In the UK, the interpretation of the Proceeds of Crime Act 2002 when using asset confiscation as a weapon in the criminal regulators’ arsenal of sanctions will continue to develop and solidify over time. However, in recent years it seems that the courts, lawyers and regulators alike struggle to understand the spirit of the law. On one hand the prosecutors seem to be applying the “lifestyle” assumptions with complete abandon whereas the court, while certainly not ignoring the law, on occasions comes up with common sense judgements when enforcing what many commentators have labelled as “Draconian” legislation.
What is criminal benefit and how much might be realised during confiscation is commonly disputed and was a notable issue in the recent R – v – May appeal during 2008. The judge had originally reduced an individual’s benefit by the amount of monies recovered elsewhere in a fraudulent matter. It was subsequently ruled that he had erred in doing this as he had been confusing realisable assets with benefit.
What is clear after this decision is that the benefit obtained from money laundering for the purpose of the Proceeds of Crime framework is not the profit (or commission earned) of carrying out the crime but the sum of the criminal property dealt with. This means that if you facilitate the laundering of a million pounds for a friend for a £10,000 fee, your benefit will be assessed at the level of one million pounds. Put simply, it is the amount of criminal proceeds flowing through your hands.
The quantum of recovery can therefore be much more than the cash earned by doing the crime! This is the case if a person is deemed to have a criminal lifestyle. Then it is not just the value of the particular criminal conduct that has taken place that becomes the benefit, but the value of all assets owned and monies transacted during the previous six years. So in theory, if you fail to pay a few parking tickets you stand to lose your house, car and life savings.
It is up to a defendant to prove that all monies passing through his or her bank account do not represent the proceeds of criminal activity. This means that all income must be verified. This is easy for an average employee whose main income will be a salary through the PAYE system with perhaps an occasional injection of funds from an identifiable source such as parental gift or lottery win. It is not so easy for the person who has lived as a wheeler and dealer, often paying little or no tax and certainly keeping only minimal accounting records. Explaining cash receipts into a bank account can be difficult and the Prosecution will always assume these to be benefit. Furthermore, when assessing realisable assets all payments out of a bank account will be deemed to be dispersal of criminal proceeds as “hidden assets” unless the purchase can be identified clearly. Identifying these transactions, which are often simply innocent household outgoings, can be difficult without a properly documented paper trail.
The system penalises those that do not live a conventional lifestyle, dealing in cash and therefore very often not paying appropriate taxes. It is a lesson for those that do deal in cash but otherwise keep their legal obligations up to date – to keep good records!