Answer ... (a) What confiscation mechanisms are available in your jurisdiction?
The Proceeds of Criminal Conduct Act 1997 (as amended) (PCCA) permits:
- the confiscation of assets held by a person – including a company – that has been convicted of a criminal offence or offences; and
- the seizure and forfeiture of cash that is obtained by criminal conduct or used in the commission of an offence.
These are different processes: the confiscation provisions apply where there has been a conviction; while the cash seizure and forfeiture provisions are based on a simple civil recovery process.
The model in each case is the Proceeds of Crime Act 2002 (POCA) and preceding legislation in the United Kingdom.
The general confiscation procedure is modelled on the post-conviction confiscation provisions in Part 2 of POCA. The procedure does not specifically target assets that are themselves the proceeds of crime. It obliges a convicted defendant to pay money or disgorge assets – even legitimately acquired assets – up to the value of the amount by which an offender benefited from the offence. If there is a pattern of offending, there is an assumption that all property held by a convicted defendant or acquired by it in the preceding period represents the benefit from criminal conduct unless the defendant can prove otherwise. Default sentences of imprisonment – consecutive to any sentence served for the underlying offences – are imposed as an enforcement mechanism.
The cash seizure and forfeiture provisions of the PCCA closely follow the equivalent provisions in Chapter 3 of Part 5 of POCA. They apply to cash that “directly or indirectly represents a person’s proceeds of criminal conduct or is intended for use in criminal conduct”.
This broadly corresponds to the definition of ‘recoverable property’ in Part 5 of POCA, but the British Virgin Islands does not yet have a general equivalent of the provisions in Part 5 for the civil recovery of assets other than cash that are obtained by criminal conduct.
Various BVI statutes permit the forfeiture of specific items of property that are used in the commission of crime or are connected to criminal conduct. The Asset Seizure and Forfeiture Act 2020 creates mechanisms for the management and ultimate distribution of those assets.
(b) How do these different mechanisms work in practice?
Confiscation: Confiscation proceedings are heard by a criminal court – either the magistrates court or the Criminal Division of the High Court – as an adjunct to the sentencing process.
Following conviction, the prosecution serves a statement on the defendant and the court setting out what it alleges to be:
- the defendant’s benefit from the offences of which it has been convicted; and
- if there is a relevant pattern of offending, the wider benefit from criminal conduct.
Where there is a pattern of offending, there is an assumption that property acquired or transferred by the defendant in the preceding six-year period will be treated as the benefit from criminal conduct, unless it can show that the property has a legitimate origin.
The statement will also list:
- the known assets (‘realisable assets’) of the defendant; and
- any ‘gifts’ made by it after the offences were committed. A ‘gift’ for these purposes is the transfer of property to another person for which anything less than market value was received.
A defendant’s benefit is the value of the property that it obtained through its offending.
The defendant will then be required to provide details of:
- any assets it holds; and
- sums received or transferred in the relevant period.
The court will hold a formal and often detailed hearing to determine the amount of the confiscation order. In that hearing, which is conducted by a magistrate or judge alone (there is no jury), the court determines the amount of the defendant’s benefit and makes a confiscation order in that amount, unless the defendant can show that its realisable assets fall short of the benefit, in which case the court makes an order in that lesser sum.
Cash seizure and forfeiture: This is a simpler, summary process. The prosecutor applies to the magistrates court for an order permitting the detention of the cash that has been seized. There is then a hearing at which the prosecutor must satisfy the court, on the balance of probabilities, that the cash represents the proceeds of a person’s criminal conduct or is to be used in the commission of crime.
(c) Are any procedural tools available in your jurisdiction that can enhance the effectiveness of the confiscation regime or capture a wider range of assets?
The High Court can and generally will make a restraint order prohibiting the defendant from dealing with its assets once criminal proceedings have been instituted. This preserves the assets so that they are available for confiscation if there is a conviction in due course. Once there is a conviction, the court will order disclosure by the defendant of his or her assets. Where a confiscation order is made, it can be reinforced by the appointment of a receiver and/or charging orders over relevant property. The court also has powers to enforce the order through bankruptcy or other insolvency proceedings.
(d) Can secondary proceeds be confiscated in your jurisdiction?
Yes.
Criminal confiscation does not require the confiscated asset to be the proceeds of the crime in question. The defendant’s realisable assets include property that has been bought with the proceeds or crime or exchanged for it.
Cash forfeiture applies to cash that is acquired by the sale of assets that themselves represent the proceeds of crime. If and when the PCCA is extended to allow for the civil recovery of assets other than cash – including funds held in bank accounts – it is anticipated that the proceeds of crime will be recoverable by the forfeiture of any assets for which they have been exchanged.
(e) Is value-based confiscation allowed in your jurisdiction? If so, how does this work in practice?
Yes, to the extent that the value of a post-conviction confiscation order will be an amount that represents the offender’s benefit from criminal conduct, however that money is obtained.
(f) Can the property of third parties or close relatives be confiscated in your jurisdiction? How are third-party interests addressed?
The property of third parties is treated as the asset of the defendant for the purposes of determining the defendant’s available assets, if he has or she made a gift caught by Section 4 of the PCCA to the third party. In other words, any asset that has been transferred to a third party for less than market value after the relevant offence or offences have been committed is treated as an asset of the defendant for the purposes of confiscation.
A defendant’s interest in a jointly owned asset is treated as his or her property for the purposes of confiscation – for example, a jointly owned house is vulnerable to restraint and an order for sale even if the ultimate amount that is the subject of confiscation is limited to the defendant in the property.
There is no general rule that makes the assets of a spouse of family members available for confiscation. However, assets held by a spouse in particular are likely to be regarded as the assets of a defendant, where the inference is that they have been acquired by the defendant’s criminal conduct and are being shielded by the spouse’s nominal ownership or control.
In calculating a defendant’s assets, court judgments and debts to preferential creditors are discounted. Third parties may assert an interest in any property that might be available for confiscation and the court will determine the amount of the third-party interest, if any, and discount it.
(g) Can confiscated assets be used to provide restitution to the victims of crime?
Yes.
A criminal court can make a compensation order in favour of the victim of a crime. Where there is a confiscation order under the PCCA, and a compensation order, and the defendant does not have the means to satisfy both orders, Section 7(3) of the PCCA permits the court to order that all or part of the confiscation order be used for the purposes of satisfying the compensation order.
(h) Can confiscated assets be used to satisfy civil claims for damages or compensation arising from the offence?
Yes, the proceeds of a confiscation order can be used to satisfy a concurrent compensation order where there are insufficient funds to satisfy the order otherwise.
(i) Is confiscation possible without a conviction in your jurisdiction? If so, how does this work in practice?
With cash that represents the proceeds of criminal conduct, the summary process for forfeiture does not depend on criminal conviction.
Either:
- the cash is seized in anticipation of an application for forfeiture under the PCCA; or
- an application can be made in relation to cash that is seized using other police powers, often pursuant to arrest.
If the court is satisfied that the cash represents a person’s proceeds of criminal conduct or is for use in the commission of an offence, the magistrates court can order its forfeiture without the need to prove a specific predicate offence nor to obtain a criminal conviction. A similar test will probably apply when the PCCA is extended to reflect the wider civil recovery regime in Part 5 of POCA.