House of Commons - Explanatory Note
Proceeds Of Crime Bill - continued          House of Commons

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Administrators: general

Clause 135: Protection of administrators

195.     Clause 135 protects administrators from liability for anything done by them to property which is not realisable property, unless they are negligent. The clause also provides that where a confiscation order is not made, or where the sums available from such an order are insufficient, the administrator will be reimbursed by the Lord Advocate.

Clause 136: Protection of persons affected

196.     Clause 136 contains explicit provision for any person affected by any action taken or to be taken by an administrator to challenge that action in court and the court may then make such an order as it thinks appropriate. The person affected may be the accused, the recipient of a tainted gift from the accused or some other person.

Clause 137: Administrators: further provision

197.     Clause 137 introduces Schedule 2 to the Bill, which makes further detailed provision on the appointment, functions etc of an administrator.

Clause 138: Administrators: restriction on proceedings and remedies

198.     Clause 138 permits the court to sist any action, execution or other legal process relating to property which is affected by the appointment of an administrator.

Compensation

Clause 139: Serious default

199.     Clause 139 provides for compensation to be paid to a person whose property has been affected by the enforcement of the confiscation legislation. Compensation is only payable where a criminal investigation is instituted but proceedings are never brought, or the accused is not convicted of an offence, or the sentence is quashed, or he is pardoned for it. In all cases, there must have been a serious default on behalf of one or more of the enforcement authorities specified in subsection (9). The restriction to serious default cases is based on the principle that the restraint and realisation of property is ancillary to a criminal trial in the same way as the detention of a person pending trial. In neither case is compensation paid on acquittal as a matter of course.

200.     Clause 139 is largely based on existing legislation, except that it has been extended to cover the situation where an investigation is started but proceedings are never brought. Under the Bill, it will be possible for a restraint order to be made as soon as a criminal investigation has been started (at present, this is only possible where proceedings have been instituted or are about to be). Therefore, compensation will in future be payable, subject to the current criteria including the serious default test, from the beginning of an investigation, not only where proceedings have been started.

Clause 140: Confiscation order varied or discharged

201.     Clause 140 allows compensation to be payable where a person who absconded before trial and against whom a confiscation order was subsequently made secures a variation or discharge of the order. The provision is not limited to serious default (as in clause 139) because it is considered that the court should be able to exercise a more flexible approach in circumstances where a confiscation order has been made without the accused having been tried.

Enforcement abroad

Clause 141: Enforcement abroad

202.     Clause 141 sets out the conditions under which requests for assistance in the freezing and realisation of property may be made by authorities in Scotland to other jurisdictions outside the United Kingdom. Although requests of this nature have been made for many years, the current primary legislation is largely silent as to the respective roles and powers of the various authorities involved. The Bill places outgoing requests on a fully statutory footing. It is important to note that clause 141 applies only to requests relating to Part 3 of the Bill.

203.     All outgoing requests must be made by the prosecutor and may only be made with the authority of the Secretary of State. In practice, this means that all outgoing requests must pass through the United Kingdom Central Authority for mutual assistance in criminal matters in the Home Office. Requests may be made for a prohibition on dealing with property or additionally, where a confiscation order has been made, the realisation of property. It will be noted that under subsection (1)(a), a request may be made where any of the conditions in clause 121 is satisfied. This will enable the prosecutor to request an asset freeze abroad before any restraint or charging order has yet been made in Scotland, as long as the conditions for making one are satisfied.

Interpretation

Clause 142: Criminal lifestyle

204.     Clause 142 is to be read in conjunction with clause 94. As explained in the note on clause 94, the question of whether a person has a criminal lifestyle is crucial to the operation of the Bill, because it determines whether the accused is subject to the confiscation of benefit from his particular criminal conduct or his general criminal conduct. Clause 142 sets out the criteria which govern whether or not a person has a criminal lifestyle.

205.     Under the current legislation, drug trafficking is always regarded as a criminal lifestyle offence. A conviction for any drug trafficking offence triggers an examination of all the accused's past drug trafficking and the possible application of the assumptions. The Bill adds money laundering to the offences that are always to be regarded as indicative of a criminal lifestyle. Subsection (1)(c) enables the Scottish Ministers to specify by regulations other offences that are always criminal lifestyle offences. Such offences might include, for example, arms trafficking or trafficking in human beings.

206.     The effect of subsection (1)(d), together with subsection 2, is that an accused has a criminal lifestyle if the accused has been convicted in the current proceedings of four or more offences from which he has received a benefit, or has been convicted in the current proceedings of one such offence and has convictions for other such offences on at least two separate occasions in the last six years. The provision is similar to that in the current non-drug legislation, where an enquiry may be launched into benefit from a person's entire past criminal conduct (other than drug trafficking) where the person is convicted of two or more offences in the current proceedings or one in the current proceedings.

207.     Subsection (1)(e) provides that an accused has a criminal lifestyle if the accused is convicted of any offence, and the offence in question lasted for six months or more, for example, a conspiracy. It will thus be possible under the Bill to confiscate the benefit from an accused's entire past criminal conduct where a person is convicted of one offence of any nature. Unless the offence in question is a drug trafficking or money laundering offence, however, the offence in question will have to have been carried out over a period of six months or more.

Clause 143: Conduct and benefit

208.     Clause 143 defines criminal conduct as any conduct constituting an offence in Scotland or, if it took place outside Scotland would constitute an offence if it had occurred in Scotland. The restriction to drug trafficking, other indictable offences and certain summary offences is thus abolished. Under the Bill, the court that makes a confiscation order will only need to consider whether the accused has benefited from any conduct contrary to the criminal law of Scotland. Clause 143 also defines "general criminal conduct" and "particular criminal conduct" (for which, see the note on clause 94).

209.     Clause 143 also provides that a person benefits from criminal conduct if he obtains property as a result of or in connection with the conduct. This unites in one new provision two similar but not identical definitions in the legislation relating to drug trafficking and that relating to other offences.

Clause 144: Tainted gifts and their recipients

210.     The existing legislation enables gifts by the accused to other persons to be recovered in satisfaction of the confiscation order, and makes ancillary provision (for example, to enable assets of the recipient of a gift to be placed under restraint). Under the existing legislation, a tainted gift is described as a "gift caught by the Act". Clause 144 reappraises and aligns the two different tainted gift schemes currently found in the drug and non-drug legislation. The new scheme provides that, where the court has decided that the accused has a criminal lifestyle, any gift from the accused to any person in the six years before the institution of proceedings is caught, together with any gift at any time out of the proceeds of crime. This definition would apply both at the confiscation hearing and for the purposes of enforcement. However, if the court decides that the accused does not have a criminal lifestyle, only gifts made after the commission of the offence are caught. Again, this would apply at the confiscation hearing and for the purposes of enforcement.

Clauses 145-147: Value: the basic rule; value of property obtained from conduct; value of tainted gifts

211.     Clauses 145-147 set out how the court is to work out the value of property held by a person, the value of property, and the value of a tainted gift. These clauses all reproduce, with some redrafting, the property valuation principles set out in the existing legislation.

Clauses 148-150: Free property; realisable property; property: general provisions

212.     These definitional clauses, amongst other things, introduce the new concept of free property as any realisable property which is not subject to certain kinds of forfeiture and deprivation orders. The underlying principle is that property already subject to one of these orders made in earlier proceedings should not be added to the amount available for confiscation because it is already accounted for. In addition, property is not free if it is subject to certain orders under Part 5 of the Bill on civil recovery. Clause 148 contains a very wide definition of property.

Clauses 151-153: Proceedings; applications; satisfaction of confiscation orders

213.     Clauses 151-153 define when proceedings are instituted, when proceedings and applications are concluded, and when confiscation orders are satisfied. The definitions are particularly important in that they determine the earliest and latest points at which a restraint may be made.

Clause 154: Drug trafficking offences

214.     The definition of a drug trafficking offence in this clause is required because any conviction of a drug trafficking offence is indicative, under the Bill, of the fact that the accused has a criminal lifestyle. As explained above, where the accused has a criminal lifestyle, the case is one in which all the accused's criminal conduct can be taken into account in calculating the amount due under the confiscation order.

215.     The definition in clause 154 replaces that currently found in section 49 of the Proceeds of Crime (Scotland) Act 1995, but there are two important differences between the two. Firstly, the offence of allowing premises to be used for drug related activities (section 8 of the Misuse of Drugs Act 1971) is regarded as having the characteristics of a drug trafficking offence and so has been added to the list. Secondly, drug money laundering offences have been removed from the list, because, under the money laundering provisions of the Bill, the current separate drug and other crime money laundering offences are being abolished and replaced with new money laundering offences applicable to the proceeds of all criminal conduct. The handling of money laundering offences for confiscation purposes is discussed further in the note on clause 155.

Clause 155: Money laundering offences

216.     Under clause 155, the three new principal money laundering offences created by the Bill are all defined as money laundering offences, as are the inchoate offences of conspiracy etc to commit one of these offences. All these money laundering offences are indicative, under the Bill, of a criminal lifestyle and a conviction of any one or more of them will thus trigger an examination of the accused's benefit from "general criminal conduct."

Clause 156: Other interpretative provisions

217.     The definition of a criminal investigation in subsection (1) is required because the power to make a restraint order is brought forward, by clause 121(2), to the beginning of an investigation.

General

Clause 157: Rules of Court

218.     Clause 157 provides that rules of court may make provision for giving notice or serving any document for the purposes of this Part of the Bill, the accountant of court's functions under Schedule 2 and the accounts to be kept by the administrator in relation to the exercise of his functions.

Schedule 2: Administrators: further provision

219.     Schedule 2 makes further detailed provision for the appointment and functions of an administrator and for the supervision of his activities by the court. It is similar to the existing provisions in Schedule 1 of the Proceeds of Crime (Scotland) Act 1995.

Part 4: Confiscation: Northern Ireland

Confiscation orders; Procedural matters

Clauses 158 - 171: Confiscation orders; Procedural matters

220.     These clauses set out some of the basic principles of the Bill. These clauses will establish essentially the same procedure for the obtaining of confiscation orders in Northern Ireland as the Bill proposes elsewhere for England and Wales. However, while, in England and Wales, all confiscation orders will be made in the Crown Court, in Northern Ireland confiscation orders may only be made in the Crown Court in two circumstances. These are either following conviction in the Crown Court or where a defendant convicted in the magistrates' court is committed to the Crown Court for confiscation under a new power for this purpose created in the Bill by clause 221. This difference from the proposed procedure for England and Wales is a consequence of the lack of power currently in Northern Ireland for a magistrates' court to commit for sentence to the Crown Court a person convicted in the magistrates' court. This power introduced in England and Wales by the Criminal Procedure and Investigations Act 1996 did not extend to Northern Ireland.

221.     The only other differences in text are as a result of references to Northern Ireland legislation equivalent to the legislation referred to in the clauses for England and Wales.

Reconsideration

Clauses 172 - 174: Reconsideration

222.     Clauses 172 - 174 reproduce, with some changes, provision in the current legislation in Northern Ireland found at Articles 17 to 20 of the Proceeds of Crime (Northern Ireland) Order 1996. The clauses enable a confiscation order to be made where none was made in the original proceedings, and a confiscation order, once made, to be increased.

223.     Currently Article 20 of the 1996 Order allows a court, when reconsidering the benefit obtained by a defendant, to apply similar assumptions to those that appear in clause 166 of the Bill in relation to property held by or transferred to a defendant on or after the date of conviction. Equally Article 20(4) provides that a court could take into account any payment or other reward received by a defendant on or after the date of conviction, original determination or current assessment but only where it represents the defendant's benefit from relevant criminal conduct or was received in connection with drug trafficking carried on or before the date of the court decision.

224.     New provision has been required primarily to take account of the new role of the Assets Recovery Agency (ARA) in criminal confiscation. Either the prosecutor or the Director may apply to the court for a reconsideration of the assessment of benefit from criminal conduct under these clauses.

225.     The principle underlying clauses 20, 21, 172 and 173 is that reconsideration should only be applied for where new evidence comes to light. It is inappropriate for the prosecutor or the Director to have evidence at the time of the original proceedings, yet not to apply for a confiscation order on that occasion but to apply for reconsideration at a later date. The provision included in these clauses reflects this principle.

Clauses 175 & 176: Order made: reconsideration of available amount; Inadequacy of available amount: variation of order

226.     These clauses correspond to those for England and Wales at clauses 23 and 24 save that the comparable references to other clauses in this Bill reflect the numbering adopted for this part of the Bill.

Clause 177: Inadequacy of available amount: discharge of order

227.     As in England and Wales under current legislation, there is no provision for writing off a confiscation order. The same practical difficulties outlined elsewhere in the explanatory notes clearly apply equally in Northern Ireland. However there are no justices' chief executives in Northern Ireland nor are Crown Court orders enforced through the magistrates' courts. Accordingly the clause is drafted to reflect the operational circumstances in Northern Ireland.

228.     Clause 177 therefore provides that the prosecutor enforcing a confiscation order may apply to the Crown Court to write the order off if the outstanding sum is under £1,000 and the reason for the shortfall is a fluctuation in exchange rates or some other factor specified in secondary legislation, or some combination of the two. No similar provision is available where the Director is enforcing a confiscation order because enforcement by the Director will always involve the appointment of a receiver, who will be able to apply to the Crown Court under clause 176.

Clause 178: Small amount outstanding: discharge of order

229.     Clause 178 deals with the situation where a confiscation order has been satisfied almost in its entirety, but a sum of £50 or less is outstanding. Under these circumstances, a chief clerk may apply to the Crown Court for the order to be written off. In all other respects the clause is the same as clause 26.

Clause 179: Information

230.     Clause 179 contains provision ancillary to clauses 172-173. Its purpose is to make it clear that clauses 169-171 on statements of information and the provision of information by the defendant apply to reconsideration proceedings as they apply to confiscation proceedings immediately following a conviction.

Defendant absconds

Clause 180-183: Absconded defendant convicted or committed; Defendant neither convicted nor acquitted; Variation and discharge of orders

231.     Clauses 180 to 183 are clauses dealing with confiscation orders against absconders. Under the current legislation in Northern Ireland, the High Court may make a confiscation order against an absconder convicted of one or more offences to which the Proceeds of Crime (Northern Ireland) Order 1996 applies. Article 2(4) of the Order defines the Offences to which the Order applies. These include all indictable offences, i.e. any offence capable of being tried in the Crown Court. Certain terrorist offences are excluded and certain summary offences are included. The Bill transfers jurisdiction to the Crown Court to make a confiscation order against an absconder convicted of, or charged with, any crime.

232.     Clause 180 deals with the situation where a defendant is convicted either in the Crown Court or in the magistrates' court, and then absconds. In the case of a conviction in the magistrates' court, the defendant must have been committed to the Crown Court for confiscation before absconding. Either the prosecutor or the Director may apply to the Crown Court for a confiscation order to be made under this clause.

233.     The clauses as currently drafted will apply in Northern Ireland in the same way as in England and Wales. These clauses provide that none of the reconsideration clauses, namely clauses 172-174, apply where a person is still an absconder pre- or post-conviction and that they do all apply where an absconder returns. Clauses 182 and 183 reproduce existing ancillary provision for unconvicted absconders, except that the functions are transferred from the High Court to the Crown Court.

Appeals

Clause 184: Appeal by prosecutor or Director

234.     These clauses provide the prosecutor and the Director with new powers to appeal against any confiscation order made by the Crown Court, and against any decision of the Crown Court not to make a confiscation order. The grounds for appeal and the procedure for appeal, both to the Court of Appeal in Northern Ireland and the House of Lords, are essentially the same as those provided for elsewhere in the Bill for England and Wales.

Clause 185: Court's powers on appeal

235.     Clause 185 provides the Court of Appeal in Northern Ireland with the same broad powers of disposal as those proposed for the criminal division of the Court of Appeal in England and Wales.

Clause 186: Appeal to House of Lords

236.     Clause 186 details the powers of disposal provided to the House of Lords. There is no difference in substance between Northern Ireland and the rest of the United Kingdom in the powers provided on appeals from the Crown Court.

Enforcement authority

Clause 187: Enforcement authority

237.     Clause 187 sets out the same criteria for Northern Ireland as for England and Wales for the appointment of the Director to enforce a confiscation order. However the rationale for this provision in Northern Ireland is to ensure that the Director when operating in Northern Ireland can use the specific powers of receivership, provided in clause 203 of the Bill, to assist him in the enforcement of confiscation orders.

Enforcement as fines etc

Clause 188: Enforcement as fines etc

238.     Clause 188 explains how confiscation orders are to be enforced. As at present, the order will be treated as a Crown Court fine and enforced, as a Crown Court fine. Essentially the burden of enforcing such orders falls on the main prosecuting authority in Northern Ireland, the Office of the Director for Public Prosecutions in Northern Ireland (DPP). Unlike in England and Wales, Crown Court fines in Northern Ireland are not enforced by or through the magistrates' court. This results in some differences between the two jurisdictions in the powers of enforcement available.

239.     Accordingly, this clause provides for confiscation orders to be enforced essentially in the same way as fines are enforced in Northern Ireland by referring to the relevant legislation, the Criminal Justice Act (Northern Ireland) 1945. However, as in England and Wales one of the main features of this regime is that the Crown Court, where it makes a confiscation order, is required to set a term of imprisonment in default of payment. The maximum default term that may be imposed is determined by the size of the confiscation order. There is no substantial difference in the maximum default term applicable to a particular confiscation order between the various United Kingdom jurisdictions.

Clause 189: Director's application for enforcement

240.     As noted above, all Crown Court confiscation orders are enforced through the Crown Court in Northern Ireland. The relevant legislative provisions are contained at section 35 of the Criminal Justice Act (Northern Ireland) 1945. They include detailed provision on imprisonment in default of payment. This clause provides for the Director to apply to the Crown Court to trigger the default term on the same grounds as apply when the DPP is enforcing a confiscation order.

Clause 190: Provisions about imprisonment or detention

241.     Clause 190 contains general provision on imprisonment in default of a confiscation order, applicable when the default term is imposed by the Crown Court in response to an application either by the prosecutor or the Director. The provision reflects existing legislation in Northern Ireland. As in England and Wales, it provides that a term of imprisonment in default of a confiscation order must be served consecutively to the substantive term imposed for the offence(s), and that the service of a default term does not prevent the confiscation order from being enforced subsequently by other means.

Clause 191: Reconsideration etc: variation of prison term

242.     The Crown Court fixes the period of imprisonment in default by reference to the amount of the confiscation order. Clause 191 provides for Northern Ireland in the same way that clause 40 does for England and Wales, for the period of imprisonment in default to be varied where the court varies the amount of a confiscation order under certain provisions of the Bill.

243.     The overall purpose of the provision is to clarify what happens when the variation of a confiscation order changes the maximum period of imprisonment in default applicable to the order.

Restraint orders

Clauses 192 to 194: Conditions for exercise of powers; Restraint orders; Application, discharge and variation

244.     Clauses 192 to 194 essentially reflect the provisions made in this Bill at clauses 41 to 43 for England and Wales. The significant difference is that in Northern Ireland restraint orders will remain within the jurisdiction of the High Court. However the point at which a restraint order may be made is brought forward in the Bill to any time after an investigation has been started (at present, although both orders may be made at the investigative stage, it is only possible to do so where charges are in the offing). The only other differences arise from references to Northern Ireland legislation. Clause 193 explains the nature and effect of a restraint order. Clause 194 lays down who may apply for a restraint order under the Bill, and sets out criteria like those in the existing legislation for the variation or discharge of such orders. The Bill provides that application may be made by the prosecutor, the Director and by an accredited financial investigator.

Clauses 195 & 196: Appeal to Court of Appeal; Appeal to House of Lords

245.     As in England and Wales, there exists legislation that provides for a very general right of appeal against any order of the High Court. These are the Judicature (Northern Ireland) Act 1978 and the Supreme Court Rules for Northern Ireland. There is accordingly no need for the legislation to provide a specific right of appeal in relation to these orders. However, as it has been necessary to create a specific right of appeal in the Bill for England and Wales in relation to restraint orders made (or not made) by the Crown Court, it was considered appropriate to make similar provision in Northern Ireland.

 
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Prepared: 18 October 2001