Cash Forfeiture - A Practical Overview
CASH FORFEITURE: A PRACTICAL OVERVIEW
Written August 2015 by:
Emma Shafton - Furnival Chambers - Called 2011
Emma has particular experience and expertise in Financial Crime and the Proceeds of Crime. As a led junior Emma appeared for the defence at the Isleworth Crown Court in Confiscation Proceedings arising from £42 million Money Laundering convictions and at the Blackfriars Crown Court in a multi-handed Money Laundering trial lasting 9 weeks. In the Magistrates’ Court, Emma defends in enforcement and cash forfeiture proceedings. __________________________________________________________________________________________
- Chapter 3 of Part 5 of the Proceeds of Crime Act 2002 contains provisions that enable the search, detention and forfeiture of cash believed to have been obtained through unlawful conduct or intended for unlawful use, in the absence of any criminal conviction. Cash can be seized with only reasonable grounds for suspicion of the above. Once detained, the onus is on the party from whom the cash is seized to establish why it should no longer be held. To forfeit cash, the applicant prosecutor need only persuade the court of its unlawful origin or intended purpose on the balance of probabilities. It follows therefore, that a respondent is required to provide cogent evidence to the Court as to the legitimacy of the cash in order to secure its release. There is no legal aid available and there exists a presumption against recovery of costs even if the cash is released. As such, this is an area of law that is often difficult for a respondent to tackle alone. This article provides a practical overview to cash detention and forfeiture proceedings for both practitioners and lay clients.
- A customs officer, constable or UKBA officer may seize any cash (or part of it) over £1,000 if he or she has reasonable grounds for suspecting that it is either recoverable property (obtained through unlawful conduct) or intended by any person for use in unlawful conduct. Cash has a wide meaning and includes notes and coins in any currency, postal orders, cheques of any kind (including travellers’ cheques), bankers’ drafts, bearer bonds and bearer shares found at any place in the United Kingdom (interestingly as conceded at first instance in one case, not Premium Bonds). Unlawful conduct is not defined in the Act but certainly covers all criminal conduct. Section 308 of the Act sets out specific exceptions to what constitutes recoverable property. These include cash obtained in good faith, for value and without notice, cash received in satisfaction of a county court judgment and cash received in satisfaction of a compensation order.
- An application for detention must be made to the Magistrates’ Court within 48 hours of seizure. In addition to having reasonable grounds for suspecting that the cash is recoverable property or intended to be used in unlawful conduct, the following conditions for detention must be established: (i) the continued detention of the cash is justified while its derivation or intended use is further investigated, or consideration is given to bringing proceedings against any person for an offence in connection with the cash; or (ii) proceedings against any person for an offence in connection with the cash have been started and have not been concluded.
- An order for detention by the Magistrates’ Court of up to 6 months at a time is permissible with the maximum period for detention being two years from the date of the first order. The individual from whom the cash was seized or an interested party is able to apply to the Magistrates’ Court for its release back to them. In doing so, they must satisfy the Court that the conditions for detention are no longer met. If they succeed the proceedings come to an end.
- Detention is only a temporary measure. The prosecutor will next apply for forfeiture of the detained cash. At the final hearing the prosecutor must satisfy the court on the balance of probabilities that the cash is recoverable or intended for unlawful conduct. In Angus v UKBA  EWHC 461 (Admin) the Divisional Court held that a customs officer (etc.) has to show that the property seized was obtained ‘through conduct of one of a number of kinds each of which would have been unlawful conduct’ i.e. point to a particular type or types of unlawful conduct i.e. drug trafficking, tax evasion, illegal workers, money laundering etc. Proving general criminal conduct therefore is no longer sufficient. It is important to note that there is no requirement to point to a specific criminal offence however. Angus clarified the meaning of section 242(2) (b) of the Act. No type or types of unlawful conduct have to be identified within the UK for the ‘intended use’ limb because 242(2) (b) defines recoverable property only. At the final hearing, proof may be by inference from all of the circumstances including lies told by the defendant.
- Below is a summary of the key stages in detention and forfeiture proceedings:
- 1) Search for cash by constable, customs or UKBA officer;
- 2) Seizure of cash above £1,000 minimum, detention and interview;
- 3) First order for detention made at the Magistrates’ Court within 48 hours (Form A served on suspect and any person affected);
- 4) Detention for a period up to 6 months if conditions are met;
- 5) Further applications and orders for detention permitted (up to 6 months) for a period not exceeding two years from the date of the first order (hearing must be on 7 days’ notice);
- 6) Application for release by affected person/s (released if conditions no longer met or it appears the cash belongs to a victim of crime);
- 7) Application for forfeiture by prosecutor. Cash remains detained until final hearing (Form G);
- 8) Pre-trial review if forfeiture contested (directions for exchange of evidence and final hearing date set);
- 9) Forfeiture Hearing;
- 10) Return or forfeiture of the cash;
- 11) Appeal by either side to the Crown Court (within 30 days).
- Cash forfeiture proceedings are civil in nature. Applications are conducted as ‘complaints’ under sections 51 - 58 and 64 of the Magistrates’ Court Act 1980. The rules of evidence are relaxed to fall in line with those used in the civil courts. Previous convictions of the individual are admissible as is hearsay evidence subject to notice being given under the Magistrates Court (Hearsay) Rules 1999. The Magistrates’ Court Rules 1981 (rules 13 – 16) and The Magistrates’ Courts (Detention and Forfeiture of Cash) Rules 2002 apply in place of the criminal or civil procedure rules .The Crown Prosecution Service has powers to appear on behalf of HMRC or the police in proceedings. The seizing officer, or officer in charge of the case will often be the only witness to give evidence for the applicant.
- If cash is detained under section 295 for more than 48 hours it must at the first opportunity be paid into an interest-bearing account and held there. The interest accruing on it is to be added to it on its forfeiture or release. Section 302 of the Act provides for compensation if the cash has not been held in an interest-bearing account.
- Whilst costs normally follow the event in civil proceedings, the case of R (on the application of Perinpanathan) v City of Westminster Magistrates’ Court  EWCA Civ 40 held that a public authority carrying out a public duty and acting reasonably was not required to pay the costs of its successful opponent in litigation. The financial prejudice necessarily involved in litigation would not normally justify an order for costs in the private party’s favour. See also R v (on the application of Doherty) v Westminster Magistrates' Court  EWHC 2990 (Admin) where the Court upheld District Judge Snow’s costs order granted in respect of an interested party (where cash had been forfeited).
- In the event that the Magistrates find that the detained cash is recoverable property and make a forfeiture order, the Act allows for an appeal to the Crown Court. The Appeal must be made within 30 days of the forfeiture hearing having taken place in the Magistrates’ Court. The prosecutor can also apply if the cash is released.
- These powers are used extensively by HMRC, police forces and the UKBA. The majority of cases I have dealt with concern those attempting to carry cash between the UK and non EU countries. Any sum above 10,000 euros (or equivalent) must be declared. Failure to do so leads to suspicion and ultimately seizure and detention of the cash. Many of my clients do not speak English as a first language, were carrying cash at the request of friends/relatives and had little knowledge of the law in this area or the declarable sums.
- I recently represented a 20-year-old Iranian university student studying in the UK who had been asked to carry £10,000 with him on a trip home to Tehran. His Uncle had been loaned the money by a friend some years ago who had subsequently moved home. My client had been asked to deliver the repayment monies back to the friend because of the difficulties in transferring funds between the UK and Iran at the time and the untrustworthy reputation of money transfer businesses. He placed the money in a cereal box to deter thieves. There was nothing unlawful about the request from his Uncle or the cash. All parties were of exemplary character. Notwithstanding the above, due to my client’s nationality, the suspicion that goes hand in hand with the carrying of large quantities of cash and the packaging, the police contended the money was recoverable or intended for use in unlawful conduct (money laundering and/or terrorism), Ultimately, the cash was released after a contested hearing calling no less than 5 witnesses and presenting a bundle containing the original loan agreement, witness statements from those in Tehran, bank accounts and withdrawal slips etc.
Challenging a Forfeiture Application
- As demonstrated above, a properly evidenced audit trial showing where the cash is from is essential. Signed witness statements must be served in good time in compliance with directions set by the court. If the prosecutor does not agree the statements, the witness must be available to attend to give evidence. I always advise my instructing solicitors to prepare a respondents’ bundle containing all witness statements and supporting documents and serve it well in advance of the hearing. Instructing legal representation at an early stage in proceedings is therefore wise and can avoid costs sanctions for late service or refused adjournment applications in the event of non-service.
Relationship with Confiscation Proceedings
- Cash proceedings should await the outcome of criminal proceedings (R v Barrington Payton  EWCA Civ 1226). A Crown Court, when determining the ‘available amount’ as part of confiscation proceedings will not simply disregard cash subject of civil forfeiture proceedings. It remains ‘available’. To avoid the risk of double recovery, civil proceedings must always be adjourned until the conclusion of all Crown Court matters.
- The case of Gale v SOCA  UKSC 49 was significant in so far as the relationship between confiscation and forfeiture proceedings is concerned. It held that whilst unattractive, civil recovery proceedings can be brought in the face of an acquittal for an offence based upon the same conduct and the same evidence relied upon in those proceedings. The appellants had argued that the civil proceedings triggered article 6(2) and therefore the criminal standard of proof. The court rejected this, however Prosecutors must be careful; any suggestion in an application that there has been a wrongful acquittal may lead to an application for damages.
Expert Cash Seizure Solicitor:
Majad J Habib: Director - Stuart Miller Solicitors
The expert Fraud Solicitors at Stuart Miller Solicitors are proficient with the Proceeds of Crime Act 2002 and Cash Detention & Forfeiture proceedings. Our Lawyers are skilful in creating the best strategy & able to analyse huge volumes of evidence to find the grain of detail required to achieve success for you. Having Specialist Cash Detention Lawyers on your side is vital to achieve the best result and ensure fairness in the proceedings. Your objective is to have your funds returned and our Cash Forfeiture Lawyers will collate all the necessary evidence to help you succeed with the application.
This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of its content.