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5SAH Business Crime & POCA - May 2021 Update

Welcome to our 5SAH Business Crime & Proceeds of Crime Update. 


Featuring the following articles from our barristers who are experts in the field of Business Crime and Proceeds of Crime work:


  • Freezing and confiscation under the EU–UK Trade and Cooperation Agreement:  Gary Pons barrister at 5SAH, London, UK & Vania C. Ramos, Carlos Pinto de Abreu e Associados, Lisbon, Portugal.
  • Watch Uncovering and Mitigating Complex Financial Schemes Post CumEx Webinar, which took place on 29 April 2021: David Stern & StoneTurn experts.
  • International and Sensitive Evidence in Account Freezing and Forfeiture Orders (AFFO’s): Barnaby Hone.
  • Confiscation & honouring the unchallenged basis of plea in R v Mohammed Zia Munir: Francesca Levett examines for Lexis Nexis.
  • Asset Seizures: An overview of the new POCA powers brought in under Criminal Finance Act 2017: Barnaby Hone & John McNamara.

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  Freezing and confiscation under the EU–UK Trade and Cooperation Agreement
    View Gary Pons' profile page >>

This contribution presents a critical and practical analysis of the changes the EU–UK Trade and Cooperation Agreement brings to the recognition and enforcement of freezing and confiscation orders. It provides an overview of how this area of law may develop in the future post-Brexit.


Written for New Journal of European Criminal Law (NJECL) By Gary Pons, barrister at 5SAH, London, UK and Vania C. Ramos, Carlos Pinto de Abreu e Associados, Lisbon, Portugal.


Regulation (EU) 2018/1805 of the European Parliament and of the Council of 14 November 2018 on the mutual recognition of freezing orders and confiscation orders (2018 Regulation) replaced the provisions of Framework Decision 2003/577/JHA as regards the freezing of property for confiscation purposes (FD 2003) and Framework Decision 2006/783/JHA (FD 2006) from 19 December 2020. It is self-evident that this will have little practical effect given that the Trade and Cooperation Agreement (TCA) will take effect from 1 January 2021.


Title XI of Part 3 of the TCA bears the description ‘Freezing and Confiscation’, but it also includes provisions on mutual legal assistance (MLA) in relation to asset tracing, which substitute the ‘international cooperation’ chapters of the relevant Council of Europe (CoE) Conventions.

As outlined in the text, these CoE Conventions and their explanatory reports are relevant interpretive tools, since many of the TCA’s provisions resemble the provisions in the Conventions. The CoE Treaty Office provides an update of the entire CoE-status.


It is useful in practical terms to compare the TCA with FD 2006 in respect of confiscation orders and FD 2003 as regards the freezing of property. Furthermore, FD 2003 and FD 2006 will be applicable to freezing orders and confiscation orders received before the end of the transition period. Directive 2014/41/EU (EIO Directive) will apply to European Investigation Orders (EIO) for investigative assistance received before that date.

Read the article in full on our website > >
  Watch Uncovering and Mitigating Complex Financial Schemes Post CumEx Webinar: 5SAH & StoneTurn
    View David STern's profile page >>

Watch Uncovering and Mitigating Complex Financial Schemes Post CumEx Webinar, which took place on 29 April 2021.


Repercussions from CumEx trading. Expanding “failure to prevent” legislation. Regulators increasingly using data analytics in industrywide sweeps to uncover misconduct: What are the implications for financial institutions and their lawyers?


As financial schemes continuously innovate to reap maximum rewards, David Stern, specialist white-collar barrister at 5SAH Chambers along with compliance, internal investigations and data analytics experts, Julia Arbery, Annabel Kerley and Joshua Dennis, from global advisory firm StoneTurn explain how to stay one step ahead and successfully deter misconduct and mitigate regulatory compliance risk.


This joint webinar focused on the history of CumEx trading, as well as the latest rapidly evolving financial schemes and “failure to prevent” tax evasion requirements. The panelists will unravel complex frauds and explain proven measures to limit the practice, including data analytics, strong internal controls, and compliance program enhancement.

Watch the webinar recording here >
  International and Sensitive Evidence in Account Freezing and Forfeiture Orders (AFFO’s)
    View Barnaby Hone's profile page >>

A regular factor in Account Freezing and Forfeiture Orders (AFFO's) is international or sensitive evidence. Barnaby Hone examines how this evidence raises a number of issues of admissibility and fairness. AFFO’s, like Cash Seizures, operate outside set procedure rules but follow general civil procedure. Which rules and laws apply is a particular web which can be discussed in another article in itself.


International Evidence
As has been seen in some of the most high profile AFFO’s, such as the NCA’s co-ordinated move on multiple Chinese bank accounts, a large amount of the evidence relied upon will concern foreign jurisdictions or be gained from different jurisdictions. This raises two key questions:


First, if evidence is gathered from another jurisdiction is it admissible? The broad answer is yes, as long as it complies with the relevant Hearsay rules, if they apply. In practice, this will mean that the weight the court can put on the evidence will depend on the context that it was gathered in, and how relevant it is to the issue in dispute.


Second, will be the Applicant relying upon foreign laws. This will usually be in the context to prove that criminality took place. If they are presented by an expert in that legal area, then they should be admissible. But if the evidence is presented by a non-expert witness then it will be more difficult to deal with. Indeed, this might be a key ground on which an application can be 'defended' upon.


Sensitive Evidence
Public Interest Immunity applications do not apply in these cases as they would apply in criminal applications, but there is still the privilege to withhold grounds on public interest grounds. The document would need to be withheld on the grounds that it would be ‘injurious to the public interest’. But this is a very high test, as the Respondent has a right to a fair trial, in accordance with Article 6. The Applicant also has a duty of full and frank disclosure.


This means that the Applicant will need to draw a very fine line in what evidence they disclose and rely upon. They cannot, for example, rely upon a bland assertion without explaining it, and need to full disclose any evidence which might undermine the application.


The focus needs to be on what is relevant. It should be remembered that the aim of the application is to find out if the money is recoverable or to be used in unlawful conduct. Therefore some evidence might not be relevant, such as why it was initially seized, and on what basis. This was discussed in Hoverspeed v Customs and Excise Commissioners [2002] EWCA Civ 1804, in a similar context.  But this does not mean that the reasons will not be relevant. In cases where AFFO’s originated from a SAR, it might be relevant what the reasons were for originally seizing the money, and if it was the same in the final case for the Forfeiture.


Each case will of course rely on its own facts. It will be important that the key principles of a right to a fair trial and full and frank disclosure are upheld. On the other hand, it is important to bear in mind what is relevant to the forfeiture test. Although the burden of proof might be lower, those principles will remain paramount.

View our POCA Team pages here >>
  Confiscation & honouring the unchallenged basis of plea in R v Mohammed Zia Munir
    Francesca Levett for Lexis Nexis

Francesca Levett provides Corporate Crime analysis for Lexis Nexis PSL: R v Mohammed Zia Munir [2020] EWCA Crim 1549.


The appellant was sentenced on an unchallenged, written basis of plea to the effect that he was a mere custodian of drugs on behalf of another. In these circumstances the court was bound to apply the provisions of the Proceeds of Crime Act 2002 (POCA 2002) consistently with the facts of the basis of plea. On his basis, the appellant could not be said to have received the drugs for his own benefit and therefore he did not obtain property within the meaning of POCA 2002, s 76(4).


The judge fell into error by focusing on the concept of control. The fact that the appellant received possession, and therefore physical control of the drugs, is insufficient to amount to the obtaining of property as a benefit to him personally. A mere custodian or courier would not ordinarily be treated as obtaining property. The street value of the drugs was removed from the calculation of the appellant’s benefit figure. Written by Francesca Levett, barrister, at 5 St Andrews Hill.


This analysis was first published on Lexis PSL on 11/01/2021.

Read the article in full on our website here >
  Asset Seizures: An overview of the new POCA powers brought in under Criminal Finance Act 2017
    View John McNamara's profile page >>


As the nation emerges from lockdown, we have all had time to consider the trends which law enforcement have been deploying to disrupt the flow of suspected criminal funds. One trend that has been noted at 5SAH is the modest but steady increase of the use of the POCA listed assets regime to seize, detain and ultimately forfeit assets such as gold, jewellery, watches and art.


While the powers are not new, having been enacted on 17 April 2018, as we approach the three-year anniversary of enactment it seems law enforcement are more comfortable in using them, and as the investigatory period is limited to two years, applications for forfeiture of the items will increase. Article by Barnaby Hone and John McNamara.


The Provisions

Listed assets
Under s.303B of POCA 2002 the following items can be seized:

  • Precious metals (gold, silver or platinum whether manufactured or not);
  • Precious stones;
  • Watches;
  • Artistic works (defined by section 4(1)(a) of the Copyright, Designs and Patents Act 1988);
  • Face-value vouchers;
  • Postage stamps.

The value of the item has to be over the statutory minimum of £1,000. If more than one item is seized, it is the aggregate value of all items seized that is relevant. That is particularly relevant to collections of watches where the value of individual items can vary significantly depending on condition and the presence of original boxing and paperwork.


Seizure and detention
For a relevant officer to seize an item they must believe the following three circumstances our met. First, it is a listed item. Second it is recoverable property. Third, the value of it is not less than the minimum. The officer can also seize property which contains part recoverable property, if it is impractical not to only seize part.


Importantly for those with experience of cash and account forfeiture orders, the time limits for initial detention in listed assets cases are different. The property can be initially seized for up to 6 hours, and a senior officer must then authorize a longer detention. This longer detention is for a period of 42 hours. After that time the seizure must be authorized by the Magistrates Court. The conditions for seizure in front of the Magistrates Court remain substantially the same.  Making sure that these time frames are complied with will be an important area of challenge and one that members of 5SAH have enjoyed success in recently.


At the first hearing the Magistrates Court can seize the assets for up to six months. This can then be extended by six months tranches to up to 2 years in total under section 303L of POCA 2002. In these extensions hearing it is important to make sure that the correct service has taken place. Incorrect service has also been the source of a successful challenge by one member of 5SAH.


Forfeiture and realization
The test for forfeiting the property is the same as with cash and account forfeiture orders. There are however specific provisions on how associated and joint property should be dealt with.  S.303Q provides provision for allowing third parties to agree to pay for an item or be reimbursed. So, if there is a property, such as a work of art, which has been part paid for by recoverable funds and part from legitimate funds, it can be either bought by the person with the legitimate half, or if it is realized a fair proportion will be provided to the legitimate owner.  The parties will have to agree on what proportions of the proceeds should be received by each party.


Under s.303R, if there is no agreement as to how the item should be shared, the matter can be either decided on by the High Court, in cases where the property is worth under £10,000. If it is over this value, the decision has to be transferred to the High Court for judgment.


S.303R (11) also provides for the relevant court to make an order for compensation where there has been a loss suffered by the third party or there are exceptional circumstances. Under s.303W compensation can be claimed by the owner of the property if no order for forfeited is made.


Issues and Trends
The use of these provisions will steadily increase. The ability of budget-strapped law enforcement agencies to disrupt and strip assets from individuals suspected of being involved or benefiting from criminality without having to secure a criminal conviction is attractive. The proceedings are quicker than a criminal trial, require less resourcing from a law enforcement perspective and ultimately are easier to prove on the civil standard of proof. This follows the trend we have seen in the increasing use of Account Freezing and Forfeiture Orders.


The impacts of Brexit are being felt by all investigators in cases where there is an international dimension. In relation to luxury watches, many of the big Swiss Watch Houses keep internal databases of reported stolen watches by serial number. In some cases, this may be a reasonable line of inquiry which a Respondent would expect a law enforcement agency to undertake. The impact of Brexit on mutual legal assistance (MLA) will make this a difficult task for investigators to undertaken expeditiously.


Counsel with experience of these cases can be a valuable asset in assisting with tactical considerations of how to use the procedural rules effectively, can advise on how to use discharge applications to put pressure on the Applicant, know where to press for disclosure, and how to prepare a clear and persuasive case to resist an application for forfeiture.

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Dave Scothern  
Chambers Director. To speak to Dave about a new enquiry he can be contacted on his direct dial: 02073325401 and mobile: 07931776630  
Gary Pons  
Gary is a specialist barrister in the field of business and financial crime. He is one of the leading experts on the enforcement of confiscation orders. He is ranked in the Legal 500 and Chambers & Partners for his work in POCA and asset recovery and forfeiture.  
David Stern  
David has a wealth of experience in business crime, commercial insurance and financial regulation. He is ranked in Chambers & Partners as a leader in the field of Financial Crime (London) as well as the Legal 500 for Business and Regulatory Crime (including Global investigations) (London).  
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Barnaby Hone  
Barnaby is a barrister with specialist expertise in all types of asset recovery and financial crime. He is ranked in Chambers and Partners and the Legal 500 for his knowledge within POCA, asset recovery, and forfeiture.  
Francesca Levett  
Francesca is a criminal practitioner who has developed a significant practice in complex fraud, conspiracy, confiscation and regulatory work over the last twenty-two years.  
John McNamara  
John is experienced in defending and prosecuting a range of proceedings arising from the Proceeds of Crime Act 2002 including restraint and confiscation, cash forfeiture, and account freezing and forfeiture hearings.  
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This update is published for general guidance only and is not to be substituted for legal advice, which should be sought before taking any steps in relation to information that may be included in this notification. If you have any queries arising out of the issues raised, contact a member of our team on +44 (0) 207 332 5400. To opt-out from future communications please click here.

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