Introduction
"They don't have to convict you. They don't even have to charge you with a crime. But they have your property. "
Henry Hyde[1]
The United States of America’s civil asset forfeiture regime courts a great degree of controversy and is heavily criticised for its detrimental impact on property owners. Civil forfeiture in America is described as remedial. It involves an action taken in rem based on property’s involvement in crime, detaching the charge from the rights of the owner, or any question as to their guilt in any offence.
In combating crime it is necessary to draw a balance between giving enforcement authorities effective powers and safeguarding individuals’ civil rights (here in particular the right to own property). It may be inferred from the nature of criticism that civil forfeiture finds an unacceptable balance here, since the deprival of property is such a serious measure.
This balance is primarily affected in the standard of proof in the forfeiture charge. The civil standard of proof, ‘on a balance of probabilities’ for the UK, balances the aforementioned interests approximately equally, while a criminal standard of proof, ‘beyond a reasonable doubt’, offers far greater protection for individuals in the enjoyment of their property. This balance is also affected by other relevant factors.
Criticisms of the separation of recoverability from property owners’ guilt infer some to consider forfeiture to be punitive.
Building on a fragmented criminal confiscation regime and very limited capacity for civil recovery in customs cases, the Proceeds of Crime Act 2002 (PoCA) provides for extensive general powers of confiscation of benefit of crime following conviction and civil recovery of property obtained through or intended for use in unlawful conduct. This Act follows recommendations from a report by the Cabinet Office’s Performance and Innovation Unit (PIU, since renamed the Strategy Unit) entitled ‘Recovering the Proceeds of Crime’, published June 2000.
This new civil recovery regime closely parallels civil forfeiture in American law, and accordingly criticisms of the American regime may be applicable to that now operating in the UK. Examining justifications and criticisms of the American regime and considering their applicability to the PoCA will provide a basis for examining those justifications and criticisms applicable to the UK’s system. The legitimacy of civil recovery in the UK may then be determined.
The United States of America’s asset forfeiture provisions form a diverse and well-established regime, implemented by federal law across America and in many different formats by state-level authorities. While an in-depth study of the American forfeiture regime would be inappropriate here, consideration of America’s purposes for forfeiture and the regime’s justifications and criticisms can highlight issues perhaps applicable to the UK recovery system.
Perhaps the most in-depth government material on forfeiture is that published by the Department of the Treasury’s Executive Office for Asset Forfeiture. It’s material can largely be supported by that published by the Department of Justice regarding their own forfeiture program. Most state-level material[2] is of very limited scope and is largely unhelpful for present purposes.
There also exists an organisation specifically opposed to the American forfeiture system, the Forfeiture Endangers American Rights Foundation (F.E.A.R.), whose materials offer an alternative viewpoint to that expressed in governmental materials.
The Executive Office for Asset Forfeiture
The Executive Office for Asset Forfeiture (EOAF)[3] administers the Department of the Treasury’s forfeiture program. The EOAF is part of the Department of the Treasury’s Office of Enforcement and is responsible for administering the Treasury Forfeiture Fund (TFF), which manages the assets seized and forfeited by Treasury law enforcement bureaus.
For the EOAF, the purpose of its use of
forfeiture provisions is expressed in a number of instances. Particularly clear
are the ‘mission’ and ‘goal’ of the TFF[4],
the mission: to promote use of forfeiture “…to disrupt and dismantle criminal
enterprises…”, the goal: to support the Treasury’s use of forfeiture “…as a
high-impact law enforcement sanction to punish and deter criminal activity.”
The
incentive of using the forfeiture sanction in particular is elaborated upon
with the following quote:
“From drug cartels to criminal syndicates to terrorist organizations, the only real damage that can be done to these insidious structures by law enforcement is the removal of enabling assets and profits that support or stem from their existence. Human resources have proven interchangeable to such criminal networks, but the loss of the criminal physical structures and any associated profit-incentive serves to dismantle and deter their existence and/or proliferation.” [5]
Asset forfeiture is not limited in scope to organised crime (New York City use asset forfeiture against drink-drivers). The general principle regarding use of the forfeiture sanction seen here is that it is a potentially efficient remedy which may have greater impact or be more appropriate than traditional criminal penalties.
The EOAF web site also distinguishes the
purposes of civil and criminal forfeiture.[6]
Civil proceedings, made in rem, are said to be “…to confiscate property used in
violation of the law and to remove the illegally gained profits from
violators.”
Criminal forfeiture, in personam, is “…imposed as part of [criminal] punishment following conviction.”
Thus the purpose of civil forfeiture can be described as remedial, while that of criminal forfeiture is punitive. This is particularly important, as it is the basis for the separation of the civil forfeiture charge from the individual property owner. Since the claim is deemed a remedial measure against the property and designed to simply recover property based on its illegality, the guilt of the owner is not even brought into question.
The distinction between the two charges is elaborated upon in personal correspondence received from the EOAF[7], which highlights benefits of civil, as opposed to criminal, forfeiture, including that it may be used where there is no obvious defendant to property, or it would be difficult to attach the charge to a defendant. It is also pointed out that civil and criminal forfeiture may be used in conjunction against property to exploit the benefits of each system. The US Supreme Court has established that this is not contrary to America’s ‘double jeopardy’ rule (preventing trial for the same crime twice)[8], a decision itself based on the presumption that since civil forfeiture is a charge in rem, it is not punitive toward the property owner.
Internet material available regarding the Department of Justice’s Asset Forfeiture Program[9] is rather less expansive than that of the EOAF. The program encompasses seizure of assets used to facilitate or representing proceeds of federal crimes, though only applies to cases developed by particular government agencies. Like the EOAF’s program, the Department of Justice use both criminal and civil forfeiture.
The purpose of the program is said to be “…employ asset forfeiture powers in a manner that enhances public safety and security.” Like the EOAF, the Department of Justice highlight forfeiture’s superiority over traditional criminal penalties: “Asset forfeiture has the power to disrupt or dismantle criminal organizations that would continue to function if we only convicted and incarcerated specific individuals.”
Both government organisations support the use of forfeiture to provide an effective tool to tackle crime, both in prevention and punishment, with particular attention drawn to scenarios where it is superior to other criminal sanctions.
From this purpose, it may be inferred that forfeiture would be argued to be an effective regime whose benefits to enforcement powers outweigh any detriment to civil rights.
We also see a distinction between criminal forfeiture, for punitive purposes and justified as a part of criminal sentence, and civil forfeiture, for remedial purposes and justified as a mode of recovering illegally held proceeds of crime and assets intended for use facilitating crime. This distinction is particularly important as it is key to the legitimacy of the civil charge, separating the charge against the property from the property owner.
F.E.A.R. – The Forfeiture Endangers
American Rights Foundation
F.E.A.R.[10] was formed in 1992 as a reaction to perceived injustices arising from America’s forfeiture regime. Their work includes lobbying against forfeiture and providing support for forfeiture ‘victims’. The nature of their criticisms of the forfeiture system, in particular civil forfeiture, are expressed in their web pages entitled ‘Why F.E.A.R. exists’[11] and their ‘Official Position on Forfeiture’[12].
The page ‘Why F.E.A.R. exists’ highlights the right to own property as under the US Constitution, in particular the Fifth Amendment, which reads that no citizen is to be "deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation.". It is then asserted that civil forfeiture (in rem) is inconsistent with these rights, in particular that due process has been diminished, reflecting an underlying belief that the balance struck between powers of enforcement and civil rights is unacceptable.
The main specific problems resulting from the action in rem are then drawn out:
1. Criminal law gives a right to legal counsel at the government’s expense. An individual contesting a civil forfeiture claim will typically have no right to such legal aid.
2. A civil charge requires a lower standard of proof than a criminal charge, in America the civil standard is ‘on a preponderance of evidence’ rather than ‘beyond a reasonable doubt’.
The use of a civil charge itself is key here in detaching the recoverability of the property from guilt of the owner (supported by making the charge in rem). While this separation remains, the charge is deemed unrelated to the guilt of the owner, so their guilt is not at issue.
The civil standard of proof is central in drawing the balance between enforcement powers and civil rights.
3. A civil charge enjoys no right to trial by jury, as would be the case in a criminal trial.
Following this list is another criticism of forfeiture, this one detached from the use of civil in rem proceedings. It is highlighted that police may keep their ‘profits’ of seizure and forfeiture, effectively creating a profit incentive for maximum use of forfeiture by enforcement authorities – potentially contrary to the wider purposes of their work, tackling and reducing crime.
The page on F.E.A.R.’s ‘Official Position on Forfeiture’ lists F.E.A.R.’s Proposals for Reform, which further express the Foundation’s criticisms of America’s forfeiture.
Proposal I[13] is the abolition of civil forfeiture, permitting criminal forfeiture with traditional procedural safeguards in place.
Most of F.E.A.R.’s criticisms of forfeiture are derived from the civil in rem charge. This proposal acknowledges and suggests suitable rectification of this.
Proposal II[14] is to require proportionality between the nature of the offence concerned and the value of forfeited goods.
This must be directly based on the existence of a link between the property owner’s guilt and the forfeiture, rejecting arguments to the contrary. As a punitive measure, the punishment should be appropriate for the crime in question. Civil forfeiture is based only on the property’s involvement in crime, which is unaffected by the nature or extent of the crime itself.
Proposal III[15] seeks the increase of minimum quality of evidence permitted by the court. (This does not address the issue of the standard of proof).
This is a procedural safeguard relating to the US legal system as it applies to forfeiture provisions.
Proposal IV[16] requires restoration of the principle of ‘innocent until proven guilty’. Ie, subject forfeiture claims to the criminal standard of proof, again arising from the attachment of civil forfeiture to criminal guilt,
It also requires prohibition of seizure before trial and provision of legal counsel, funded by the government. These are both procedural safeguards.
Proposal V[17] is to enable forfeited property to be used to fund a legal challenge to the forfeiture (and restates the issue of provision of legal aid).
This is another procedural safeguard.
Proposal VI[18] is to reform the process of forfeiture to make individuals better able to contest forfeiture claims within the system.
Again, this is a procedural safeguard.
Proposal VII[19] concerns use of funds realised through forfeiture. It suggests a system whereby use of funds can be monitored and controlled in a bid to minimise any conflict of interests arising from forfeiture’s profit incentive to enforcement agencies.
Proposal VIII[20] is to require in forfeiture proceedings that the government show a property owner knew of and consented to illegal use of their property.
This again attaches forfeiture to the owner’s guilt. A true separation of the two means property’s involvement in a crime is the only issue, which is unaffected by the consent or knowledge of the property owner.
Proposal IX[21]
highlights that at present, since a property owner’s lack of knowledge is no
defence in forfeiture proceedings, to protect their property the owner will be
burdened with the task of performing “…the police function of detecting and
preventing crime.”
Consequently
the proposal requires forfeiture from innocent owners to be abolished.
While
this problem arises from the separation of ownership and property’s liability,
and the proposal seeks to rectify the problem by terminating this separation,
the purpose for the proposal is additional to other arguments of the
illegitimacy of the separation, offering a policy reason for the rejection of
this law.
Proposal
X[22]
deals with a specific problem relating to the structure of authority amongst
enforcement bodies operating within America’s federal structure of power, where
police can act on behalf of federal, instead of state, enforcement authorities
to use forfeiture powers that would otherwise be unavailable to them (while
they can still receive proceeds of forfeiture under federal bodies’ systems of ‘equitable
sharing’).
This is
aimed at minimising the profit incentive of forfeiture, and allowing state
authorities fuller control over the implementation of forfeiture laws within
their jurisdiction.
Proposal
XI[23]
is to reform law to open government to liability for damages arising from
forfeiture and related investigations.
This
again provides a procedural safeguard against forfeiture powers.
In summary, F.E.A.R.’s criticisms of America’s civil asset forfeiture regime arise from three assertions: Civil forfeiture creates an unacceptable balance between enforcement powers and civil rights, civil forfeiture is punitive and so property’s recoverability should not be detached from associated crimes, and the administrative system used creates unfairness and injustices.
Summary of Purposes, Justifications and Criticisms for Asset Forfeiture in America
The argument in favour of civil forfeiture, provided by US government bodies, is based on the following points:
Forfeiture serves as an effective and appropriate sanction to tackle crime.
In this respect, the benefits of the current forfeiture system are in an acceptable balance with the level of protection of civil rights afforded.
Civil and criminal forfeiture are distinguished on the grounds that the former is reparative and the latter punitive. Civil forfeiture is concerned only with the involvement of property in a crime, not the guilt, or indeed punishment, of the property owner. As such, the civil charge in rem is appropriate.
The argument against civil forfeiture, provided by F.E.A.R., is based on these points:
The balance of enforcement powers and legal rights is at an unacceptable level, particular problems are:
- The civil standard of proof
- Absence of legal aid
- ‘Quality’ of permissible evidence
Forfeiture is punitive and separation of property’s recoverability and owner’s involvement in crime is fictional. Specific criticisms are:
- The use of a civil charge and standard of proof instead of criminal
- A civil charge, unlike criminal, gives no right to trial by jury
Other administrative matters are also criticised, particularly:
- The capacity for police to keep what they seize
- Capacity for seizure before trial coupled with Government immunity to claims for damages
- Prevention of availability of seized property to fund legal proceedings to contest forfeiture
The law on recovery of property derived from or intended for use in crime is now all contained in the Proceeds of Crime Act 2002 (PoCA). Building on very limited pre-existing civil recovery in customs cases, Part 5 of the Act provides for a civil recovery system far wider in scope. Also relevant is the creation of the Assets Recovery Agency (ARA) in Part 1 and provisions on criminal confiscation in England and Wales, Scotland and Northern Ireland across Parts 2 to 4 respectively.
The effect of Part 5 is summarised in S.240. Subsection (1)(a) describes recovery proceedings for property ‘which is, or represents, property obtained through unlawful conduct’. Such an action may be brought by the ARA (‘the enforcement authority’), before the High Court or Court of Session. This is dealt with in Chapter 2.
Subsection (1)(b) describes recovery through summary proceedings, before a magistrates’ court (or, in Scotland, the sheriff). This is dealt with more fully in Chapter 3.
Chapters 1 and 4 of Part 5 contain provisions relevant to both forms of civil recovery. S.240(2) states that civil proceedings may be brought regardless of whether criminal proceedings for a connected offence have been brought. Section 290 of the Explanatory Notes to the Act confirms that this extends to where criminal proceedings have been brought and failed.
Unlawful conduct is defined in S.241, approximate to any conduct unlawful in the jurisdiction where it takes place. Subsection (3) confirms that in determining whether unlawful conduct has occurred and whether a person intended to use property in an unlawful manner, the normal civil standard of proof, ‘on a balance of probabilities’, will be used.
Under S.242(2)(b) it is unnecessary to show the unlawful conduct to be of a particular kind, only that it was obtained through one of a number of possible kinds of unlawful conduct. Subsection (1) confirms that a person obtains property through unlawful conduct for the purposes of the Act regardless of whether it was his own conduct or another’s.
Under S.304 property may be followed on disposal, and will continue to be recoverable. Property may be followed in all disposals until an exception prevents following. When this happens property will cease to be recoverable, including in any future disposals. S.308 provides exceptions to prevent following. Most significant is that under subsection (1), where a person obtains recoverable property on a disposal in ‘good faith, for value and without notice that it was recoverable property’, the property cannot be followed into their hands.
In addition to following, where a person disposes of recoverable property and obtains other property in place of it, this property will represent the original property and so become recoverable. This is provided in S.305. Subsection (3) confirms that such property may also be followed on disposal.
It is provided by S.316 (3) that in deciding whether property was recoverable at any time, including before the Act’s commencement, it is to be assumed that Part 5 was in force at any relevant time.
Chapter 2 provides for civil recovery actions to be brought by the ARA, before the High Court in England, Wales and Northern Ireland under S.243 and before the Court of Session in Scotland under S.244. According to S.266(1), where the court is satisfied that property is recoverable it must make a recovery order.
However, subsection (3) prevents the court making a recovery order over property where:
(a) all conditions of subsection (4) or (5) are met and it would not be ‘just and equitable’ to make the order; or
(b) where it would be incompatible with the Human Rights Act 1998.
Subsection (4), applicable to England, Wales and Northern Ireland, sets out four conditions required to satisfy subsection (3):
(a) property was obtained in good faith;
(b) the respondent took steps he would not have done if he hadn’t obtained / hadn’t believed he would obtain the property;
(c) when taking such steps he had no notice that the property was recoverable; and
(d) because of the steps taken, a recovery order would be detrimental to him.
Subsection (5) makes the same provisions for Scotland, except that (c) requires the individual had ‘no reasonable grounds for believing that the property was recoverable’, rather than concerning actual notice.
In deciding whether recovery would be just and equitable, subsection (6) requires the court have regard to both the degree of detriment that would be suffered by the respondent and the ARA’s interests in receiving the property.
During proceedings in England, Wales and Northern Ireland, under S.246, property may be subject to an interim receiving order, whereby property will be detained or preserved pending the outcome of recovery hearings. S.252 provides for exclusion of property from the order for the purposes listed in subsection (3) – to meet living expenses and to continue a ‘trade, business, profession or occupation’. However, subsection (4) prevents exclusion for the purposes of meeting legal expenses relating to proceedings under Part 5 or the PoCA.
Similar provisions, for interim administration orders, are available for Scotland under S.256 and S.261.
S.283 makes compensation available to property owners where an interim receiving/administration order has been made and recovery proceedings have failed.
Chapter 3 provides for recovery of cash which is or represents property obtained through unlawful conduct or which is intended for use in unlawful conduct, in summary proceedings. S.289 to S.293 provide for police search powers to find what they suspect to be recoverable property. S.294 to S.297 provide for seizure of cash found and reasonably suspected to be recoverable.
Under S.298 an application for detained cash may be made, in rem, before a magistrates’ court in England, Wales and Northern Ireland or before the sheriff in Scotland. Subsection (2) permits the court or sheriff to order forfeiture where satisfied the cash is either recoverable property or intended (by any person) for use in unlawful conduct. However S.299 permits any party to proceedings where an order is made under S.298 to appeal against the decision. In England and Wales this will be to the Crown Court.
Where no forfeiture order is made S.302 permits the person who owns seized cash or the person from whom it was seized to apply for compensation.
S.1 of the Act establishes the Assets Recovery Agency (ARA). While some minor provisions on the role of the Agency are contained in Part 1, the most significant power of the ARA is their capacity to bring civil and criminal recovery proceedings, prescribed in other parts of the PoCA.
Criminal confiscation in England and Wales is provided for in Part 2 of the PoCA. Similar provisions to those discussed below apply to Scotland (Part 3) and Northern Ireland (Part 4). Under S.6 where a convicted defendant comes before the Crown Court (as under subsection (2)) and the director of the ARA, prosecutor or court wish to bring proceedings for criminal confiscation, the court must proceed under S.6.
The court must then determine whether the defendant has a criminal lifestyle, following the test in S.75. If so it must be determined if he has benefited from his general criminal conduct, if not it must be determined whether he has benefited from his particular criminal conduct. If benefit is found, the court must evaluate the recoverable amount (from the quantity of benefit and available amount) and make an order for its recovery. Subsection (7) requires these issues be decided on a balance of probabilities.
For these purposes, S.76 defines criminal conduct, general criminal conduct, particular criminal conduct and benefit. S.76 (2) provides that in determining general criminal conduct and benefit of such conduct, it is immaterial whether such conduct or benefit relates to a time before the PoCA was in force.
Following S.10 certain assumptions are to be made where a criminal lifestyle has been found. Particularly, subsection (2) requires the assumption that any property transferred to the defendant after the ‘relevant day’ (defined in subsection (8) as the day six years before proceedings for the earliest of any relevant offences were started) was obtained as a result of general criminal conduct. Subsection (3) requires the assumption any property held by the defendant at any time after conviction was obtained as a result of his general criminal conduct. However, subsection (6) prevents the court making any of these assumptions where it would be shown to be incorrect or would cause a serious risk of injustice.
Thus S.6 provides for the determination of whether the defendant has a criminal lifestyle on a balance of probabilities. If so, this will generally open more of the defendant’s property to confiscation than would otherwise have been the case.
Similar provisions for Scotland stem from S.92, and for Northern Ireland from S.156.
Table 1:
|
Provision |
En. + Wa. |
Scot. |
N.I. |
|
-Capacity to bring confiscation proceedings. -Determine whether D has criminal lifestyle, evaluate any benefit of general or particular criminal conduct, on a balance of probabilities. |
S.6 |
S.92 |
S.156 |
|
-Test for whether D has a criminal lifestyle |
S.75 |
S.142 |
S.223 |
|
-Definition of general and particular criminal conduct |
S.76 |
S.143 |
S.224 |
|
-Assumptions to be made where D found to have criminal lifestyle |
S.10 |
S.96 |
S.160 |
The act also amends the Access to Justice Act 1999, to provide for civil legal aid for Part 5 proceedings. This will be available in England and Wales under the Community Legal Service scheme.
In effect then, the Act creates four separate forms of recovery:
1. Criminal confiscation of benefit of particular criminal conduct
2. Criminal confiscation of benefit of general criminal conduct
3. Civil recovery in personam of property which is or represents proceeds of unlawful conduct (following Part 5 Chapter 2)
4. Civil forfeiture, in rem, of cash which is or represents property obtained through unlawful conduct or of cash intended for use in unlawful conduct (following Part 5 Chapter 3).
For criminal confiscation of benefit of general criminal conduct, the property owner’s guilt in a crime will have been proven to the criminal standard. However, involvement in any other crimes, establishing a criminal lifestyle, need only be shown on a balance of probabilities.
Civil recovery under Chapter 2 requires the property be shown to be attributable to unlawful conduct, at the civil standard, without showing involvement of the property owner.
Civil recovery in summary proceedings under Chapter 3 permits forfeiture on a civil standard in rem, severing any attachment to the property owner.
The purposes and justifications behind the PoCA as expressed by the government are clearly evident in the PIU Report ‘Recovering the Proceeds of Crime’[24] on which the Act was based.
The PIU Report, in Part 3 – ‘Why track down and recover the proceeds of crime?’, sets out the purposes of recovery. Paragraph 3.1 points out that while removing assets of crime is in itself a just purpose, recovery will also have a significant impact on crime. Specific effects are listed in paragraph 3.2, and most notably include showing that crime does not pay, disrupting criminal networks and deterring individuals from committing crime by reducing anticipated returns.
In effect, this is the same purpose as behind American forfeiture, to provide an effective measure by which crime can be tackled, and that the benefit of using such measures are considered to justify any necessary reduction in civil rights.
In comparison to America’s separation of purposes of civil and criminal forfeiture, Part 4 – ‘Where are we starting from’ paragraph 4.11 states that criminal forfeiture is meant as reparative, not retributive. This shows both modes of recovery are claimed to be concerned only with the property’s connection with any crime, not the owner’s guilt (as in American civil forfeiture).
Part 3, paragraph 3.4, indicates the potential cost-effective nature of recovery and potential to generate revenue, stating “…asset confiscation policies can generate significant revenue flows that reduce the net costs to the criminal justice system, especially where civil forfeiture is used.” Box 3.1 highlights statistics (‘recent’ at the time of the report’s publication in June 2000) estimating the value of illegal drugs transactions in the UK to be up to £8.5 billion, while the cost of fraud was estimated as between £5 billion and £16 billion.
Part 5, ‘Civil Forfeiture’, further expresses the purposes behind the recovery system. Paragraphs 5.15 to 5.17 stress the difficulty in obtaining convictions against heads of organised crime. Paragraph 5.1 offers a quote from the Home Office Working Group on Confiscation[25] to summarise the role of civil recovery, for use “where there is strong evidence of the criminal origins of the property, but insufficient evidence for criminal conviction of the owner”.
Paragraph 5.22 highlights the need to balance civil rights and effective state powers, requiring any provisions be compatible with the Human Rights Act 1998 and European Convention on Human Rights in order to maintain an acceptable balance.
Box 5.4 offers a quote from Willie Hofmeyr, Head of the Asset Forfeiture Unit, South Africa[26] on the effects of recovery, which can be summarised in the line “Police have started seeing forfeiture as a way of hurting and getting at [organised crime figures].”
Paragraph 5.13 points out that civil forfeiture is not intended to be punitive, before acknowledging the quote in Box 5.4 and conceding that criminals are often at least as concerned at losing their property as they are their liberty. In effect, this acknowledges that recovery can be of punitive effect, regardless of its intent.
Paragraph 5.26 highlights the risk of recovery proceedings being used as an alternative to criminal conviction, and stresses the need to prevent this. While only time will reveal the degree to which these procedures are used interchangeably, the acknowledgement of the underlying risk serves to further the similarities which may be drawn between recovery and conviction.
The UK’s system of recovery, like the American system, is seen as an effective and appropriate sanction to tackle crime, which finds an acceptable balance between civil rights and effective law enforcement. Like America, proceedings are still to the normal civil standard of proof, on a balance of probabilities, following S.241. Coupled with this is the detachment of any criminal guilt from the recoverability of the property, as present in the American system. S.240 (2) expressly states that whether or not proceedings are brought in relation to an offence with the property, a civil action under Part 5 will be valid. S.242 (1) highlights that property is obtained through unlawful conduct regardless of whether it was the conduct of the person obtaining it or not.
The two systems diverge where America separates criminal forfeiture as punitive and civil as reparative. Under the PoCA, according to paragraphs 4.11 and 5.13 of the PIU Report ‘Recovering the Proceeds of Crime’, neither criminal confiscation nor civil recovery are intended to be punitive. Both then are merely intconcerned with removing from individuals what was never legally theirs.
Due to differences in the two systems, many of F.E.A.R.’s criticisms of America’s civil forfeiture regime will be inapplicable to recovery in the UK. However, some points of criticism will remain valid. To determine which are applicable to the UK each of F.E.A.R.’s points previously highlighted shall be considered in turn.
Regarding the balance of enforcement powers and civil rights:
Regarding the assertion that recovery is punitive:
On other criticised matters:
Thus F.E.A.R.’s criticisms of American forfeiture can be reduced to four criticisms applicable to the UK’s system of recovery:
The fourth problem, acknowledged in one form by the PIU Report (see paragraph 5.26), may only become evident in the UK system in time. This may at some time be subject of judicial review. The third problem, if recovery is indeed punitive, is clear in its nature. However, the first problems go to the heart of civil recovery, and must be given further consideration.
In addition to those criticisms highlighted by F.E.A.R., there is also capacity for the PoCA to act retrospectively. Present in criminal confiscation[28] and civil recovery under Part 5 Chapter 2[29], this is another valid ground for criticism. It also has implications for the PoCA’s compatibility with the European Convention on Human Rights and the Human Rights Act 1998.
The PoCA uses the civil standard of proof in Parts 2 to 4, determining whether the defendant has a criminal lifestyle. S.6 provides for this in England and Wales.[30]
Where property is confiscated under the assumptions of a criminal lifestyle, this appears to be confiscation on the grounds that property was obtained through the crimes making up the criminal lifestyle, where this unlawful conduct is established to the civil standard of proof. This is essentially analogous to civil recovery under Part 5, subjecting confiscation on the criminal lifestyle to the same criticisms as Part 5’s civil recovery.
Regarding the balance of enforcement powers and protection of civil rights, all authorities in favour of civil recovery highlight that it offers a means to tackle criminals assets where the individual may be out of reach of criminal law, and that it is effective in tackling the profit-incentive in crime. On the side of civil rights it must be stated that with the civil standard of proof is an increased risk of wrongful recovery. The standard is, of course, legitimately present in other civil proceedings. However, typical civil proceedings may be distinguished as they concern two parties each of whom would suffer loss in event of a wrongful decision. Thus a standard of proof ‘on the balance of probabilities’ protects each party’s interests equally. In recovery proceedings it is the state, not a rightful property owner, who would benefit from recovery, so that only the owner of property subjected to the order would suffer loss in a wrongful decision. It may thus be argued that the civil standard is too low in protecting property owners.
How any one individual weighs the two factors to decide whether they consider an adequate balance to have been struck will of course be a subjective matter. However, this seems to give sufficient grounds for legitimate criticism to be raised by those who consider the balance unacceptable.
On the distinction between reparative and punitive measures, a reparative measure redresses some wrong, while a punitive measure may incorporate reparative elements but must also impose detriment on an individual for purposes of deterrence and/or retribution. Factors which point to whether civil recovery is punitive may include the degree of detriment incurred and whether the charge is aimed at property or at an individual (hence why it is significant that recovery is argued to concern only property’s criminality).
Indicating that recovery is reparative is the fact that it only concerns property’s origins, not owner’s involvement in any crime. In this sense recovery only targets property that was never legally owned, so removing it is not a form of punishment. Following this point, it would be argued that the degree of detriment incurred is thus irrelevant.
Since recovered property is held by the state (though rightful owners may subsequently claim it) it may be argued that recovery fails to redress the loss to legitimate property owners, so cannot be reparative. Further, recovery of property intended for use in unlawful conduct cannot redress a wrong, so cannot be considered reparative. The legitimacy of labelling a measure preventative may be questioned, so that the measure could only be described as punitive.
‘Recoverable property’ includes all property obtained through unlawful conduct, rather than merely actual enrichment. Since this imposes detriment beyond that necessary in recovering benefit of crime, this too can be argued to be punitive.
Regarding the assertion that recovery concerns property’s origins, instead of owner’s guilt, S.305(2) provides that where an individual disposes of property and obtains other property in its place, that other property will represent the original property, and thus become recoverable. This permits recovery of benefit of crime, rather than specific property that is derived from crime, and seems to focus on levelling the recovery order at individuals involved in a crime, instead of following the specific property (as would seem the purpose of separating recoverability from owner’s guilt).
The Act seems to further this approach by protecting innocent owners of property. S.308(1) prevents following of property to a person obtaining property in ‘good faith, for value and without notice that it was recoverable property’. Although this only reflects a normal limit on tracing in equity to protect innocent parties, it nevertheless protects these innocent owners from recovery. This implies a requirement of guilt for other owners, and connects recoverability to guilt in a manner consistent with punitive measures.
While those supporting recovery would argue detriment incurred by a property owner in recovery is irrelevant, critics would suggest otherwise, that where sufficient detriment is imposed by an order, this effect cannot be dismissed and a charge must be considered punitive. The PoCA also suggests some alignment with this argument. Where S.266 prevents recoverability under conditions of subsection (4) or (5) where it would not be just or reasonable, subsection (6) requires the court have regard to the degree of detriment the (‘innocent’) owner would suffer from recovery.
Since the imposition of a sufficiently detrimental remedy on those deemed innocent is prevented, where it would be permitted on those not protected as ‘innocent’, it can be argued this is punitive in purpose.
Thus on whether recovery is punitive, criticisms seem more compelling than on the point of whether recovery balances enforcement powers and civil rights adequately. It seems there is again scope for argument for either side, although the argument asserting that recovery is punitive is perhaps the more persuasive of the two.
Thus it appears there is strong evidence to support the claim, as made by F.E.A.R., that civil recovery in many of the forms it takes in the PoCA is punitive in effect, and that thus any claim that it is remedial, or that it attaches to property’s recoverability rather than owner’s criminality is flawed.
Consequently it may be argued that as a punitive measure, civil recovery, derived from criminal offences as under the PoCA, is a form of criminal punishment and should be administered only when the property owner has been proven guilty of the crime in question. This argument may relate both to all civil forfeiture under Part 5 and to confiscation of benefit of general criminal conduct under Parts 2 to 4.
Although there are strong justifications for civil recovery, which largely reflect those applied to American civil forfeiture, there are also strong grounds for criticism of the UK’s system. Significant are the issues of the conflict of interests for police, amount recoverable in summary proceedings, the potential retrospective application of the Act and the nature of the balance of enforcement powers and civil rights. However probably most important, and most compelling, is the assertion that recovery is punitive. If accepted, it follows that recovery is punishment for the unlawful conduct concerned and should be subject to criminal proceedings.
The Human Rights Act 1998 (HRA) and European Convention on Human Rights (ECHR) offer rights protection relevant to criticisms levelled at civil forfeiture. While criticisms are valid in their own right, legal enforcement may be sought from the HRA or ECHR, which offer the closest measures to entrenched constitutional law available to the UK, giving them potential to operate ‘above’ standards Acts of Parliament such as the Proceeds of Crime Act.
While S.226(3)(b) PoCA prevents the court making a recovery order under Chapter 2 of Part 5 where it would be incompatible with the HRA, general protection provided is more limited. Under S.4 HRA where a statute is not compatible with any provision of the HRA the Judiciary may only make a statement of incompatibility, and cannot overrule the offending statute. A judgement of the European Court of Human Rights finding a state to have violated a convention right will impose an obligation on the state to amend its domestic law to bring it within the Convention (following Art. 46(1) of the Convention). It seems unlikely this could be forced upon a state that sought to preserve the incompatible laws. However, while neither system may be capable of forcing change in domestic law, both hold a great amount of political weight which would all but inevitably bring change, and so can be regarded as practically sufficient to override the PoCA.
The relevant rights under the two instruments are as follows (Article and Protocol numbers are applicable to both the ECHR and HRA (where Article numbers alone refer to Articles of Schedule 1)):
The right to a fair trial – Article 6
The right not to be held guilty of a crime retrospectively or to receive greater penalty than was applicable when the offence was committed – Article 7
The right to peaceful enjoyment of property – Article 1 of Protocol No.1
The Right to a Fair Trial
To find incompatibility for civil recovery (Part 5 PoCA) and confiscation of benefit of general criminal conduct (Parts 2 to 4 PoCA) with protection the right to a fair trial, it can be argued that recovery is punitive (in respect of criminal conduct concerned), that guilt is a pre-requisite to punishment and that as part of a fair trial guilt should be determined on the criminal standard of proof. For confiscation of benefit of general criminal conduct it is also necessary to show recovery is punishment for the crimes constituting the general criminal conduct. If all these elements are in place, the relevant provisions of the PoCA will be incompatible with the right to a fair trial.
Thus there are four key elements to be established:
Recovery is
punitive:
The European Court of Human Rights have
ruled on this matter in the case of Welch v UK[31],
in relation to provisions existing before the PoCA which operated largely to
the same effect as the PoCA regarding confiscation of benefit of general
criminal conduct, finding confiscation to be punitive. The Court described the
concept of a penalty as an ‘autonomous Convention concept’[32],
i.e., it’s definition is independent of those used in national law of any
contracting state (a tool used to insure uniformity of the convention’s
application across contracting states). It continued “…the Court must remain free to go behind appearances and assess
for itself whether a particular measure amounts in substance to a “penalty”
within the meaning of this provision…”
Paragraph 28 summarises the means of determining whether a measure is punitive. The factors are as follows:
On the first factor, confiscation proceedings under Parts 2 to 4 will satisfy this. Civil recovery under Part 5 will not.
On the second factor, the nature and purpose of the measure, the Court states “…the aims of prevention and reparation are consistent with a punitive purpose and may be seen as constituent elements of the very purpose of punishment.”[33] This indicates that any reparative nature of recovery will not diminish its potential punitive nature.
Regarding the procedures involved in making and implementing the order, a number of factors highlighted by the Court to indicate punitive character are applicable to the PoCA.
Under confiscation proceedings where a criminal lifestyle has been found is the assumption that all property transferred to the defendant in the six years before the ‘relevant day’ is recoverable unless shown otherwise. This could now be supported by the assumption that all property held by the defendant after conviction is also recoverable. (Both provided for by S.10 PoCA for England and Wales.)[34]
Under civil proceedings is the factor that a recovery order will be directed at proceeds of unlawful activity, rather than actual enrichment or profit. Where the Court mention the capacity to take into account culpability of the defendant in fixing the amount of the order, this seems somewhat analogous to the protection of some owners from recovery under S.308(1) and S.266.
There are also other non-applicable arguments used in the evaluation of a charge as punitive in the case before the Court, see paragraph 33 of the judgement.
Paragraph 32 expresses that the severity of any order for recovery or confiscation is not in itself decisive in determining punitive effect, acknowledging that non-punitive measures may too have a substantial impact on the owner. This seems particularly important, since the potential degree of detriment incurred in recovery seems to be at the heart of the moral objection of the argument against civil recovery, particularly so in asserting the balance of enforcement powers and civil rights to be unacceptable.
Since UK law has changed significantly since the case, and since the case concerned only the punitive nature of confiscation after conviction, it seems uncertain whether the court would now consider recovery or confiscation punitive. This uncertainty is not aided by Court’s absence of a solid system of case precedent. However, on balance of the evidence above, it seems reasonable to predict criminal confiscation would be considered punitive. Regarding civil recovery, this seems less clear, with significant evidence both supporting and rejecting punitive character, and it seems impossible to confidently predict how the Court may decide such a matter.
Guilt is a pre-requisite to punishment:
All recovery proceedings under the PoCA are based on property’s involvement in crime. If recovery is a form of punishment it is punishment for a criminal offence.
Art 6(2) of the ECHR and of Schedule 1 to the HRA provide that any individual charged with a criminal offence is to be presumed innocent until proved guilty[35]. Here the law seems particularly straightforward, perhaps as one would expect. Guilt is indeed a pre-requisite to punishment.
Criminal guilt should be determined on the criminal standard of proof:
Although Art 6(2) of the ECHR (or indeed Art 6(2) of Schedule 1 to the HRA), which requires the presumption of innocence in criminal matters, does not provide proof need be beyond a reasonable doubt, the court has held ‘the burden of proof is on the prosecution, and any doubt should benefit the accused’ in the case Barberà, Messegué and Jabardo v Spain[36]. This seems sufficiently close to the requirement of proof beyond a reasonable doubt that it would be unthinkable for the civil standard of proof to be legitimate in a criminal matter.
Recovery of benefit of general criminal conduct may be recovery, and thus punishment, for the crimes constituting the general criminal conduct:
Since general criminal conduct is defined by S.76(2)[37] PoCA as all a defendant’s criminal conduct, and benefit of general criminal conduct is, of course, that benefit derived from such conduct, it would seem logical to consider an order for confiscation of benefit of general criminal conduct to be derived from all a defendant’s crimes.
The European Court of Human Rights approaches this in Phillips v UK[38] (concerning similar provisions to the PoCA’s confiscation of benefit of general criminal conduct) by first acknowledging that Art 6(2), providing for the presumption of innocence regarding criminal offences, doesn’t apply to sentencing after guilt has been proven. However, as is stated in paragraph 35, if the application is deemed to constitute the bringing of a new charge within Art 6(2), the Article’s protection will apply. In paragraph 43 it was concisely concluded that since the defendant did not face conviction for another offence, he could not be considered charged with another offence. Thus recovery of benefit of general criminal conduct is only part of the punishment for the proven particular criminal conduct.
Although surprising, particularly in light of the Court’s approach in Welch v UK, to “…go behind appearances and assess for itself [the nature of a particular measure]”[39], the decision was upheld by a majority of 5 votes to 2, so judges are unlikely to depart from this principle in the foreseeable future, either in the European Court of Human Rights or the United Kingdom’s Courts.
To summarise the conclusions on the four elements for incompatibility:
Thus compatibility for civil recovery under Part 5 will depend on whether such recovery is considered punitive. Confiscation of benefit of general criminal conduct will not be incompatible since it is considered only attributable to the particular crime proven to the criminal standard.
Retrospective criminal penalties:
Art 7 ECHR and Art 7 Schedule 1 HRA prohibit criminal law operating in a retroactive manner. The law here seems clear, Article 7(1) stating that no one shall be held guilty of a criminal offence which did not constitute a criminal offence at the time which it was committed, nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed.
In the case Welch v UK, dealing with provisions of a similar nature to those of confiscation of benefit of general criminal conduct under Parts 2 to 4 PoCA, the retrospective imposition of a confiscation order was accepted by all parties, the case only concerned with whether the order for recovery was punitive, and so constituted a penalty for the purposes of the Convention. However, it was confirmed in paragraph 34 that the property owner concerned was in a position to face far greater detriment from recovery than that to which he was exposed at the time of the commission of the offence. This arose from assumptions akin to those of S.10 PoCA (for England and Wales[40]), whereby between the ‘relevant day’ and commission of the offence (under subsection (2)) and between conviction and the making of an order for recovery (subsection (3)), it is possible for the recoverable amount to increase in value.
Mere recoverability of benefit of general criminal conduct does not contravene Art 7 as it is considered, following Phillips v UK, not to be punishment for any general criminal conduct which may have occurred before the Act, but for the particular criminal conduct for which he has been convicted. The PoCA will thus only act retrospectively where the amount recoverable increases in breach of Art 7.
If civil recovery is deemed to be punitive S.316, stating that property shall be recoverable even if it was acquired before the Act’s commencement, will breach Article 7. There is also capacity for a civil recovery order to subject a property owner to a greater penalty than was applicable at time of commission of the criminal conduct from which recoverability arose: Under S.307 ‘further property’ (e.g., profit) obtained using recoverable property shall be recoverable. Again, if recovery is punitive this provision is incompatible with Article 7.
Finally, it should be noted that in Welch v UK it was stressed
by the Court in paragraph 36 that their conclusions of retrospective effect in
the case (and presumably in any similar future decisions) concern only the
retrospective application of the law, not the legislation as a whole.
Article 1 of Protocol
No. 1 to both the ECHR and HRA protects the individual’s right to peaceful
enjoyment of his possessions, only permitting deprival which would be in line
with conditions of law and would be in the public interest.
Where deprival of
property would be in the form of a penalty, paragraph 2 of Article 1 expressly
permits the state to enforce such laws as deemed necessary against this right.
However, penalty or not, any such measure must be subject to the general right
to property, and must be proportionate to the aim it pursues (see, for example,
Allan Jacobsson v Sweden[41]).
Describing the confiscation order in the judgement in Phillips v UK,
paragraph 53 states “…[the amount of the confiscation order] corresponded to
the amount which the Crown Court Judge found the applicant to have benefited
from drug trafficking over the preceding six years and was a sum which he was
able to realise from the assets in his possession.”
These seem to be the
only considerations required in determining the confiscation procedure to be
fair and reasonable. Since recovery provisions only extend to property shown to
have criminal involvement, provisions under the PoCA should satisfy Art 1 of
Protocol No. 1.
Criminal confiscation proceedings do not breach the right to a fair trial of Art 6 ECHR and Art 6 of Schedule 1 HRA, civil recovery may do, depending on whether it is considered punitive in nature. Criminal confiscation of benefit of general criminal conduct will potentially breach Art 7 and the prohibition on imposing a greater penalty on a defendant than was applicable at the time the offence was committed. If civil recovery is deemed punitive, S.307 and S.316 PoCA may also contravene Art 7. It seems provisions will not breach of Art 1 of Protocol No. 1.
However, while there is potential incompatibility between the PoCA and the ECHR and HRA, should a case go before the European Court of Justice it will take several years to be heard due to the Court’s large backlog of cases, and this delay shall be on top of the requirement for the case to exhaust all appeals permitted in domestic courts to qualify for necessary standing. This delay will be further extended pending arising of a suitable complaint. It could be an extremely long time before the European Court of Human Rights could foreseeably pass ruling on the compatibility of the PoCA with the ECHR. This leaves only the domestic courts ruling incompatibility with the HRA as the only available measure against the PoCA for many years.
Civil recovery of proceeds of crime and the use of the criminal lifestyle in criminal confiscation (established on the civil standard of proof) are claimed effective measures which are just in themselves and tackle crime in a way obtaining convictions cannot. However, while this stresses that civil recovery provides effective powers for law enforcement, this must be balanced against the need to safeguard civil rights, and critics of the regime would argue the use of the civil standard goes too far in weakening civil rights.
All forms of recovery are claimed by official sources to be reparative in nature. However, there is a particularly strong case to the contrary, that recovery is punitive. From this point it would follow that recovery should be sought through criminal proceedings and that any summary proceedings before a magistrates’ court (Part 5, Chapter 3 PoCA) should be limited to the maximum £1,000 penalty under the Criminal Justice Act 1991.
In addition to these criticisms is the potential for the Proceeds of Crime Act 2002 to act retrospectively and the conflict of interests created for police by the lure of profit of recovery.
The European Convention on Human Rights (ECHR) and Human Rights Act 1998 (HRA) offer some protection to support certain criticisms. Civil recovery may be incompatible with Article 6, the right to a fair trial. Criminal confiscation of benefit of general criminal conduct is limited in its application by Article 7, preventing the imposition of a greater penalty than applicable at the time of the commission of the offence. Article 7 may also limit use of civil recovery, both in confiscation for crimes committed before the PoCA was brought into force and in preventing imposition of a greater penalty than applicable at the time of the commission of the offence. This is dependant on such measures being considered to be punitive.
Unfortunately, even where incompatibility would be found, it may take many years for such a ruling to emerge due to procedural delays in the work of domestic courts, and particularly the European Court of Human Rights. Compatible or not, provisions of the Proceeds of Crime Act 2002 will remain in force for many years to come.
However, since the ECHR and HRA protect only minimum standards of human rights, there is still very much a place for criticism of civil recovery provisions. Whether one considers them valid or not, given the persuasive arguments of both sides, must be a matter of opinion. Nevertheless, public opinion can bring political change.
[1] As quoted in an article by the Legal Information Institute, available at www.law.cornell.edu/background/forfeiture (accessed 1 May ’03)
[2] Which can be accessed from www.firstgov.gov/Agencies/State_and_Tribal.shtml (accessed 15 April ’03)
[4] Taken from www.eoaf.treas.gov/about_mission.asp (from the EOAF home page: ‘About TFF’ > ‘TFF Mission and Goal’, accessed 15 April ’03)
[5] From www.eoaf.treas.gov/about_TFFForfeiture.asp (from the EOAF home page: ‘About TFF’ > ‘The Treasury Forfeiture Fund (TFF)’, accessed 15 April ’03)
[6] www.eoaf.treas.gov/forfeiture.asp (from the EOAF home page: ‘About Forfeiture’ > ‘Forfeiture’, accessed 15 April ’03)
[7] See Appendix Item 1
[8] In U.S. v. Ursery, 518 U.S. 267 (1996)
[9] www.usdoj.gov/jmd/afp/index.html
[10] www.fear.org
[11] www.fear.org/whyfear.html (from the F.E.A.R. home page: ‘Enter Site’ > ‘What is FEAR?’ > ‘Why FEAR exists’, accessed 17 April ’03)
[12] www.fear.org/fposit.html (from the F.E.A.R. home page: ‘Enter Site’ > ‘What is FEAR?’ > ‘Official Position on Forfeiture’, accessed 17 April ’03)
[13] www.fear.org/fposit.html#I
[14] www.fear.org/fposit.html#II
[15] www.fear.org/fposit.html#III
[16] www.fear.org/fposit.html#IV
[17] www.fear.org/fposit.html#V
[18] www.fear.org/fposit.html#VI
[19] www.fear.org/fposit.html#VII
[20] www.fear.org/fposit.html#VIII
[21] www.fear.org/fposit.html#IX
[22] www.fear.org/fposit.html#X
[23] www.fear.org/fposit.html#XI
[24] Available at www.cabinet-office.gov.uk/innovation/2000/crime/recovering/default.htm (accessed 19 April ’03)
[25] Home Office Working Group on Confiscation Third Report: Criminal Assets, November 1998
[26] Taken from the Sunday Telegraph, 2 April 2000
[27] www.homeoffice.gov.uk/crimpol/oic/proceeds/asset.html#D.%20To%20use%20the%20proceeds%20recovered%20for%20the%20good%20of%20the%20community (accessed 20 April ’03)
[28] S.76 for England and Wales, see Table 1 for equivalent provisions for Scotland and Northern Ireland
[29] S.316 (3)
[30] See Table 1 for Scotland and Northern Ireland
[31] Welch v UK 17440/90
[32] Paragraph 27 of the judgement
[33] Paragraph 30
[34] See Table 1 for equivalent sections for Scotland and Northern Ireland
[35] Although in some circumstances the burden of proof may be placed on the defendant. However, this does not affect the fact that guilt must be found.
[36] Barberà, Messegué and Jabardo v Spain 10590/83
[37] For England and Wales. See Table 1 for equivalent sections for Scotland and Northern Ireland
[38] Phillips v UK 41087/98
[39] Regarding determining whether a charge was punitive.
[40] See Table 1 for equivalent sections for Scotland and Northern Ireland
[41] Allan Jacobsson v Sweden 10842/84