defendant is required to pay towards a confiscation order:

• The court should identify any property that was seized by or disgorged to the state or repaid to victims by the defendant and reduce the total benefit figure by that amount to arrive at the outstanding benefit figure. The recoverable amount will be determined with reference to the defendant’s available amount but cannot be more than the outstanding benefit figure.
• Where the confiscation order is made in an amount less than the recoverable amount, the court should satisfy itself that the defendant understands: what each figure means; why the figures are different; and that it will be open to the prosecution to seek to recover more of the outstanding benefit in future, until it is repaid in full. To this end, the Judicial College consider the inclusion of an example direction in the Crown Court Compendium to assist judges.
• Including a provision to the effect that where the value of the defendant’s available amount appears to be lower than the value of the benefit the court may treat the difference between the values as assets which have been hidden by or on behalf of the defendant, and which are available to satisfy the confiscation order. This should be supplemented with a list of factors to assist the court in determining whether there are hidden assets be set out in statute.
• To amend the definition of a “tainted gift” to provide that a gift is tainted if it was made by the defendant at any time after “the commission of the offence”.

See recommendations 46 to 56 of the report.

Response to the Law Commission

38. The recommendations in Chapter 12 cover a number of different themes; we recognise that their collective aims are to facilitate accurate and realistic calculations of the figures that form the basis of a confiscation order, and to make the processes for arriving at those figures clear and accessible for the courts, practitioners, defendants, and the public.

39. We appreciate that the law on confiscation is technical, and that in order to cater for the facts of individual cases, many of the regimes core principles have developed in case law. The law on hidden assets determinations is an example, which has real significance for the making and enforcement of confiscation orders.  For clarity, and to ensure that the law is applied consistently in practice, we therefore see merit in ensuring a proper statutory basis for the construct. Conceptually, such findings are necessary for dealing with the most sophisticated offenders who are adept at concealing their assets. Without such findings these individuals would not be subject to realistic confiscation orders that accurately reflect their benefit from crime. We will therefore work with stakeholders to assess the suitability of the approach proposed by the Law Commission.

40. To ensure that the consequences of confiscation orders are properly understood, we agree that a requirement on the court to ensure that the meaning and significance of the recoverable amount is explained to the defendant would be valuable. Appropriate rules will be devised by the Rule Committee.

41. The Crown Court Compendium provides guidance on directing the jury in Crown Court trials and when sentencing. The Judicial College reviews the Crown Court Compendium periodically and updates it where new legislation and procedures are introduced where appropriate.

42. We see value in a minor change to the definition of a “tainted gift” to ensure that it captures individuals who transfer criminal property to others on the day of their offending. This would be aligned with Parliament’s original intention for the regime.

Part 5: Enforcement of the Confiscation Order

Chapter 13: Contingent Orders

43. Chapter 13 of the report makes recommendations regarding “contingent orders”, an enforcement order, made by the court during the initial confiscation hearing, to take effect immediately or on a contingent basis should the defendant fail to satisfy their outstanding debt, subject to a confirmation hearing, if (1) there are reasonable grounds to believe that the defendant will fail to satisfy the order through wilful refusal or culpable neglect; or (2) in view of any third-party interests, there are reasonable grounds to believe that, without a contingent order the defendant’s share of the asset will not be made available for realisation by the expiry of the time to pay period.

44. To assist the court when exercising its discretion to make a contingent order, the Law Commission further recommends a list of non-exhaustive factors. In consideration of third-party interests, the Law Commission also recommends specific provisions are made for any interests to be raised.

45. In circumstances where there are related family law proceedings which are running concurrently to the confiscation proceedings, the Law Commission recommends that where the intervention of the prosecution authority in the family law proceedings is likely to represent an increase in complexity such that the High Court would be the appropriate venue for concurrent disposition of the proceedings, or it is otherwise in the interests of justice for concurrent disposition of the proceedings to take place, allocation of both proceedings may be to the High Court.

See recommendations 57 to 62 of the report.

Response to the Law Commission

46. In principle we see merit in introducing a proactive enforcement mechanism where non-payment of a confiscation order is a likely prospect. The Law Commission’s recommendation for a contingent order strikes an appropriate balance between the in personam nature of the regime – an important distinguishing feature of criminal confiscation – and the need to satisfy orders in a timely way.

47. We have listened to stakeholders and consider further work is necessary to develop the substance of any such approach. For instance, we do not consider that the “wilful refusal or culpable neglect” test is a helpful inclusion. It would introduce an additional barrier to enforcement. At present, the court need not be satisfied of a defendant’s wilful refusal to cooperate to apply the existing enforcement mechanisms. Any such approach would undermine the purpose and effectiveness of a “strengthened” enforcement regime. We will work closely with the Law Commission to consider the practical implications of progressing these recommendations.

48. In regard to the recommendations for concurrent disposition of confiscation and related family law proceedings, we recognise that there are huge benefits if both sets of proceedings can be resolved promptly. However, any such benefits would need to be balanced against the impacts on the wider justice system.

Chapter 14: Enforcement

49. Chapter 14 of the report addresses other aspects of enforcement of confiscation orders, such the appropriate forum for proceedings and compliance with confiscation orders. It recommends:

• The Crown Court and the magistrates’ court should have flexible powers to transfer enforcement proceedings between them to achieve the best enforcement of the confiscation order on the facts of each case.
• The Crown Court should have the power to make a “confiscation assistance order” which appoints an appropriately qualified person to assist a defendant in satisfying their confiscation orders.
• The court should have a bespoke power to direct a defendant to provide information and documents as to their financial circumstances.
• To strengthen the powers of the magistrates’ court to:
  • Make it explicit that collection orders can be applied to confiscation orders.
  • Provide the court with the power to compel defendants to attend court at any stage of enforcement proceedings.

See recommendations 63 to 70 of the report.

Response to the Law Commission

50. We acknowledge that the current enforcement levers have attracted criticism that confiscation proceedings are susceptible to “drift” while orders have remained unpaid. However, enforcement has improved considerably in recent years; 74% of the confiscation orders made in the financial year 2021-22 were collected in-year^{[footnote 2]}.

51. Nevertheless, prompt resolution of confiscation proceedings and the satisfaction of confiscation debt is key to ensuring crime does not pay. Timely satisfaction of orders is especially important where sums recovered as part of confiscation are to be paid towards compensation. We agree that a more flexible approach to enforcement, tailored to the facts of a case could assist. Recognising this, the government supports the thrust of the recommendations in chapter 14 to better enable timely enforcement of confiscation orders.

52. The practice of appointing an appropriately qualified person to assist defendants with satisfying their outstanding confiscation orders has already been successfully trialled. Project Mariner was established in 2021 with funding from the Asset Recovery Incentivisation Scheme Top-Slice^{[footnote 3]} and has been led by the National Police Chief’s Council. Under Project Mariner, appropriately qualified members of the police are appointed to work alongside prison staff to assist serving defendants with their confiscation orders. The project has been successful with over 260 prisoners having been contacted and nearly 60 prison surgeries conducted. Due to this success, the project received funding to establish a network of staff to cover all regions in the UK. We will work with the Law Commission and practitioners to understand whether there could be additional benefits in formally establishing a statutory basis for “confiscation assistance orders”.

Part 6: Reconsideration 

Chapter 15: Reconsideration

53. Chapter 15 concerns reconsideration of the available amount. This includes:

• Statutory restrictions on an application for upwards reconsideration of the available amount.
• When making an order to vary the available amount, the Crown Court should have the power to adjust the compensation element of the order to reflect the variation.
• When an order to vary the available amount upwards is made, the court may set a deadline by which the reconsidered available amount must be paid.
• The powers to apply for a section 23 order for downwards reconsideration should also be vested in a designated officer of the magistrates’ court.
• Extended provisions to cater for assets that realise a lower amount than their original valuations.

See recommendations 71 to 78 of the report.

Response to the Law Commission

54. While we recognise that reconsideration permits some degree of flexibility to accommodate changes of circumstance after a confiscation order has been made, and that some provisions are necessary to cater for such change, we do not agree that all of the recommendations in chapter 15 support the objectives of the confiscation regime. The power to vary the amount payable if a confiscation order was made in an amount lower than the defendant’s assessed benefit from crime is an important component of the confiscation regime and key to ensuring crime does not pay.

55. There is a clear lack of consensus among stakeholders in relation to the recommendation to restrict applications to increase the recoverable amount to exclude property which the defendant legitimately acquired after the confiscation order was made. We therefore do not accept this recommendation.

56. We note the concerns raised by the Law Commission and the views held by some stakeholders that the unlimited ability to increase a defendant’s confiscation order stifles their rehabilitation, encourages the commission of further offences and provides an incentive to hide assets. However, POCA already includes a safeguard to prevent “unjust” applications. Given this safeguard, and the divergence of views amongst stakeholders, we consider that further analysis is required to understand whether the upwards variation policy would operate counter to the objectives of the confiscation regime and wider criminal justice policies.

57. We strongly support the recommendation to facilitate a compensation order being satisfied in full, or satisfied to the fullest extent possible, from sums owed under the confiscation order.

Chapter 16: Provisional Discharge

58. Chapter 16 of the report addresses the circumstances in which there is no realistic prospect of recovering the remainder of a confiscation order, despite all the reasonable efforts of enforcement authorities. In such circumstances, the Law Commission recommends that orders are provisionally discharged. In these instances, no further enforcement action (including accrual of interest and the activation of the default term) can be taken to recover sums under the confiscation order, unless the discharge order is revoked because it can be revoked when some conditions are met: namely where (1) the conditions for provisional discharge no longer apply, and reasonable enforcement measures become available; or (2) an order is made pursuant to section 21 to increase the benefit figure or section 22 to increase the available amount

59. It is further recommended that where the only part of an order that is outstanding is interest, the court should have the ability to discharge the confiscation order provisionally in the interests of justice. See recommendations 79 to 85 of the report.

Response to the Law Commission

60. We recognise the assessment made by the Law Commission that the reasons for high impairment charge are not a consequence of defendants retaining large amounts of their criminal proceeds, but are linked to the nature of their debt, which may have been accumulated to a large extent in the early years of the operation of the regime. The legacy interest balance is £1,137 million as of March 2023 and accounts for 45% of the outstanding debt, which currently stands at £2,510 million^{[footnote 4]}. These outstanding values are not representative of criminals retaining their proceeds of crime. Recent success collecting confiscation order debt within one year of the imposition are illustrative of this (see paragraph 50).

61. His Majesty’s Courts and Tribunals Service (“HMCTS”) continues to enforce the debt regardless of the age of the imposition. But we see value in a policy to allow certain confiscation orders to be placed in abeyance if all enforcement steps have been exhausted. It would limit resources spent on futile attempts to enforce orders and could permit such orders to be treated differently when accounting the total confiscation order debt.

62. We agree with the Law Commission’s assessment that unlimited enforcement is not always viable because it is not without costs ultimately borne by the taxpayer. This principle is already recognised by sections 24 and 25 of POCA, which provide for orders to be written off in narrow circumstances.

63. The government will consider whether the proposals are scalable to deal with the existing backlog of historic unenforced confiscation orders. To address this, specific criteria would need to be developed to determine when provisional discharge of a confiscation order should apply. The government will therefore work closely with the Law Commission and other criminal justice stakeholders to consider the practical implications of progressing these recommendations before taking a view on their adoption.

Part 7: Preserving the Value of the Assets

Chapter 17: Restraint

64. Chapter 15 addresses restraint, which aims to protect the value of assets against dissipation before a confiscation order is made and enforced, with a view to preventing defendants from frustrating the purpose of confiscation proceedings. The recommendations include:

• Placing on a statutory footing the “risk of dissipation” test currently applied by courts but not explicitly mentioned in Part 2 of POCA.
• Non-exhaustive lists of factors the courts should consider when hearing applications for restraint.
• The release of restrained funds to allow a defendant to meet reasonable living expenses and legal expenses, subject to a judicial approval of a cost budget and a table of remuneration, set out in a statutory instrument.
• The Criminal Procedure Rules should require a statement of the defendant’s income and outgoings on an application for the release of restrained funds for reasonable living expenses.
• A power to award costs should be included in POCA 2002 and the CPRC should consider outlining the procedure for an assessment of costs in the CPR in the following (non-exhaustive) terms:
  • Costs should be limited to each application.
  • Costs orders should not be made against the defendant.
  • If the prosecution brings a successful application, each party should bear their own costs.
  • If the prosecution brings an unsuccessful application, there is a presumption that costs follow the event (that is, that the prosecuting authority pays the defence costs) unless the prosecution can demonstrate that the application was reasonably brought.
  • In deciding whether the application was reasonably brought, the fact that the application was previously successful does not necessarily mean it was reasonably brought.

See recommendations 86 to 92 of the report.

Response to the Law Commission

65. The identification and preservation of assets which may later be used to satisfy a confiscation regime is key to the success of an effective confiscation regime. It is important, therefore, that any reforms do not introduce unnecessary barriers to the use of the powers.

66. Codifying the “risk of dissipation test” and supplementing that with a list of factors for the court to consider would be a sensible way to protect individuals’ property rights while assisting decision making. We will work with stakeholders to assess the list of factors proposed by the Law Commission.

67. Noting that no guidance is provided in either POCA or the Criminal Procedure Rules concerning the calculation of “reasonable living expenses” we recognise that a list of statutory factors could assist and ensure that the power is exercised consistently and transparently. To supplement this, it would be useful and seemingly uncontroversial to require the proposed information of the defendant in the Criminal Procedure Rules. Appropriate rules will be devised by the Rule Committee.

68. In principle, the government is receptive to proposals that would introduce consistency with other POCA provisions. Permitting legal expenses to be released from restrained funds would align the criminal confiscation regime with the civil asset recovery schemes under Part 5 of POCA. This would not conflict with the objective of a confiscation regime, but safeguards would be required to ensure that assets are not fettered away to frustrate confiscation. Cases involving victims may warrant an exemption. The government will consider this recommendation in further detail.

Chapter 18: Effective Asset Management

69. Chapter 18 makes recommendations regarding other measures which may be taken to manage or preserve the value of assets, in addition to restraint:

d. The National Police Chiefs’ Council reconsider the training needs of all police officers in connection with confiscation, and in particular those who may need to exercise or oversee the powers of search and seizure in connection with confiscation.

e. The Crown Court ought to have the power to appoint a management receiver (who may in turn sell the property) without additionally having to restrain the property subject to further detention.

f. The government consider developing a national asset management strategy and a Criminal Asset Recovery Board (“CARB”).

See recommendations 93 to 95 of the report.

Response to the Law Commission

70. The National Police Chief’s Council recognises the need to develop and strengthen the training of police officers in connection with confiscation. It is currently working on a people strategy to bolster staff retention in critical roles that require specialist accreditation.

71. The government supports the recommendation to extend the powers to appoint a management receiver in respect of restrained assets to cover assets that are seized. We will work with the Law Commission to take this forward.

72. The recommendation to develop a national asset management strategy is under active consideration by the City of London Police, in connection with the storage and realisation of assets acquired via civil processes. Its findings will inform the outcome of this recommendation.

Chapter 19: Digital Assets

73. Chapter 19 of the report makes recommendations regarding cryptoassets:

• when determining whether an order for compensation ought to be made in favour of an acquitted defendant in relation to the restraint and exchange of cryptoassets to sterling which subsequently lose value, the court must apply the same test of reasonableness as to prosecution liability for costs as would apply to all other assets subject to early restraint.
• any national asset management strategy developed by the Criminal Asset Recovery Board should cover issues in connection with the storage and exchange of digital assets including cryptoassets.

See recommendations 96 and 97 of the report.

Response to the Law Commission

74. The Economic Crime and Corporate Transparency Bill, introduced to Parliament on the 22 September 2022, amends the criminal confiscation regime to enable law enforcement to investigate, seize, and recover cryptoassets more effectively. We consider these provisions adequate and that further provisions are therefore not required. The government will keep this position under review.

Part 8: Post-Confiscation Order Issues

Chapter 20: Multiple Confiscation Orders

75. Chapter 20 makes recommendations regarding multiple confiscation orders (a situation arising when a defendant is subject to more than one order). The Commission recommends:

• Where there are multiple confiscation orders sought against the same defendant, the court should have the power to consolidate the applications for confiscation.
• Where a defendant already has a confiscation order, the court should have the power to: (a) amend the benefit calculation for the earlier confiscation order within six years of the date of conviction (pursuant to section 21 of POCA 2002); and (b) consolidate any amount outstanding under it into the new confiscation order.
• Payments obtained pursuant to a consolidated confiscation order should reflect the following priority: (a) compensation of victims (when such compensation is ordered to be paid from confiscated funds); followed by (b) each confiscation order in the order in which it was obtained.
• That an accurate record of consolidated orders is logged on an amended 5050 form and stored on the Crown Court Digital Case System.

See recommendations 96 and 97 of the report.

Response to the Law Commission

76. While we support the premise of the recommendations in chapter 20, we do not agree that all the suggested legislative changes are required. We have heard from stakeholders that the practice of consolidating multiple confiscation orders against the same defendant already occurs. Meanwhile, it may not be appropriate to introduce a requirement on consolidating confiscation orders as mandatory. Our stakeholders also noted that section 21 applications are infrequent as the requirement to have fresh evidence that was not available at the date of the confiscation hearing can be challenging.

77. The government does support the recommendation that payments pursuant to a consolidated confiscation order should prioritise compensation of victims followed by the order in which each confiscation order was obtained. However, when there are several concurrent confiscation and compensation orders, it will likely be challenging to determine what proportion of compensation should be paid first. We will work closely with the Law Commission and our stakeholders to consider the practical implications of progressing this recommendation.

Chapter 21: What Happens When a Confiscation Order is Paid?

78. Chapter 21 discusses the interaction between confiscation and compensation and recommends that where a compensation order is imposed at the same time as a confiscation order, the Crown Court should be required to direct that compensation should be paid from sums recovered under the confiscation order. See recommendation 100 of the report.

Response to the Law Commission

79. The government is supportive of this recommendation and will work with the Law Commission to take this forward. An effective confiscation regime that swiftly recovers criminals’ assets and compensates victims of crime is central to our efforts to restore faith in the public sector response to fraud – two of the key commitments in the Economic Crime Plan 2 and Fraud Strategy.

Chapter 22: Appeals

80. Chapter 22 makes several recommendations relation to appeals against confiscation orders and other orders made in confiscation proceedings:

• All routes of appeal be made explicit within Part 2 of POCA 2002, including signposting other legislation (and in particular the Criminal Appeal Act 1968) where relevant.
• Provision to allow the Court of Appeal (CoA) to remit confiscation appeals back to the Crown Court will ensure the CoA is not burdened with cases it currently hears at present, where we think the crown would be better placed to hear the proceedings.
• Where appropriate, new appeal rights will be introduced for defendants, prosecutors and third parties, in recognition of new processes such as contingent orders.

See recommendations 101 to 119 of the report.

Response to the Law Commission

81. We acknowledge that the law on appeals in connection with confiscation proceedings is disparate across multiple instruments and that the lack of clarity has resulted in a body of case law concerning the existence of appeals.  There would be benefits to clarifying existing rights of appeal in POCA, for prosecutors, defendants and third parties. The law would be clear, transparent, and easily accessible.

82. While the recommendation to enable the Crown Court to hear cases currently heard by the Court of Appeal is ostensibly an attractive proposal, a further cost benefit analysis is required. Any benefits would need to be balanced against the impacts on the wider justice system.

1. The Law Commission makes no recommendations in Chapter 6: Incentivising the Payment of Orders. ↩

2. The obligation to satisfy outstanding confiscation debt rests with a defendant. The standard time-to-pay period afforded to defendants being three months, after which the enforcement leavers come into operation. While this is a helpful performance metric it potentially downplays improved performance on enforcement as it does not account for orders being imposed towards the end of the financial year being less likely to be collected within that same year. ↩

3. The Asset Recovery Incentivisation Scheme (“ARIS”) was introduced in 2006 to allow a proportion of the proceeds of crime recovered under POCA to be redistributed to agencies involved in the asset recovery process. The objective of the scheme is to provide operational partners with incentives to pursue asset recovery as a contribution to the overall aims of cutting crime and delivering justice. It divides net receipts from asset recovery between operational partners and HM government. A proportion of the ARIS receipts make up a “top-slice” pot, a funding stream which provides investment for innovative projects that trial new approaches to support the development and delivery of a more effective and efficient asset recovery regime. Funding allocations are agreed between ministers in the Home Office, Ministry of Justice and Attorney General’s Office, reflecting the ambition to support innovation across the criminal justice system. ↩

4. HMCTS Trust Statement 2022 to 2023. ↩