POCA

It must be recognised that a defendant who is aware that his assets are likely to be required to satisfy a
confiscation order may well take steps to dissipate or hide those assets. The confiscation legislation
therefore empowers the courts to impose freezing orders on defendants which are modelled on mareva
injunctions in English civil proceedings. Under the CJA and DTA such orders could only be obtained once
the laying of a charge was imminent, sometimes leading to long delays in, especially, fraud cases while
the allegations against the suspect were investigated. Under POCA, however, a restraint order can be
obtained as soon as a criminal investigation is begun, 1 meaning that a defendant who has not even been
arrested on suspicion of having committed an offence may nevertheless find himself the subject of an
order freezing all of his assets worldwide.

A restraint order can be made in support of criminal proceedings in England and Wales over property
“wherever situated”, ie. anywhere in the world. 2 Thus the Crown Court in the UK may exercise world-
wide jurisdiction over the defendant in his dealings with his assets. However, before such an order can
be effective over the particular assets in question, rather than exclusively as an in personam obligation
of the defedant, it must be recognised in the country where the assets are located. This replicates the
position in ordinary civil mareva proceedings. However, one important distinction between civil mareva
injunctions and criminal restraint orders was highlighted by the House of Lords in King v Director of the
Serious Fraud Office. 3 By s. 25 of the Civil Jurisdiction and Judgments Act 1982 the High Court in England
is empowered to grant mareva injunctions overproperty anywhere in the world in support of
proceedings in another country, subject to certain conditions. However when faced with a request for
assistance by the law enforcement agencies of another country, the Crown Court is governed by the
Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005, which by Articles 6 and 8 limit
the scope of criminal restraint orders in support of criminal proceedings in another jurisdiction to
property situated in England and Wales. Accordingly the device often deployed in, for example, civil
fraud actions of coming the UK for a world-wide mareva injunction even though the substantive
proceedings are to be heard in, for example, the USA is not available to law enforcement agencies
seeking to freeze a suspect’s assets.

Under CJA and DTA it was held that a defendant could, at least prior to his conviction, pay bona fide
creditors using sums subject to a restraint order. 4 However under POCA the Court of Appeal has held
that the regime has been considerably tightened, so that even a victim of a defendant’s crime who has
secured judgment against him may not seek to have that judgment satisfied out of restrained assets. 5
The only exception is where the claim is proprietary in nature so that rather than seeking recompense
for his loss, the victim is able to say that he is seeking the return of his property. The effect of this is to
leave the creditors of a suspect completely out in the cold. Since a restraint order can be obtained

1
POCA s. 40(2)
2
POCA ss. 74, 447
3
[2009] UKHL 17
4
Re X (Restraint Order: Variation) [2004] EWHC 861 (Admin)
5
Serious Fraud Office v Lexi Holdings [2008] EWCA Crim 1443
before the suspect has even been arrested, this is a feature of the legislation which has the ability to
hurt not only the suspect but also anyone to whom he owes money. In today’s credit-driven society this
can be particularly harsh both for the suspect and his creditors. Under the CJA and DTA a defendant was
able to draw on restrained assets to fund legal representation, exactly as is the case under a mareva
injunction. Under POCA there is an express prohibition on variations being made for such purposes. That
this is an absolute prohibition has been confirmed by the Court of Appeal on a number of occasions. 6 So
committed is the UK government to the principle that restrained assets should not be used to fund legal
representation in criminal cases that it presented an argument to the Court of Appeal, which met with
the Court’s approval, that it would be preferable to have criminal proceedings stayed altogether if legal
aid proves inadequate to provide a proper defence to the defendant than to permit restrained funds to
be used to secure representation.7 Once a confiscation order has been made it can be enforced by two
complementary methods; first a defendant who refuses to pay can be committed to prison for a period
of up to 10 years for that default. Second, a receiver may be appointed to get in and realise the
defendant’s assets. Where such a receiver is appointed he is only entitled to realise the defendant’s
share of any property in satisfaction of a confiscation order, but he is entitled to draw his costs from any
assets which come within the ambit of the receivership order. 8

Part 5 of POCA does however purport to confer extra-territorial jurisdiction on the UK courts when
making a civil recovery order. To this author’s knowledge there are as yet no decided cases on the
extent to which civil recovery orders obtained under Part 5 of POCA may be enforceable abroad in the
absence of an express bi-lateral treaty. However one difficulty which might be thought immediately
apparent, in the EU at least, is that civil recovery orders are made in rem and could therefore be said to
constitute judgments concerned with ownership of the relevant property. Where that is real property,
the usual rule is that proceedings concerning the ownership of land should be brought in the jurisdiction
in which the land is located.9 Although there is a strong argument that the Council of Europe Convention
on Laundering, Search, Seizure and Confiscation of the Proceeds of Crime and the Financing of Terrorism
might assist,10 that provision requires that the order be made “in relation to a criminal offence”. Since
civil recovery orders can be obtained without proof that any specific offence has been committed, there
must be a real question-mark over whether this Convention can be relied on to over-ride the well-
established principles of EU law.

In R v Rogers (Bradley) and others the Court of Appeal of England and Wales held that the three
moneylaundering offences in Part 7 of the Proceeds of Crime Act 2002 (POCA) have extraterritorial effect,
6
Re S (Restraint Order: Release of assets for legal representation) [2004] EWCA Crim 2374; AP and U Ltd. v Crown
Prosecution Service and Revenue and Customs Prosecution Office [2007] EWCA Crim 3128; Irwin Mitchell v
Revenue and Customs Prosecution Office [2008] EWCA Crim 1741; Crown Prosecution Service v Campbell and
others [2009] EWCA Crim 997
7
AP and U Ltd. v Crown Prosecution Service and Revenue and Customs Prosecution Office [2007] EWCA Crim 3128
8
Sinclair v Glatt and others [2009] EWCA Civ 176
9
Webb v Webb (Case C-294/92) [1994] QB 696
10
Article 23(5) of that Convention provides: “The parties shall co-operate to the widest extent possible under their
domestic law with those Parties which request the execution of measures equivalent to confiscation leading to the
deprivation of property, which are not criminal sanctions, in so far as such measures are ordered by a judicial
authority of the requesting Party in relation to a criminal offence, providing that it has been established that the
property constitutes proceeds or other property in the meaning of Article 5 of this Convention.”
such that an offence of converting criminal property under section 327(1) (c) of POCA could be tried in the
United Kingdom even where the defendant, who lived and worked in Spain, committed no part of the offence
within the UK. The court’s decision and approach is of considerable importance to practitioners in this area
and merits closer scrutiny.11

11
http://www.nortonrosefulbright.com/knowledge/publications/137785/uk-poca-jurisdiction-in-cases-of-money-
laundering-committed-abroad