The law does not permit people to profit from criminal activity. When someone benefits from a crime, any property or money gained may be confiscated or “forfeited to the Crown”. This means the state will assume control or ownership of the property.
If the property is suspected to be the proceeds of crime, orders can prevent a person from dealing with it even before criminal proceedings have concluded.
Which property can be forfeited?
Any property considered the proceeds of crime can be forfeited to the Crown. Property is considered to be the proceeds of crime if it was directly or indirectly derived from the commission of an offence, such as money obtained from the sale of illicit drugs.
“Property” has a broad meaning and includes real and personal property, which may be tangible or intangible. Examples of property include cash, houses, yachts, cars, and bank accounts.
The NSW legislation also refers to “tainted property”. Property is tainted when it is used in, or in connection with, the commission of a serious offence. This expression is synonymous with proceeds of crime.
Australian forfeiture laws
Property derived from a crime may be forfeited under three key legislative regimes. The main aim of these Acts is to prevent people from benefitting from criminal offences, and to preserve evidence. Many of the provisions impose significant financial burdens on a defendant.
The legislative regimes include:
Proceeds of Crime Act 2002 (Cth) – under this Act, the Australian Federal Police (AFP) and Commonwealth Director of Public Prosecutions (CDPP) can apply to withhold proceeds of crime concerning Commonwealth offences under one of the following types of orders:
- Freezing Order.
- Restraining Order.
- Forfeiture Order.
- Pecuniary Penalty Order.
Confiscation of Proceeds of Crime Act 1989 (NSW) – under this Act, the NSW DPP, the Commissioner of the Independent Commission Against Corruption (ICAC), or NSW Police Commissioner can apply to withhold “tainted property” concerning NSW offences under one of the following types of orders:
- Forfeiture Order.
- Pecuniary Penalty Order.
- Drug Proceeds Order.
- Freezing Notice and Restraining Order.
Criminal Assets Recovery Act 1990 (NSW) – under this Act, the NSW Crime Commission can withhold proceeds of crime under one of the following types of order:
- Restraining Order.
- Forfeiture Order.
- Proceeds Assessment Order.
- Unexplained Wealth Order.
Different types of orders
Freezing and restraining orders
These orders prevent someone from dealing with or disposing of their assets. They are pre-emptive measures that ensure a person does not hide illegitimate assets before a conviction or forfeiture order can be obtained.
For example, if police suspect that an offender purchased a car using tainted money, the police can obtain an order stopping the offender from selling the car while proceedings are ongoing.
When convicted of a serious offence that has generated proceeds, a person may be subject to a forfeiture order. This order forfeits those proceeds or property to the Crown.
Pecuniary penalty and drug proceeds orders
When someone has benefited from a crime, a pecuniary (financial) penalty order may apply. This order requires the person to repay the amount.
Drug proceeds orders are similar but only apply when the offence was a drug trafficking offence.
Proceeds assessment and unexplained wealth orders
Proceeds assessment orders are used when a person derived proceeds from the illegal activity of another person.
Unexplained wealth orders are used when the origin of a person’s wealth cannot be determined or traced, but the NSW Crime Commission suspects that it was acquired through illegal activity.
In both cases, the court can make this order which compels the person to pay the NSW Treasurer the value of the proceeds derived from the illegal activity, or the value of the unexplained wealth.
Challenging proceeds of crime orders
Applications made by law enforcement agencies can be defended in court. Agencies must prove that the orders applied for are necessary, and meet the requirements under the legislation. To defend an application, it is important to first consult a defence lawyer with experience in asset forfeiture orders.
If an order has already been granted, there are two courses of action which can be taken:
1) An application to exclude property from forfeiture
Under Section 94 of the Proceeds of Crime Act, an application can be made to the Supreme Court of NSW to exclude property from forfeiture if it can be shown that the property was derived from a legitimate source.
Any action to exclude property from forfeiture must begin as soon as possible after conviction. There is a 15-month limitation period from the date of conviction (or sentence), after which the property will automatically be forfeited.
2) Negotiate a settlement
The second option is to negotiate a settlement and reach an amicable agreement. This may involve forfeiting part of the property.
Settlement negotiations may occur with the CDPP or the NSW Crime Commission.
What can I spend when my assets are frozen?
At a minimum, a person will be allowed to use money to pay for reasonable living expenses. This is usually a set amount of money per week, and the person will be able to take out this money every week to pay for various living expenses such as groceries, bills and loan repayments.
If the person believes the amount allowed is insufficient, they can negotiate for a larger amount or make an application to the court to increase the amount.
The orders will not always allow for legal expenses, however, in most instances they may allow for reasonable legal expenses, or sometimes legal expenses up to a certain cap. If the person owns or runs a business, the orders will usually allow for costs incurred in the ordinary and proper course of that person’s business.
It may be possible to negotiate for other exceptions to the orders, however, the person will have to provide documentary evidence as to why the exception is necessary. If it is not possible to reach an agreement with the other party for the exception to the order, an application can be brought to the Supreme Court asking that the orders be varied.
Affidavit of assets and liabilities
Generally, an affidavit is a legal document that contains a true written and signed statement, which may be used as evidence in a court or tribunal. An affidavit of assets and liabilities is a legal document that sets out the party’s real estate, personal property, and intangible assets, which are often itemized in the affidavit together with the approximate value.
This signed statement must contain all information about any assets. It will be used by the court to determine the assets owned by the party that may or may not be frozen.
What will the court consider when granting a proceeds of crime order?
The court will consider several elements when determining whether to grant a proceeds of crime order. Each order has specific factors that must be considered. However, some general considerations include:
- Whether the property or asset sought to be frozen is a “tainted property”. The phrase includes property that was:
- Used in or in connection with the commission/carrying out of a serious offence. An example in relation to drug offences is a vehicle used to transport drugs to the point of sale.
- Substantially derived or realised, whether directly or indirectly, by any person:
- From property used in or in connection with the commission/carrying out of a serious offence. This may include the money acquired from the sale of an item such as a vehicle used in the commission/carrying out of an offence, and extends to another item purchased with that money.
- As a result of the commission/carrying out of a serious offence. This may include property taken when an offence is being committed, the proceeds from the sale of such property, and other items purchased with the proceeds of sale.
- Substantially derived or realised, whether directly or indirectly, by any person for the depiction of a serious offence or the expression of the offender’s thoughts, opinions or emotions regarding the offence in any public promotion. Examples include paid interviews that the offender gives to a news media organisation, or royalties from the sale of a book by the offender about the offence.
- The court will consider whether the order will cause disproportionate hardship to the person or their family.
- The court has the discretion to provide for reasonable legal expenses when making a freezing order under the Criminal Assets Recovery Act 1990. The court has set out four factors that need to be considered:
- The strength of the prosecution case,
- The size of the fund of the property involved,
- The probable amount of the legal expense, and
- The effect of any exemption upon the achievement of the purposes of the Act.