THE PROCEEDS OF CRIME: PAST PRESENT AND FUTURE IN
ENGLAND & WALES
Sir David Calvert-Smith QC*

I. INTRODUCTION
When studying anything from an individual case to the development of an entire field of law, in order tounderstand the present we have to know something about the past and how the law has developed.
Before the development of a national system of criminal courts in the 14th century in England and Walesthe court system - if it can be described as a system at all - was within the control of the citizen who wished
to bring a case and the local lord who tried it or appointed someone or a jury of citizens to do so. There wasno distinction between civil and criminal wrongs and of course no coherent, let alone national, system ofsentencing. It was therefore possible for a citizen who had been wronged to obtain redress both in the formof compensation or restitution and in the form of some punishment pour encourager les autres.
It is ironic that the separation of civil from criminal law and procedure which developed over thefollowing centuries is now seen as having created huge problems in the field with which we are concerned and in others such as family law in which, to this day, criminal and civil proceedings concerning some of thesame facts are separated.
Although the creation of Justices of the Peace, Quarter Sessions and Assize Courts did not lead at once tothe separation of civil law with its powers of recovery restitution, etc. from criminal law, over the centuries
which followed it became increasingly the case that the criminal law and procedure - within statutory
national sanctions of death or imprisonment or fine imposed by the King’s judges who travelled the country
to impose the King’s justice - focused increasingly on the crime itself, the actus reus, to the exclusion of therights of the citizen who had been wronged or of the need to remove the profits of crime. There were ofcourse exceptions. Those convicted of treason or similar crimes had all their property forfeited to the
Crown. This was not so much an attempt to remove the proceeds of crime as to mark the seriousness of thecrime and - incidentally - to raise revenue for the Crown. Increasingly the citizen who wished to recovermoney or property or damages for injury, whether civil or criminal, had to go through the civil process inorder to obtain it.
Of course taxation, as I have hinted above, was never far from the minds of the King and Parliament andso from the earliest times His/Her Majesty’s Customs and Excise have had the power to penalise those who
attempt to evade the duty payable on imported goods and more recently the power to bring such persons
before the criminal courts. This function, important in all countries but particularly so perhaps in an island
trading state like the UK, has had an important influence on the development of the law on proceeds ofcrime. One of the biggest issues in this field today is the vast illegal profit made from the trafficking of illegal
drugs. Most of the illegal drugs consumed in England and Wales are imported from abroad and Customs andExcise assumed the lead role in investigating and prosecuting such crimes since they are the service withthe most experience of policing frontiers and liaising with foreign counterparts, etc. Because their focus has
been historically upon the collection of revenue on goods, which are dutiable but not prohibited rather thansimply upon the punishment of individual crimes and criminals, they have been proactive in recent years
when successive governments have tried to pass laws which, if properly and firmly enforced, will help totake the profit motive away from crime and to focus more on the money or property than the punishment or
rehabilitation of the individual offender.
In the thirty five years in which I have practised in criminal law I have seen enormous changes.
* Barrister, Former Director of Public Prosecutions for England and Wales, United Kingdom.

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The Second Half of the Twentieth Century
In the 1950’s and 60’s there were few ways in which the criminal courts of England and Wales were able
to go beyond the process of trying and sentencing the offender for the individual criminal act he hadcommitted. Of course it is right to say that one attack had been made on the proceeds of crime in that in the
18th century the crime of handling stolen goods - punishable by death if the property was of more than trivial
value - had been devised to try to combat the proliferation of those familiar to readers of Charles Dickens’
Oliver Twist - thereby enabling the criminal law to punish not just the thief but the handler. To this day the
maximum punishment in England and Wales for handling stolen goods is higher than that for theft. In
addition the crime of “living off immoral earnings” was created to discourage pimps exploiting prostitutes.
There were also some ways in which the sentencer could act beyond immediate punishment for the crime.
Here are some of them
• Confiscation/forfeiture of the means by which the crime was committed - e.g. the knife, gun,counterfeiting equipment, etc.
• Restitution of the actual property - though not proceeds from its sale - stolen from the victim.
• Destruction of certain criminal equipment - drugs in particular.
• Restrictions on the future behaviour of the accused by disqualification from driving, etc.
In the 1970’s four potentially important steps were taken
The updating of the law concerning illegal drugs, which, among many other measures, criminalised thepossession of drugs with intent to supply. However it was still difficult to prise the proceeds of such crimes
from the grasp of the criminal.1
The introduction of the “criminal bankruptcy” order. If an offender (economic crime only) was shown tohave benefited to a particular amount - £10,000 in those days - he could be made “criminally bankrupt” andsufficient of his assets realised to repay those he had defrauded. I had limited direct experience of suchorders but I believe that they were cumbersome and time-consuming to enforce and often failed to produce
the assets sought.
The introduction of “compensation orders”. These were orders to compensate the victim of crime inorder to save him from having to pursue a separate claim in the civil courts. However they were only madein the clearest cases in which the amount could not realistically be disputed. They were intended to coverphysical as well as financial injury. In addition many criminal judges, then under enormous pressure of workwith a rapid increase in crime which was not matched by a corresponding increase in resources, disliked
them and found it easy to decide that the issues were too complicated for a criminal court. This meant thatthe legislation did not have the hoped for effect. They also had in mind the ability of victims to use the third
new invention of the decade. This was the setting up of a Criminal Injuries Compensation Board which
provided a cheap and reasonably quick way for a victim to obtain compensation from the state for the crimecommitted against him/her. It was (and still is) limited to compensation for physical/mental injury rather thanfinancial. It did/does not require that an offender be convicted of the crime - merely proof that the crime has
been committed and the injury suffered as a result.
In the 1980’s further measures were introduced. Sentencing courts were required to consider
compensation in all “victim” cases and to give reasons why, if they did not order compensation, they had notdone so. Frequently the reason given was that the sentence was one of imprisonment and therefore theaccused could not be expected to earn the money necessary to compensate the victim of the crime. As will
be seen the present government is not attracted by that argument.
The Drug Trafficking Offenders Act - confined, as its name suggests, to drug offences. Thisrevolutionised the theory and practice of the criminal law and its relationship with the proceeds of crime. For
the first time the burden shifted to the convicted person to prove on the balance of probabilities that his
assets - or any gifts he had made - were not from the proceeds of his drug trafficking. Briefly the court was
required to work out how much profit the accused had made from the offences for which he had been
1 I well remember a case in which I was involved in which the offender was fined some £150,000 in an attempt to relieve himof the profit he had made from drug dealing. In the alternative he was to serve twelve months in prison, then the maximum
default sentence. When he learned that the fine reduced according to the days he spent in prison he chose to surrender tocustody so that he could lose a few kilos in weight and save the money necessary for his daughters’ dowries.

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convicted, to decide what assets were available, and to order that the lower of the two sums be paid to thestate. The default terms of imprisonment for non-payment were greatly increased. The legislation was once
again unpopular with criminal judges.
Many were unfamiliar with the tracing exercises normally performed by civil judges. Many felt that they
were wasting time and causing delay to other “proper” criminal work such as murders, robberies, etc. Many
felt that the shift in the burden of proof was somehow “unfair” - “not cricket” is the English expression - andlooked for ways of avoiding the issue. Others thought that the weight of this sanction fell more upon theinnocent wives and children, etc. than upon the accused who was usually spending a long time behind bars.
However, gradually the courts got used the idea. Further legislation was passed requiring the drugtrafficking matter to be dealt with in advance of the substantive sentence.
A real difficulty lay with the diversity of criminal endeavour. If the money or property had in fact been theproceeds of some crime other than that for which the accused had been convicted, then it fell outside theremit of the Act. This difficulty persisted when the first attempts were made later to criminalise moneylaundering.

In the late 80’s and 90’s the struggle continued•••

A new Drug Trafficking Act was passed andA new Act in similar but not identical terms was introduced to deal with financial crime at the pointof sentence.
An offence of money-laundering was created. It still required proof that a particular predicate
criminal offence or offences had been committed so that if the offender could show that actually he
was simply a tax-fiddler or had amassed the wealth by committing crimes which were not within thestatute he could escape. If the court (jury) could not decide whether the illegal profit stemmed fromdrugs or financial crime they could not convict of either. Likewise the sentencing judge when
considering confiscation.

II. THE 21ST CENTURY
Fed up with the mixed success of the preceding thirty years or more the new government in 1997
announced early that it was taking two important but closely related steps.
First we were at last to incorporate into English law the European Convention on Human Rights (ECHR)- a Convention largely drafted by English lawyers! The Human Rights Act 1998 came into force in 2000.
Second a new a far-reaching law would be passed to enable the profits of all crime from the most serious
to the most humble, including tax evasion, to be made the subject of criminal sanction either as a discrete
crime - of money-laundering - or as a tough weapon in the hands of the sentencer. In the absence of criminal
proceedings for lack of sufficient evidence to satisfy the high standard of proof, a structure whereby a newagency, the Assets Recovery Agency (ARA), can institute civil proceedings or refer the case to the Inland
Revenue for it to recover tax upon suspiciously derived income was to be introduced. The scale of the
problem was huge. The proceeds of crime were estimated in 2000 to amount to £18 billion or 2% of Gross
Domestic Product. Before the passing of the Act the average funds recovered amounted to less than 1/1000thof this - £17 million. As Director of Public Prosecutions for England and Wales from 1998 to 2003 I was
involved in the consultations which led to the enactment of the legislation and the setting up of the ARA. By
now a number of jurisdictions closely related to our own had enacted tough laws of their own with the aim ofremoving dirty profits and deterring future offenders. We had excellent examples from common law
jurisdictions such as the US, Ireland and Hong Kong. The Act was finally passed as the Proceeds of Crime
Act 2002 (The Act) and came into full force in April of 2003.
Why do I juxtapose the Human Rights Act 1998 (HRA) with the Act? As the years passed the law on this
topic had become, as I have described, gradually more severe and weighted against the launderer of suspect
money. Grave concerns had been expressed about the fairness of the law and its potential to trap theinnocent as well as the guilty. The government saw the enactment of the HRA as an opportunity to create an
independent scrutiny of legislation on this and other fronts - e.g. anti-terrorist legislation - by giving theHigh Court, Court of Appeal and House of Lords sitting in its judicial capacity, the ability to declare that a

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law or a particular aspect of it was either incompatible with the ECHR or needed to be interpreted in aparticular way in order for it to be compatible. It therefore felt more comfortable devising legislation which
undoubtedly shifts the balance away from the accused and in favour of the prosecutor secure in theknowledge that if it went too far the courts would intervene. Many of the still unanswered questions arisingfrom the passing of the new Act are directly related to the compatibility or otherwise of particular Sectionsof the Act with the ECHR.

III. THE PROCEEDS OF CRIME ACT 2002
The General Scheme of the Act
The first thing to say is that it is very long. Twelve Parts and 462 Sections. Even discounting the fact thatit has to deal with criminal and civil procedure in Scotland and Northern Ireland there is still a great deal forthe police officer, investigator, prosecutor, judge and defence lawyer to grasp.
Part One (ss1-5) deals with the setting up of the ARA and the powers and functions of its Director.
Part Two (ss 6-91) deals with confiscation orders to be made following conviction of a defendant and theenforcement of such orders. It also deals with restraint orders to be made during an investigation or at any
time up to conviction and sets out the possible appeal routes for a defendant or prosecutor in connexion withthese orders. I shall deal with this Part in more detail later.
Part Three and Part Four (ss 92-239) deal with criminal jurisdiction in Scotland and Northern Irelandrespectively and do not concern me.
Part Five (ss 240-316) deals with Civil Recovery in both England and Scotland.
Part Six (ss 317-326) deals with the ARA Director’s Revenue (Tax) functions.
Part Seven (ss 327-340) deals with the creation of new money-laundering offences. Again I shall deal withthese in more detail later.
Part Eight (ss 341-416) deals with investigations and the orders - production of documents, search andseizure, disclosure, customer information, account monitoring, and overseas evidence, etc. - which may beobtained in pursuance of investigations. I shall deal with aspects of this later.
Part Nine (ss 417-434) deals with such property of a bankrupt person as may be subject to the provisionsof the Act.
Part Ten (ss 435-442) deals with the degree to which information which comes to the knowledge of the
ARA may be shared with other bodies such as the Police, the Director of Public Prosecutions, etc. This is an
important Part because too often in England and Wales, and, I believe, other jurisdictions information heldby one agency is not shared with others who need it.
Part Eleven (ss 443-447) deals with “internal” jurisdictional matters - England & Wales, Scotland,
Northern Ireland, etc.
Part 12 (ss 448-462) deals with miscellaneous matters.
It will be clear from the scheme that I have outlined that so far as the criminal law is concerned the Act
works backwards from conviction through investigation to the creation of new offences. I shall deal with the
topics in chronological order. I do so in the hope that this latest attempt of a leading Western economy tocombat economic crime without unduly injuring the private rights of individuals may be of interest to you.
I do not present the legislation as the perfect solution. Indeed there are parts of it against which I argued
before the legislation was finalised and there is often a substantial gap between the intention of legislationand its implementation by those responsible for so doing. I am, however, certain that on the one hand, thepublicity given to it and the fear of leading firms and companies that they may fall foul of the moneylaundering provisions, and on the other, the huge effort which has gone into training prosecutors and176

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investigators has already had a salutary effect on the behaviours of those who may have allowed theirrespectable businesses to be used as the washing machine for dirty money.

IV. THE NEW OFFENCES.
Four weapons have been deployed to combat money laundering:••••

The creation of new criminal offences of money laundering.
Regulation of financial institutions and others to put systems in place to detect and prevent money
laundering.
Legislation to require reporting of known or suspected instances of money laundering to theauthorities.
Criminalising the disclosure of information which might undermine a money laundering
investigation.

Five types of offence are created. The mental element required is similar though not identical for eachgroup of offences. It is sufficient for the prosecution to prove that the defendant suspected, or, in the case ofsome offences, had reasonable grounds for suspicion.

Concealing, etc. (Section 327)
A person commits an offence if he conceals, disguises, converts, or transfers “criminal property”, orremoves it from England & Wales. Concealment and disguise are widely defined and may concern any aspectof the property. The only defence surrounds the possibility that the accused has made an authorised
disclosure to an appropriate authority and has been allowed to perform the act which would otherwise haveamounted to an offence. “Criminal property” is defined as property of all kinds and wherever situated whichconstitutes or represents in whole or in part a person’s benefit from “criminal conduct” and which thedefendant knows or suspects to be such a benefit. “Criminal conduct” is any conduct which if committed inEngland and Wales would constitute a crime. The Act is retrospective so far as the criminal conduct isconcerned so that it does not matter if the crime which generated the property occurred before the Act was
passed.
Acquiring, etc. (Section 329)
This section penalises the acquisition, use or possession of “criminal property”. To this offence there isan additional defence that the defendant acquired, used or possessed the property for “adequate
consideration”.
Arrangements, etc. (Section 328)
This Section penalises those who make arrangements they know or suspect may facilitate theacquisition, use or possession of “criminal property”. The only defence available is the one under Section
327 above. The maximum penalties for offences under these three sections are tough. 14 years
imprisonment. This is twice the maximum sentence for theft and four years longer than the maximum forreceiving/handling stolen goods. Of course many of the offences described above would in fact amount tooffences of handling stolen goods.
Disclosure Offences
Regulated Sector. Section 330. Failure by a person in the “regulated sector” to disclose to a “nominatedofficer” knowledge, suspicion, or reasonable grounds for suspicion, that another person is engaging inmoney-laundering. The regulated sector is defined in considerable detail in a Schedule to the Act but
roughly speaking it covers banking, money lending and investment businesses. “Nominated officers” arepersons nominated by the company or business concerned.
Regulated Sector. Section 331. Failure by a “nominated officer” to disclose to an “authorised person” within the National Criminal Intelligence Service or someone nominated by it to receive disclosures knowledge, suspicion, or reasonable grounds for suspicion, that another person is engaging in moneylaundering based upon a disclosure to him by a person within his company’s or business’ employment. The
only defence is if the defendant has a “reasonable excuse “ for not having made the disclosure.
Non-regulated sector. Section 332. Failure by a “nominated officer” to disclose to an “authorised person”

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knowledge or suspicion (NB not reasonable grounds for suspicion as in the two earlier sections) that anotherperson is engaging in money-laundering based upon a disclosure to him by a person within his company’s orbusiness’ employment. The only defence is if the defendant has a “reasonable excuse “ for not having madethe disclosure.

Tipping off (Section 333)
A person who knows or suspects that a disclosure has been made to a nominated officer or direct to theauthorities and makes a disclosure which is likely to prejudice any investigation which might be conductedfollowing the original disclosure commits an offence. Here the defences include
not knowing or suspecting that his disclosure was likely to be prejudicial
being done by a legal adviser in the course of giving legal advice or conducting legal proceedings.
The maximum penalty for offences under these Sections is five years imprisonment.
It should perhaps be noted that many countries have underpinned their preventative anti-money
laundering regimes with purely administrative sanctions. The UK government has chosen to underpin themwith criminal sanctions in order to emphasise the seriousness with which it views the importance of proper
systems of control. Even failure to comply with some of the procedural requirements can be prosecuted in
the criminal courts.
Comments
The scheme seems to be admirable in theory. In particular the doing away with the distinction between
different crimes as the sources of criminal property.2
My one serious reservation is that in setting the standard of “guilty mind” so low - mere suspicion - there
is a risk that most offenders will be able to plead that they should be sentenced on the basis of suspicion
rather than knowledge or even belief and sentences at the top end of the range will be rare. In contrast themental element for the closely related offences of handling or dealing in stolen goods is “knowledge or
belief ” that the goods in question were stolen.
All the “defences” to which I have referred require proof by the accused on the balance of probabilities inorder for them to succeed. Since the old legislation had similar provisions, which survived challenges on
ECHR grounds, it is unlikely that this feature will cause problems.
In short I believe that the prosecutor now has some formidable weapons in the shape of Sections 327-329
and the supporting Sections and those enterprises which are likely to be used as washing machines for dirty
money have a strong incentive to be vigilant in the way in which they deal with customers and clients.

V. INVESTIGATIONS
Once again some brief history to illustrate how the process of investigation has developed over the years.
Historically criminal proceedings were brought upon “information” being laid before the local magistrates by
a citizen that so-and-so had committed a particular crime. The magistrates were the investigators andsummoned witnesses and the accused before them to hear the evidence. If they believed that there wassufficient evidence to place the accused before a court he was committed to trial before the local quartersessions (now Crown Court), or in more serious cases the assize (now Crown Court) presided over by oneof the King’s judges. Over the years the magistrates were given powers to order witnesses to bringdocuments or other exhibits to court. All prosecutions started as private prosecutions and only if committed
for trial did they become public prosecutions. Even then it was up to the wronged victim to instruct and pay
for a lawyer to prosecute the case if he wished. In the late 18th century in London and more particularly inthe early nineteenth century police forces began to be created - the most famous being the Metropolitan
Police - “Scotland Yard”. This was in response to the poverty and lawlessness which accompanied the
beginning of the industrial revolution, together with the return from many years of soldiering in the wars
2 Another personal experience. I am currently engaged in the prosecution of a number of defendants for money laundering

offences. We allege that during the material time the principal accused were engaging in three different forms of criminal
activity all of which generated criminal property. We cannot however trace a particular car or house purchase or deposit ofcash at a bank to any particular offence or type of offence. Prior to the enactment we would have been unable to prosecute.

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against France of thousands of men with no skills and no money.
Gradually the police began to wear the shoes of the private citizen informant. Although the criminal
process was still started by the information of a citizen that citizen was more and more often a police officer.
Of course the police soon started to press for ways in which they could better investigate and secure
evidence. Interestingly, and it has coloured the development of the English system to this day, the policecame on the scene long before any form of local or national prosecutor. The police themselves were - andstill are - not under national but local control. It was not until the late 19th century that the office of Directorof Public Prosecutions was established. Even then his office was responsible only for the prosecution of atiny fraction of the most important cases and crimes. The vast majority - until 1986 - were dealt with by thepolice, who gradually began to employ lawyers of their own to prepare and present cases to court.
This has meant that in England and Wales the driving force for change in the way in which cases areinvestigated and prosecuted has been the police service, rather than the prosecutor who in most countries
has the power to direct the police and - even as close to us as Scotland - has been around a lot longer thanthe police. The Home Office, which has responsibility for overseeing the police, but not the Crown
Prosecution Service, is responsible for promoting new criminal justice legislation. Hardly surprising thenthat much of it has been designed to make the police’s rather than anyone else’s job easier.
Over the years powers, of search of the person and premises, to require intimate samples with anadverse inference to be drawn from refusal, to question suspects under caution, to allow an adverse
inference from silence when questioned, to allow pre-charge detention for longer than 24 hours, etc. havebeen introduced. They have been balanced by increased safeguards for the suspect such as the automatic
right to a lawyer from the moment of arrest, tape-recording of interviews of suspects, the right to disclosureof all relevant material gathered in the course of an investigation. The most recent legislation and in one
sense that which provides the framework for the changes introduced by the Act was the Police and Criminal
Evidence Act 1984. This effectively introduced the principle into English law that the defendant/suspect has
a duty to assist like all citizens in the investigation of crime and that if he fails to do so a court may hold thatfact against him if he is later brought to trial. Without these reforms I doubt whether the changes, which I
am about to describe both in the investigation process and later when we come to deal with sentence, could
have been effected.
Two further developments since 1984 are worth recording. In 1986 the Crown Prosecution Service wascreated. For the first time there was a national prosecution agency independent of the police and responsible
for the prosecution of all offences investigated by the police. This has led to a healthier relationship between
prosecutor and investigator and has allowed the prosecutor’s voice to be heard independently when
government policy is being worked out.
And in 1987 the Criminal Justice Act created the Serious Fraud Office (SFO). This is an independent
free-standing agency set up to investigate and prosecute - as its name suggests - the most serious cases offraud. For the first time police officers and lawyers work together to investigate and prosecute such cases.
They have unique powers to require witnesses to provide statements3 and special procedures were devised
to expedite the trial of their cases once the decision to prosecute has been taken. In particular, for the firsttime the defendant was required in such cases to set out in writing the nature of his defence to the charges
in the same way that the prosecution is required to state its case in detail so that the defendant knows what
he has to answer. In 1996 this requirement was extended to all cases tried in the Crown Court.
Thus, by 1997, when the new government decided to embark upon the creation of the Act, there werealready changes which had been seen to make a significant and beneficial difference to the prosecution ofcrime.

VI. THE ASSETS RECOVERY AGENCY (ARA)
The first change is the setting up of another new agency - the ARA - which has a single focus and three
key functions. These are:
3 These statements cannot generally be used in evidence against their makers at trial.

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The conduct of investigations with a view to confiscation of assets
The conduct of investigations with a view to civil recovery of assets
The training, accreditation and monitoring of private financial investigators

The Director is required to carry out his - actually the first Director is a woman - functions “in the way
which he considers is best calculated to contribute to the reduction of crime”. He and his staff will operate
under a Code devised by the Home Secretary. The Code - an extensive document with more than 200
paragraphs - is admissible in criminal proceedings, and serious breaches of its provisions may lead to the
exclusion of evidence at trial. Officers are required under the Code to consider whether a less intrusive
method may be appropriate, to consider the HRA and the proportionality of action and its effect on the rightto privacy. There is a duty to take reasonable steps to check information. Information provided anonymously
must be corroborated.
At this stage before looking at the details of the various orders available under the Act it is worth
dwelling for a moment on the new “accredited investigators”. This development will be closely watched bythose concerned at the possible abuses of power, opportunities for corruption and lack of day-to-day
accountability of such investigators. The police themselves have always been suspicious of developments
which substitute sworn constables with private citizens however regulated. However, the SFO has long used
the services of leading accountancy firms with forensic divisions, albeit they have usually been used in a
supporting role rather than in the “front line”. Provided these investigators remain true to the provisions of
the Code and there are no early headline cases involving malpractice I believe that the initiative isworthwhile, since the expertise necessary to do the job properly is not sufficiently broadly developed within
the current cadre of police or Customs investigators.

VII. ORDERS AVAILABLE UNDER THE ACT
It should be stressed that these orders are only available to investigators and prosecutors carrying out
confiscation or money laundering investigations. A “confiscation investigation” is an investigation into
whether a person has benefited from his criminal conduct or into the extent and whereabouts of such
benefit. A “money laundering investigation” is an investigation into whether a person has committed an
offence under Sections 327 - 329 (see above 4.2.1- 4.2.3).
Most of the orders under the Act can be obtained ex parte by the applicant, that is to say without giving
notice in advance to the person against whom the order is sought. The decision to apply ex parte needs to becarefully thought through so as to survive any challenge later.
It is also important to note that the Act (Section 342) creates specific offences of prejudicing an
investigation. The first is a “tipping off” offence identical to that mentioned earlier in connexion withdisclosures (Section 333). The second is an offence - which could already be prosecuted as the common law
offence of attempting to pervert the course of justice - of “falsifying, concealing, destroying or otherwise
disposing of, or causing or permitting falsification ... of documents relevant to an investigation”. The
maximum sentence is five years imprisonment.
There are seven orders. Many of these existed in some form or another but they have never before been
consolidated into a coherent scheme and there are some new features which make them easier to use and it is hoped - therefore more effective.

A. Restraint Orders (Section 41 - 47, 58)
These may be obtained by application (ex parte if necessary) to a Crown Court judge in five different
circumstances.
1)

When a criminal investigation has started and there is “reasonable cause to believe” that the alleged
offender has benefited from his criminal conduct.

2)

When criminal proceedings have started but not concluded and there is “reasonable cause tobelieve” that the alleged offender has benefited from his criminal conduct and provided there has
been no undue delay in continuing the proceedings.

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3)

Following a conviction after which no confiscation order (see later) was made. If within 6 years ofconviction evidence comes to light which suggests that a confiscation order should after all be made,then a restraint order can be made pending the decision.

4)

Following a conviction after which a confiscation order was made but subsequently fresh material
comes to light which causes the prosecutor to apply to reopen the question of the amount to which
the defendant has benefited from his criminal activities. In these circumstances once again arestraint order can be made pending the decision.

5)

Following a conviction after which a confiscation order was made but subsequently fresh material
comes to light which causes the prosecutor to apply to reopen the question of the available assets ofthe defendant. In these circumstances once again a restraint order can be made pending the decision.

The order may be made against any person - not just the suspect, accused or convicted person - andapplied to any form of property. The order prevents the person named from “dealing with any realisableproperty” held by him. Exceptions to the order may be made•••for reasonable living costs;
legal expenses - though only for the purpose of the instant proceedings;
or for the purpose of enabling any person to carry on any trade, business, profession or occupation.

The accused/suspect or any other person affected by the order may apply to vary or discharge the order.
The court may appoint management receivers (Section 48 et seq) to manage the property concerned
during the life of the order. The Court may give the receiver wide powers to deal with it including selling,entering into contracts, suing, etc. He must take steps to ensure that there is no diminution in the value ofthe property and that innocent parties who may have an interest in particular property can retain thatinterest.
Either party may appeal to the Court of Appeal against the refusal or the grant of a restraint order.

B. Production Orders (Section 345-351)
This order may be made against any person by a Crown Court judge on the application (ex parte if
necessary) of the prosecutor or other authorised person. It must be complied with within 7 days unless thejudge orders otherwise. It may apply to all material other than legally privileged material or “excluded”
material. Government Departments may be subject to orders. There are the same powers to vary, discharge
or appeal such orders as for Restraint Orders.
C. Search and Seizure Warrants (Sections 352-356)
These can be granted on application if • A person has failed to comply with a production order, or• It is not considered practical to seek such an order or• It is not practicable to secure agreed entry to premises for the purpose of production.
The latter two conditions implicitly, though surprisingly not explicitly, allow for the application to be madeex parte.
Obviously this is a more intrusive order than the others and investigators need to be sure that they are
justified in applying for it rather than a less intrusive order. Strict requirements are set down for those whowish to apply under the last two sub-headings above.

D. Customer Information Orders (Sections 363-369)
These may be obtained (ex parte if necessary) in order to discover the existence of accounts held atfinancial institutions. They do not extend to the statements of account, etc. merely to such details as theidentity of the account holder, the number of the account, the date the account was opened (and closed if
necessary), his/her most recent address, and any information which the institution gathered for the purposesof carrying out its own responsibilities concerning money laundering. If the account holder is a company orbusiness like details as above but also the country of incorporation, registered office, and the identity of all
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the account such as bank statements, correspondence, etc. then a production order (see above) has to beobtained.
Criminal offences carrying a sentence of an unlimited fine are committed by an institution which either
fails to comply with a Customer Information Order or knowingly or recklessly makes a statement which isfalse or misleading.
Subject to the last paragraph statements made by financial institutions in pursuance of a Customer
Information Order may not be used in evidence in criminal proceedings against the institution itself.
Either party may apply to vary or discharge the order.

E. Account Monitoring Orders (Sections 370-375)
This order may be obtained on application (ex parte if necessary) to a Crown Court Judge. It is the only
one of the orders which is entirely new, although the others have been modified and the new law makes
them easier to obtain than before. It is perhaps for that reason that its operation has been limited. The order
requires a financial institution to supply ongoing account information for a maximum period of 90 days
(which will need to be justified in the application) following the order. Hitherto it was only historicalinformation which could be obtained.
This welcome change does mark another move away from the strictly adversarial system which I
described briefly earlier and back to the old system which was so much closer to the “Civil Code” systems
which apply in most countries outside the so-called common law countries. Here is the judge, who may one
day try the case if a prosecution is brought, making orders which are directly relevant to the ongoinginvestigation as opposed simply to allowing investigators access to already created material. This may seem
unsurprising to most of you but for us it is a big change.

F. Disclosure Orders (Sections 357-362)
I have left this power and the following power until last since the two powers can only be exercised upon
the application (ex parte if necessary) of the Director of the ARA rather than by a police officer or otherauthorised person. If made it can allow the Director to require a person to answer questions or provide
information or documents. As with the Customer Information Order criminal offences are committed bythose who fail to comply or provide, knowingly or recklessly, false information, and statements made cannot
generally be used in evidence against the person who made them otherwise than in such prosecutions.
Comment
This power mirrors the power I described earlier when I referred to the setting up in 1987 of the Serious
Fraud Office. It is not a power available to ordinary prosecutors even in cases of treason, terrorism, murder,
etc. I would be surprised if this situation were to survive for long.

G. Application for Letter of Request for Assistance in Obtaining Outside the United Kingdom
Evidence for Use in a Confiscation Investigation
This does no more than extend the power already available to prosecutors in other forms of crime to theinvestigation stage of matters under this Act. Some countries are more willing than others to comply withrequests at this early stage when it is not certain that a charge will ever be brought in connexion with theinvestigation.
However, I believe that gradually the, to me, old-fashioned attitudes to assisting foreign investigations
based either on the concept of “national sovereignty” or on a xenophobic belief that other countries areincapable of behaving fairly or of using information supplied appropriately, are gradually giving way to theurgent need to cooperate as fully as possible to combat crime and criminals who know no such restrictions.

VIII. CONFISCATIONThis is the last but also the most important and controversial area covered by the Act. As I explained
earlier, since the 1970’s attempts have been made by successive governments to pass laws which enabled
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other countries in forcing convicted persons to prove, if they can, that their assets and those they havedisposed of have been honestly acquired. These attempts have been challenged in the courts and theposition even under the old law was not entirely clear. What is clear is that the Act significantly extends thedegree to which the defendant is “on the back foot” and it is likely that there will be challenges to it both indomestic courts and before the European Court of Human Rights.
The Act creates two types of confiscation order.
1)
2)

Confiscation of the assets of those proved to have a “criminal lifestyle”
Confiscation of the benefit obtained by a defendant’s “particular criminal conduct”

A number of conditions have to be met.

The person has to qualify as a candidate for an order - of either kind.
He does so if he has been convicted of an offence in the Crown Court or committed by the magistrates’
court to the Crown Court for sentence generally or specifically for consideration of a confiscation order. And
if he does so the court must proceed under the Section (10). Sections 27 and 28 allow the court to proceed if
the defendant has absconded after (Section 27) or even before (Section 28) conviction.
The prosecutor or the ARA asks, or the court of its own motion decides, to bring confiscation
proceedings.
Does the nature of his offence or series of offences show that he has a “criminal lifestyle? (More of thisbelow).
(If the answer to 3 is Yes). Has he been proved to have benefited from his general criminal conduct? In
answering this question the court must make the assumptions about property in the possession of theperson or gifts, etc. he has made in the relevant period which the Act requires. I will deal with them later.
(If the answer to 3 is No). Has he been proved to have benefited from the particular criminal offences forwhich he has been convicted?
(In the event of the answer Yes to either 4 or 5). How much has he benefited either from his generalcriminal conduct or from the particular criminal offences for which he has been convicted?
Has the defendant shown that the available amount is less than the benefit?
If Yes then the order must be made in the lesser sum. If No then in the full amount of the benefit (subject
to a deduction for sums in respect of which a victim has already or is likely to obtain in civil proceedings
against the defendant).
There are a number of terms which are new to the English Criminal Law. The most obvious is the term
“criminal lifestyle” hitherto confined to the pages of the popular press or detective novels. It was a concept
for which the police pushed hard. The term is defined in Section 75.
A person has a criminal lifestyle if (and only if) ....One or more of his offences is set out in Schedule 2 to
the Act. Briefly these are:
•
•
•
•
•
•
•
•
•
•
•

Drug trafficking offences
Fraudulent importation or exportation of other prohibited goods
Money laundering offences (Sections 327 and 328 only)
Directing terrorism
People trafficking
Arms trafficking
Counterfeiting (money only)
Copyright offences
Profiting from prostitution
BlackmailAttempting, conspiring, etc. to commit any of the above.

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Or,
The offence constitutes conduct forming part of a course of criminal activity.
Such conduct is defined as follows:
Conduct from which the defendant has benefited, andIn the proceedings on which he was convicted he was convicted of three or more other offences eachof three or more of which constitute conduct from which he has benefited, or
In the period of 6 years from the day the proceedings started he was convicted on at least two
separate occasions of an offence from which he has benefited.
The total benefit must be at least £5000
Relevant benefit includes
Benefit from the offences of which he was convicted.
Benefit from any other conduct which forms part of the criminal activity and which constitutes an offenceof the same kind as one of those of which the defendant has been convicted. (If a defendant has committed along series of similar offences - for instance fraud on the Social Security system the prosecution will only
charge a sample of the offences on the indictment and will lead the evidence, if the defendant contests his
guilt, of the remaining offences as evidence of “system”. This provision allows the court to take these otheroffences into account when calculating the benefit).
Benefit from such conduct which has been listed in a list of offences “to be taken into consideration” by
the court. (This applies to a similar situation as above when the defendant has pleaded guilty to a sample ofhis offending and the rest is placed on a list of offences which he agrees. It prevents the prosecution frombringing further proceedings against him.)Or,
The offence is one which was committed over a period of at least six months and the defendant has
benefited to at least £5000. Relevant benefit is similar to the relevant benefit defined above.
As I warned this is quite a lot to take in. Even reducing it to its most basic it is still a complicated scheme
requiring sound and detailed information as to previous record, etc. and a careful consideration by theprosecutor in advance of trial as to how to frame the charges and by the defence lawyer as to how to run the
defence.
The complications do not end there. How to calculate the benefit and the recoverable amount, which, as I
said earlier, may be - usually are - different. In assessing benefit certain deductions must be made. These
include property already the subject of court orders for forfeiture, compensation, etc.
If the court has found that the defendant has a criminal lifestyle then certain assumptions must be madeby the court for the purpose of deciding both whether the defendant has benefited from his general criminal
conduct and the extent of his benefit. These are the assumptions. I put them in italic type because of theirimportance and controversiality. They are that:Any property transferred to the defendant after a date six years before the start of the proceedings was
obtained as the result of his general criminal conduct.
Any property obtained by the defendant after his conviction was obtained as the result of his generalcriminal conduct.
Any expenditure of the defendant after a date six years before the start of the proceedings was met fromproperty obtained by the defendant as the result of his general criminal conduct.
For the purpose of valuing any property obtained or assumed to have been obtained that the defendantobtained it free of other interests.
If the defendant shows that a particular assumption is incorrect or that there would be a serious risk ofinjustice if the assumption were made then and only then may the court not make the particular assumption.

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The court must give reasons for any such decision.
In assessing the available amount the court must aggregate the total of all free property held by the
defendant together with the total value of tainted gifts, less “priority” obligations such as court fines and“preferential debts” in a bankruptcy. Free property is all property except property subject to court orders inother proceedings. Tainted gifts are transfers of property for significantly less than its real value. If somemoney was paid for the property then that is deducted from the value of the tainted gift.
If the court decides that the defendant does not have a criminal lifestyle but has benefited from his
particular criminal conduct then certain assumptions may be made as to tainted gifts made after the first of
the two of more offences from which he has benefited.
Complicated provisions enable the court to value the gift or, if it has been disposed of, the proceeds ofdisposal by reference to market value plus inflation, etc.
There are of course many other provisions which set out how the procedure will operate. I shallsummarise them because the way in which the procedure operates may have a bearing on the fairness orotherwise of the Act and its operation.

Procedure and Enforcement (Sections 14-39, 50-57, Etc.)
Once the court has embarked upon confiscation proceedings they may be adjourned for up to two years or longer in exceptional cases. In particular the substantive sentence may be passed before the question of aconfiscation order or its amount has been decided. However, no other sentence of a financial nature may bepassed before the decision on the confiscation order.
The prosecutor serves a Statement of Information on the Court and the defence setting out the reason
why he contends that:the defendant has a criminal lifestyle, (if he so contends);
the defendant has benefited from general criminal conduct;
the benefit is so much;there are matters which engage the statutory assumptions.
He must also include matters which operate against the application of the statutory assumptions if any.
If the prosecutor does not contend that the defendant has a criminal lifestyle but contends that he has
benefited from particular criminal conduct he must produce a similar Statement of Information setting out
the reasons why.
Once the prosecutor has served his Statement of Information the defendant is required to indicate theextent to which any allegation is accepted, and the particulars of any matters upon which he proposes to rely
to rebut any allegation in whole or in part. The court may also order the defendant to supply information usually information which only he can know. If the defendant fails to supply it the court may draw an adverse
inference against him. Acceptance by either side of an allegation or contention is treated as conclusive proofof the allegation or contention for the purpose of the proceedings.
If the defendant absconds during the proceedings or after conviction the court may make a confiscation
order in his absence. In the case of an unconvicted absconder the court must wait two years before
embarking on the process. Any person other than the defendant who may be affected by the order may makerepresentations to the court in these cases. If the absconder returns and is acquitted any order will cease tohave effect. If he returns following conviction he has the right - as does the prosecutor - to reopen thequestion of the order or its amount.
Orders should be complied with when they are made. Six months, and exceptionally 12 months may beallowed. Interest is payable if the order is complied with late.
The enforcement process is similar but more sophisticated than the process for enforcement of ordinaryfines. Periods of imprisonment in default range from 7 days in the case of an order below £200 to 10 years in
the case of an order over £1,000,000. Once fixed by the court it is reduced by the amount by which theamount has been paid. If the Director of the ARA is not appointed to enforce payment the magistrates’ court

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will be responsible for enforcement. I expect - and hope - that in the majority of cases the ARA will be
appointed since the magistrates’ record in collecting fines is far from perfect.
A fundamental purpose behind the Act, which changes the previous situation, is that service of thedefault term of imprisonment does not extinguish the order. Thus, my client in the case I referred to earlier
could not now use the money he had left after serving his term in default to provide dowries for his
daughters! In order to ensure payment the Act provides for the appointment of enforcement receivers. I
referred to management receivers some time ago in the context of restraint orders. Enforcement receivers
have a similar mandate. They are appointed on the application either of the prosecutor or the ARA when anorder is not complied with. Rules are provided to guide receivers in the order in which moneys recovered
must be applied. The Act also provides for the prosecutor to ask the Home Secretary to request theassistance of foreign states to prevent disposal of assets and to secure their realisation. There is a right ofappeal against the order to the Court of Appeal since the order is part of the sentence.

IX. HUMAN RIGHTS ISSUES
Many of the potential human rights issues which this legislation throws up had been considered in some
way as the result of earlier legislation.
The first challenge was based on the premise that, since the judge was looking in confiscation
proceedings beyond the actual offences of which the accused had been convicted to others, he was in fact
trying and convicting the accused without the normal safeguards of the trial process. In other words it wasalleged that there was a breach of Article 6(2) of the ECHR which requires “criminal charges” to be decided
according to the presumption of innocence.
Are confiscation proceedings criminal proceedings? The first case decided by the English Court ofAppeal 4 held that they are but that the shift in the burden of proof is legitimate in certain criminal
proceedings of which this was one. The next case was decided by the Privy Council5 on appeal from Scotland
where there was parallel legislation. The Privy Council held that confiscation proceedings are not criminal
proceedings and that the process involved no enquiry into whether the accused had committed specificcrimes. Accordingly Article 6(2) of the ECHR was not engaged. The Privy Council did go on to consider the
position on the basis that they were wrong and came to the same conclusion as the court in Benjafield. A
further case came before the European Court of Human Rights6. The Court decided that the proceedings
were not criminal proceedings. But having done so they held that Article 6(1) did apply because the generalright to a fair trial in Article 6(1) included the presumption of innocence. This is - to me and others - a
surprising conclusion since it seems to render Article 6(2) redundant. However, the court looked at theindividual elements of the procedure - to remind you, the pre-Act procedure - and identified a number offeatures which in its estimation rendered the proceedings fair. These were there was no finding of guilt or
innocence within the proceedings.
The hearing was public. There was advance disclosure of the prosecution case. The judge had discretion
not to apply the assumptions if serious injustice would result. The defendant could give and call evidence.
The order could be tailored to meet the actual resources of the accused.
In the given case all the facts found by the judge were underpinned by evidence or admitted by theaccused. In any event the actual amount ordered was fair. If the defendant’s account were true it would havebeen easy for him to demonstrate this independently.
More recently still the matter was considered again by the House of Lords in two consolidated appeals,
one from Benjafield to which I have referred.7 Their Lordships found that the proceedings were not criminal
and that Article 6 was satisfied in general by the safeguards outlined in Phillips.

4 R v Benjafield & Others [2001]3 WLR 75.
5 McIntosh v HM Advocate [2001] 3 WLR 107.
6 Phillips v UK (2001) BHRC 280.
7 R v Rezvi, R v Benjafield [2002] 1 All ER 801.

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There are a number of ways in which the Act, or more particularly its operation in a particular case ortype of case may be open to challenge.
The European Court, in this and in other instances when UK legislation has been under scrutiny, has
looked at what happened in the individual case rather than, as the English courts do, the general principle ofwhether a piece of legislation is ECHR compliant or not. The judgement in Phillips did not give prosecutors
and judges a free hand to use the old legislation as they pleased. It merely said that in the case before it theway in which that legislation had been applied was compliant. Even the then current regime which applied
the assumptions only in cases of drug trafficking, it implied, could be non-compliant if unfairly applied.
The new Act goes wider, both in the scope of the assumptions but, also, more importantly, in the breadthof offending which may come within its remit. As well as the Schedule 2 offences which I summarised
earlier, most of which are serious crimes (about which there can be little argument as to the necessity for
tough measures to protect the human rights of the public at large), any offence or series of offences which
benefits the offender to the value (£5000) of a second hand car is brought within its remit. It will be crucial to
the success of the legislation for prosecutors, investigators and judges to have regard in the first place to theCode which places strong emphasis on proportionality and the ECHR in the individual decision-making
processes required and to the need for the judicial discretion to be properly applied.
There is another potential ground for challenge which will diminish and eventually disappear. The
legislation extends back six years - and therefore in most current cases to before the passing of the Act - andso it may be argued that an accused is now being subjected to a greater penalty than he would have been at
the time that he committed the offence. If a confiscation order is to be regarded as analogous to a fine - and it
is enforceable in much the same way -this could infringe his right under Article 7 of the ECHR which
prohibits retrospectivity in the matter of penalty. If it is interpreted as simply the recovery of a civil debt
which would be open to the victim, or society as victim, to recover, then this challenge will probably fail.

X. CIVIL RECOVERY, BANKRUPTCY AND REVENUE FUNCTIONS
I will say little about these since I have already said a great deal about the criminal process. It is however
important to remember that these powers exist and it will be interesting to see when the ARA is working atfull stretch what the division of work between criminal, civil and revenue work is. The intention is thatcriminal proceedings will be the priority for the ARA and the Code makes this clear.
The relationship between bankruptcy proceedings and confiscation orders is complicated and perhaps
confusing. I believe the purpose of the legislation was to give confiscation orders primacy over bankruptcy
proceedings but the effect of the provisions taken together seems to be that if bankruptcy proceedings were
under way before the confiscation investigation began, the bankruptcy proceedings have priority, but if thebankruptcy proceedings post-date the confiscation investigation the confiscation proceedings oust thebankruptcy in respect of relevant property. The Act deals with this at Sections 417 et seq.
Two tough regimes are put in place to enable
the recovery by High Court proceedings of property which is, or which represents, property
obtained through unlawful conduct
forfeiture of cash by civil proceedings in the magistrates’ court which is or which represents, or isintended to be used in unlawful conduct.
These processes can be used in the absence of criminal proceedings in respect of the property or those inpossession of it. They may even be brought if there has been an acquittal of the defendant in the Crown
Court since the standard of proof in civil proceedings is lower than that in criminal. Property in suchproceedings can be “traced” in the same way as in ordinary commercial cases. There are parallel regimes tothose I have described in criminal proceedings for restraint and management of assets restrained, and aparallel discretion in the court not to act if to do so would cause injustice to the person affected. There arecomplicated provisions relating to jointly owned property which are designed to assist the ARA in obtaining
the maximum benefit while protecting the rights of innocent spouses and others who have an innocent
interest in such property. There is obvious scope for lengthy legal battles over such property.

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As with the criminal confiscation regime there are likely to be ECHR challenges on the basis that these
are criminal proceedings masquerading as civil and invoking fair trial rights under Article 6 and 7, and in thecase of, say, a family home, Article 8 the right to respect for family and private life.
Until now income tax has been the exclusive preserve of the Inland Revenue. For the first time this newagency - the ARA - will be able if it is unable to pursue suspicious funds by the criminal confiscation route or
the civil recovery route, to levy tax upon monies which it discovers in the course of an investigation. It may
use information gained during a criminal or civil investigation to inform its decision on revenue. It can raise
taxes of most kinds from income tax to student loans, etc. The money sought to be taxed must be“chargeable from the criminal conduct of himself or another”. Unlike the Revenue it does not have to prove
the source of the income - merely that it exists. (If it was able to prove the source he would be able to takecivil or criminal remedies to recover the sums in full). Appeal against such orders lies to the Commissionersof Inland Revenue.

XI. CONCLUSION
I hope I have been able to show how the law in England and Wales has developed over the years and how
this latest attempt to codify the law and to focus the minds of investigators, prosecutors and judges, not juston issues of guilt or innocence and the length of the prison term or probation order, but on the reduction or
elimination of the motive for the commission of the vast majority of crimes in a society in which economic
well-being is for most people the ultimate aim in life and which offers infinite opportunities to those who
would achieve that well-being through dishonest or other illegal means. Much will depend, as I have said,
upon the way in which the courts accept the new legislation and interpret it.
Much more will depend on the care, enthusiasm and effectiveness with which it is implemented. My
function as Director of Public Prosecutions was to try, by organising seminars and training events, by theappointment of specialists in each area of the country, and by personally stressing the message whenever I
could, to ensure that prosecutors played their full part in trying to implement the legislation fully and firmly
but without the sort of heavy-handedness which may provoke a legitimate challenge in the courts. In short I
urged all prosecutors to have an automatic “default” button in their heads when considering a case to check
whether a confiscation order would be possible and to draft charges and advise the police with that in mind.
Only then will confiscation become part of the “culture” of our criminal process.

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