Chapter 2: Proceeds of Crime.Assets Recovery Agency
Section 74: Abolition of Assets Recovery Agency and redistribution of functions etc.
253.On such day as an order under section 74(1) provides, the Assets Recovery Agency (which is established by section 1 of, and Schedule 1 to, the Proceeds of Crime Act 2002 (‘POCA’)), and the corporation sole that is its Director, will cease to exist. Such an order is to be made by statutory instrument but is not subject to any parliamentary procedure (see section 89). Section 74(2) introduces Schedule 8 and section 74(3) introduces Schedule 9.
Schedule 8: Abolition of Assets Recovery Agency and its Director
254.Schedule 8 amends POCA and other relevant legislation to repeal or transfer functions currently conferred on the Assets Recovery Agency (‘ARA’) and its Director.
255.Under Part 1 of the Schedule, the role of the Director of ARA under Parts 2 and 4 of POCA in respect of confiscation and restraint orders in England and Wales and Northern Ireland, respectively, is repealed. A confiscation order is an order made by the court following conviction for a defendant to pay the proceeds of his crimes. References to receivers of the Director under Parts 2 (for example sections 52 and 53) and 4 of POCA are also repealed. Part 1 of the Schedule also makes consequential amendments to Part 9 of POCA (which concerns the relationship between confiscation and insolvency).
256.Under Part 2 of Schedule 8, the powers of the Director of ARA under Chapter 2 of Part 5 of POCA to bring civil recovery proceedings in the High Court in England and Wales and Northern Ireland are transferred to the Serious Organised Crime Agency (“SOCA”). These powers are also transferred, as respects England and Wales, to the Director of Public Prosecutions, the Director of Revenue and Customs Prosecutions and the Director of the Serious Fraud Office and, as respects Northern Ireland, to the Director of Public Prosecutions for Northern Ireland and the Director of the Serious Fraud Office (see the amendment made by paragraph 91 of Schedule 8). The Directors will be able to delegate any of their new functions under POCA to a member of their staff or contract out these functions to a person providing services under an arrangement (see new section 2C at paragraph 124 of Schedule 8).
257.Under Part 3 of Schedule 8, the powers under Part 6 of POCA are transferred to SOCA. Part 6 enables the Director of ARA to serve on HM Revenue & Customs a notice that she intends to carry out certain Revenue functions. Paragraph 102 of Schedule 8 creates a power for the Secretary of State to repeal by order Part 6 of POCA (as amended by Schedule 8). Such an order is subject to the affirmative resolution procedure (see section 89(3)).
258.Under Part 4 of Schedule 8, powers under Part 8 of POCA are transferred from ARA to SOCA. Part 8 enables the Director of ARA to apply for various orders to investigate confiscation cases and civil recovery cases. Part 4 also provides the Directors of the main prosecution agencies with investigation powers in support of their new abilities to bring civil recovery proceedings and requires the Attorney General, in the case of the Director of Public Prosecutions, the Director of Revenue and Customs Prosecutions and the Director of the Serious Fraud Office, and the Advocate General for Northern Ireland, in the case of the Director of Public Prosecutions for Northern Ireland, to issue a Code of Practice to provide guidelines for the operation of these new prosecutor’s investigation powers. This mirrors the existing requirement in section 377 of POCA on the Secretary of State to produce a Code of Practice for the Director of ARA, the staff of ARA, accredited financial investigators, constables and customs officers. Section 377 is amended by paragraph 114 of Schedule 8 to refer to SOCA rather than ARA. Under section 377A(10) the reference to the Advocate General for Northern Ireland is to be read as a reference to the Attorney General for Northern Ireland until such time as section 27(1) of the Justice (Northern Ireland) Act 2002 comes into force.
259.Paragraph 118 of Schedule 8 inserts a new section 449A into POCA to allow staff of the prosecution agency Directors to operate under POCA using pseudonyms. This mirrors the existing provision in section 449 of POCA, which is amended by paragraph 140 of Schedule 8 to refer to SOCA.
260.In addition, Part 4 of Schedule 8 makes amendments to limit the ability to apply for a disclosure order in confiscation proceedings. A disclosure order is an order authorising the applicant for the order to give a notice in writing to any person the applicant considers to have information relevant to the investigation underway requiring that person to answer questions, provide information or produce documents. At the moment only the Director of ARA can apply for a disclosure order. Under paragraph 108 of Schedule 8 amendments are made to section 357 of POCA. In relation to civil recovery investigations, SOCA or one of the Directors of the prosecution agencies will be able to apply for an order. In relation to a confiscation investigation, a prosecutor will be able to make an application but only following a request from an appropriate officer. The identity of the prosecutor depends on the identity of the appropriate officer as set out in new subsection (8) of section 357 (see paragraph 108(7) of Schedule 8).
261.Under Part 5 of Schedule 8, the role of the ARA to train, accredit and monitor performance of financial investigators under section 3 of POCA is transferred to the National Policing Improvement Agency. This Agency was established under Part 1 of the Police and Justice Act 2006 with the function of training and developing police officers.
262.Part 6 of Schedule 8 makes other amendments to POCA. Under a new section (section 2A), which paragraph 124 of Schedule 8 inserts into POCA, SOCA and the Directors referred to in paragraph 256 above are required to exercise their functions under POCA in the way best calculated to contribute to the reduction of crime. In doing so they must have regard to guidance issued under section 2A; that guidance must in particular indicate that such reduction is in general best secured by means of criminal investigations and proceedings. Paragraphs 131-134 of Schedule 8 amend the provisions in sections 435-438 of POCA on the use and disclosure of information so as to effectively refer to some of the new bodies undertaking civil recovery, namely the Director of Public Prosecutions, the Director of the Serious Fraud Office and the Director of Public Prosecutions for Northern Ireland. These bodies do not have existing information gateways in their parent legislation: broadly equivalent provisions are included in respect of SOCA and the Director of Revenue and Customs Prosecutions in the provisions referred to in paragraph 263 below.
263.Part 7 of Schedule 8 makes amendments to other legislation. These include amendments to section 33 of the Serious Organised Crime and Police Act 2005 (disclosure of information by SOCA) by paragraph 172 of Schedule 8 to extend the circumstances when disclosure may be made to reflect types of disclosure which are authorised by section 438 of POCA but would otherwise not be authorised by section 33. Similar amendments are made to section 40 of the Commissioners for Revenue and Customs Act 2005 by paragraph 167 of Schedule 8 in relation to the disclosure of information by the Revenue and Customs Prosecutions Office.
Schedule 9: Transfers to SOCA or NPIA
264.Schedule 9 enables the Secretary of State to make a scheme to provide for the transfer of the Director and staff of the ARA together with its property, rights, liabilities and other matters to SOCA or the National Policing Improvement Agency (‘NPIA’) established by section 1 of the Police and Justice Act 2006.
Section 75: Use of production orders for detained cash investigations
265.This section enables the production order provisions under Part 8 of POCA to be used for investigating the provenance or intended destination of cash seized under Chapter 3 of Part 5 of POCA (which provides for the recovery of cash in summary proceedings). The amendments made by this section create a new type of investigation, namely a detained cash investigation. This is additional to the existing types of investigation, namely a confiscation investigation, civil recovery investigation and money laundering investigation. These new investigation powers will assist in the preparation of a case for forfeiting the cash before the magistrates’ court in England and Wales and Northern Ireland or the Sheriff in Scotland.
Section 76: Use of search warrants etc. for detained cash investigations
266.Similar to section 75, section 76 allows for the search and seizure provisions under Part 8 of POCA to be used for investigating the provenance or intended destination of cash seized under Chapter 3 of Part 5 of POCA (“a detained cash investigation”). The existing safeguards for warrants will apply equally to those sought for a detained cash investigation.
Section 77 and Schedule 10: Further provision about detained cash investigations
267.This section gives effect to Schedule 10 which makes further provision about the use of production orders and search and seizure warrants for detained cash investigations.
268.Schedule 10, in particular, makes amendments to POCA to add the new power of a detained cash investigation to relevant provisions and safeguards within Part 8 of that Act.
Sections 78 to 81 and Schedule 11: Extension of powers of accredited financial investigators
269.An accredited financial investigator is an investigator who has been trained and accredited under section 3 of the POCA to undertake certain investigation, restraint and search and seizure functions under the Act. The persons trained can be investigators who are not constables or officers of HMRC in respect of the cash forfeiture powers under Chapter 3 of Part 5 of POCA, the investigation powers under Part 8 and other search and seizure powers. Constables and officers of HMRC have access to these powers without the need for accreditation.
270.Section 78 amends section 45 of POCA (and section 194 which is the equivalent provision in Northern Ireland) to enable accredited financial investigators to exercise the powers conferred by those sections. Sections 45 and 194 currently allow a constable or officer of HMRC to seize any property subject to a restraint order to prevent its removal from England and Wales or Northern Ireland, respectively. Such an order is designed to freeze property to prevent its dissipation in advance of the making of a confiscation order. The amendments made by this section enable financial investigators to have this power of seizure if they fall within a description of investigator specified for this purpose by an order made by the Secretary of State under section 453 of POCA. Such an order is likely to relate to the training that the investigator has had to exercise powers of seizure.
271.Section 79 gives effect to Schedule 11 which makes provision for accredited financial investigators to seize and seek the forfeiture of cash under Chapter 3 of Part 5 of POCA. That Chapter already allows a constable or officer of HMRC to seize, detain and apply for the forfeiture of cash that is suspected of being the proceeds of unlawful conduct or intended for use in such conduct. These are civil proceedings against the cash; there is no prosecution or sanction against an individual. Schedule 11 extends these powers to those accredited financial investigators who have been accredited under the Act to perform these functions. The accredited financial investigator will be able to search for cash on a person or premises and seize such cash if he suspects that it is the proceeds of unlawful conduct or intended for use in such conduct. The accredited financial investigator will also be able to apply for the detention of the cash and apply for its forfeiture before the magistrates’ court. The safeguards which apply to constables and officers of HMRC will similarly apply to accredited financial investigators, namely safeguards attached to the search power regarding approval and reporting to an independent person. The code of practice under section 292 will be amended to apply to accredited financial investigators to provide guidelines on the operation of their search powers. Paragraph 13 of Schedule 11 inserts section 303A which provides that a reference to an accredited financial investigator under these provisions is a reference to one who falls within a description specified in an order made by the Secretary of State under section 453 of POCA.
272.Accredited financial investigators can currently apply for a search and seizure warrant under section 352 of POCA, but such warrants have to be executed by a constable or officer of HMRC. Section 80 amends sections 352 and 353 to allow an accredited financial investigator who falls within a description specified by order made by the Secretary of State to execute a warrant.
273.Section 453 of POCA enables the Secretary of State to specify by order a description of the type of accredited financial investigators who may exercise functions conferred on accredited financial investigators under POCA. Section 81(1) amends section 453 to provide expressly that the Secretary of State can by order require relevant accredited financial investigators to have been satisfactorily trained to perform the relevant functions. This adds to the current express power to specify that an investigator must be of a particular grade.
274.As accredited financial investigators will be undertaking invasive powers, offences of assaulting, resisting or wilfully obstructing them in the course of their duties are created by the new section inserted by section 81(2) into POCA. An accredited financial investigator will not have the power of arrest. A person found guilty of any of these offences will be liable to a term of imprisonment not exceeding 51 weeks or a fine or both. The maximum sentence in Northern Ireland is 6 months which is also the maximum in England and Wales pending commencement of section 281(5) of the Criminal Justice Act 2003.
Section 82: Powers of management receivers and enforcement receivers
275.Section 82 amends sections 49 and 51 of POCA to enable management and enforcement receivers who are appointed by the courts in England and Wales to be given powers to sell or otherwise dispose of assets which are perishable or which ought to be disposed of before their value diminishes, before a person having an interest in that property has had an opportunity to make representations. Section 82 also amends sections 197 and 199 of POCA to give management and enforcement receivers in Northern Ireland similar powers.
Section 83: Civil recovery management receivers
276.This section amends POCA to provide for a new type of receiver in civil recovery proceedings whose only function will be to manage property subject to a property freezing order. This is distinct from the current role of an interim receiver who has the additional roles of investigation of the property which he manages and reporting findings to the enforcement authority and the court. The new management receiver will have no investigation function and so will have no influence on the progress or final outcome of the case, accordingly the role does not need to be independent and therefore can be performed by a member of staff of the enforcement authority that is pursuing the civil recovery case.
Section 84: Powers for prosecutors to appear in cash recovery proceedings
277.This section amends POCA and the Commissioners for Revenue and Customs Act 2005 to enable the Director of Public Prosecutions or the Director of Public Prosecutions for Northern Ireland to act for constables and the Director of Revenue and Customs Prosecutions to act for officers of Revenue and Customs in cash recovery proceedings in the magistrates’ courts. In the case of the Director of Revenue and Customs Prosecutions, the Commissioners for Revenue and Customs Act 2005 is amended to allow designated staff who are not prosecutors and outside contractors to appear in these proceedings. The amendments made by this section are further amended by paragraph 12 of Schedule 11 to the Act to include accredited financial investigators in these new provisions. These amendments will only be needed when accredited financial investigators are given functions in relation to the recovery of cash in summary proceedings (see the commentary on section 77).
Section 85: Disclosure of information by Revenue and Customs
278.This section allows HMRC to disclose information for the purposes of civil recovery of the proceeds of crime. The purpose is to permit the disclosure of information that would otherwise be protected by the code of confidentiality in section 18(1) of the Commissioners for Revenue and Customs Act 2005. Subsection (1) states that the section applies to information held as mentioned in section 18(1) of the Commissioners for Revenue and Customs Act 2005. Subsection (2) sets out the circumstances in which information may be disclosed by or with the authority of the Commissioners. Subsection (2)(a) permits disclosure to the Criminal Assets Bureau in Ireland for the purpose of enabling or assisting it to exercise any of its functions in connection with any matter within subsection (3). Subsection (2)(b)(i) permits disclosure to a public authority specified in an order made by the Treasury for the purpose of enabling or assisting it to exercise functions in connection with any matter within subsection (3). Subsection (2)(b)(ii) provides that the order may specify or describe the matters within subsection (3) which apply.
279.The public authority may be in the United Kingdom or elsewhere. Subsection (3) sets out the matters which will permit disclosure, which are the identification of proceeds of crime, the bringing of civil proceedings for enforcement purposes in relation to proceeds of crime and the taking of other action in relation to proceeds of crime. Subsection (4) provides that information disclosed in accordance with subsection (2) must not be further disclosed except in the exercise of functions in connection with a matter within subsection (3) (or, in a subsection (2)(b)(ii) case, a matter within subsection (3) specified or described by order) and with the consent of the Commissioners or an authorised officer of HMRC. Subsection (5) provides that consent or authorisation under subsection (4) may be general or specific. Subsection (6) provides for the application of section 19 of the Commissioners for Revenue and Customs Act 2005 (offence of wrongful disclosure) if any person in the United Kingdom discloses information in contravention of subsection (4) relating to a person whose identity can be deduced from it. Section 19 will apply in relation to the disclosure as it applies to section 20(9) of the 2005 Act (prohibition on further disclosure without consent). Subsection (7) provides that a disclosure to the CAB or specified public authority is a reference to such persons as may be specified in relation to the CAB or authority. Subsection (8) provides that nothing under this section authorises the making of a disclosure which contravenes the Data Protection Act 1998, or Part 1 of the Regulation of Investigatory Powers Act 2000. Subsection (9) sets out definitions of terms used in this section.
Section 86: Use of force in executing search warrants: Scotland
280.This section makes it explicit that a proper person (as defined in section 412 of POCA) can use reasonable force to execute a search warrant under section 387 of POCA. This is a search warrant used in investigations under Part 8 of POCA. There is no need for an equivalent provision in respect of search and seizure warrants issued in England, Wales and Northern Ireland as the power to use reasonable force is implicit.
