By Phillip Gibson, Accredited Specialist Criminal Law and criminal defence lawyer.
When people commit criminal offences, they often stand to gain some benefit, whether this be by way of money or property. Needless to say, the criminal law does not permit those people to receive the fruits of their criminal acts. Whenever a person benefits from the commission of a criminal offence – whether or not they have been convicted – any property or money gained as a consequence of that offence may be forfeited to the Crown. Where a person is suspected of committing a criminal offence, they may still be affected by applications to freeze, seize, restrain or forfeit their property – these include forfeiture orders, freezing orders, unexplained wealth orders and property seizure orders.
What kinds of property can be forfeited?
All proceeds of crime can be forfeited to the Crown. Property is only said to be the proceeds of crime if it was directly or indirectly derived from the commission of an offence. For example, money obtained from the sale of illicit drugs would clearly be proceeds of crime. But property is not limited to cash – the concept of property is broad and covers both tangible and intangible things: such as a house, yacht, jet ski, car, to things as abstract as bank accounts – they are all capable of being proceeds of crime and being subjected to orders.
Who can forfeit the proceeds of crime?
Only law-enforcement bodies can apply to have the proceeds of crime forfeited. They are the Australian Federal Police, Director of Public Prosecutions (Commonwealth and NSW), and the Crime Commission (both Australian and NSW).
What laws permit proceeds of crime to be forfeited?
Property and funds which are deemed to be the proceeds of crime may be forfeited under the following three legislative regimes:
1.Proceeds of Crime Act 2002 (Commonwealth), which applies in relation to Commonwealth offences and commenced by the Australian Federal Police and Commonwealth Director of Public Prosecution
2.Confiscation of Proceeds of Crime Act 1989 (NSW), which applies in relation to NSW offences and commenced by the NSW Director of Public Prosecutions; and
3.Criminal Assets Recovery Act 1990 (NSW) which is commenced by the NSW Crime Commission.
The principal object of these Acts is to deprive people from benefiting from the proceeds of criminal offences. Many provisions in these Acts are considered draconic and capable of imposing significant financial burdens on a defendant.
How does the Commonwealth Proceeds of Crime Act 2002 (Cth) operate to forfeit property?
The Australian Federal Police (AFP) and Commonwealth DPP (CDPP) can apply under this Act for the following four orders in order to withhold proceeds of crime:
1. Freezing Orders A freezing order specifically targets bank accounts, and has the effect of preventing a person from accessing funds held in a bank account.
A prosecutor or AFP federal agent will apply in person to a magistrate for a freezing order, accompanied by a supporting affidavit that sets out the particulars of the suspicion that the funds in an account are the proceeds of crime.
A magistrate will only grant a freezing order if:
(i) there are grounds to suspect the bank account reflects proceeds of crimes; and
(ii) unless the order is made, there is a risk that the funds will be reduced.
Freezing orders have the effect of preserving the status quo to ensure such bank accounts are not interfered with.
When a Magistrate makes a freezing order, they need only be satisfied that there are reasonable grounds to suspect that funds held in a bank account are the proceeds of crime. In other words, the burden of proof is very low, and certainly not as onerous as the criminal standard, beyond reasonable doubt. As long as reasonable grounds exist, then the magistrate is compelled to grant a freezing order.
2. Restraining Orders
A restraining order can only be granted under three circumstances, where:
a) A person is convicted or charged with an indictable offence
b) A person is suspected of committing a serious offence
c) Property is suspected of being the proceeds of an indictable offence.
These orders prevent a person from disposing property of any kind if there are grounds to believe that the property may be subject to a forfeiture order. For example, if the police suspect that an offender has bought a car using tainted money, the police can obtain a restraining order preventing the offender from selling the car.
The CDPP or AFP will apply to the District Court or Supreme Court for a restraining order, accompanied with a supporting affidavit setting out the grounds on which the officer suspects property is in the effective control of the offender, and that the property are the proceeds of crime.
Restraining orders are often used as a pre-emptive measure by the police to prevent the proceeds of crime from being removed or disposed of in order to preserve the status quo. This being the case, a court can actually grant a restraining order even if a person has not been convicted of an offence. The power to grant a restraining order, even if a person has not been convicted, is a serious violation of a person’s freedoms – but one that is sanctioned by law.
3. Forfeiture Order A forfeiture order has the effect of forfeiting a person’s property to the Commonwealth if they are convicted of a serious offence.
a)A person engaged in conduct constituting a serious offence
b)A person has been convicted of an indictable offence; and
c)If property is suspected of being proceeds of an indictable offence.
Under section 338 of the Proceeds of Crime Act, a ‘serious offence’s is one that carries imprisonment of 3 years or more, and usually include offences of money laundering or fraud.
The CDPP or AFP may apply for a forfeiture order by way of a written notice of application and have the matter heard before the District Court or Supreme Court.
A magistrate will only grant forfeiture orders if:
(i)The CDPP or AFP applies for the order;
(ii)A person has been convicted of a serious offence; and
(iii)The court is satisfied that the property is the proceeds of crime.
In many instances, the fact that a person has been convicted of a serious offence may raise complex issues about the nature of the forfeited property. For example, suppose a person was convicted of stealing a motor vehicle. Further suppose that person’s wages earned legally were found in that same car. Does the fact that the money was found in a stolen vehicle automatically make that money the proceeds of crime?
That circumstance alone does not make the cash the proceeds of crime. Accordingly, the person maybe entitled to claim the entire amount back.
A forfeiture order is also known as an Asset Forfeiture Order (AFO).
4. Pecuniary Penalty Order
Where a person has derived a benefit from the commission of a criminal offence, the court may grant a pecuniary penalty order requiring payments to the Commonwealth.
When determining the penalty amount, the court must have regard to the value of the benefit the offender derived from the commission of the offence, the value of the property before and after the offence, and any other unlawful activity that the offender committed.
How does the New South Wales Confiscation of Proceeds of Crime Act 1989 (NSW) operate to forfeit property?
The State confiscation regime is uniquely different from the Commonwealth Scheme. Firstly, only the NSW Director of Public Prosecutions, the Commissioner of ICAC and NSW Police Commissioner can apply for a confiscation order. Secondly, this Act refers to the concept of ‘tainted property’. Property is tainted when it is used in, or in connection with, the commission of a serious offence. For all intents and purposes, this expression is synonymous with ‘proceeds of crime’ as used in the Commonwealth Act.
The state confiscation regime provides for the following orders:
1. Forfeiture Order
Like its Commonwealth counterpart, a forfeiture order has the effect of forfeiting tainted property to the Crown. When considering the application for a forfeiture order, the court must take into account any hardship that may reasonably be likely to arise following the making of the order. This consideration goes to ameliorating any hardship the offender may face as a result of the forfeiture order.
2. Pecuniary penalty orders
Pecuniary penalty orders can only be granted where the serious offence committed by the offender is not a drug trafficking offence. Like the Commonwealth scheme, the court will take into account a host of factors when assessing the value of the penalty, including the value of the tainted property, the value of any benefit derived from the serious offence and the offender’s income and expenditure.
3. Drugs proceeds order
Drug proceeds orders only apply to drug trafficking offences. Where a person has been convicted of a drug trafficking offence, and has benefited from that offence, the court may order the defendant to pay to the State a pecuniary penalty. Again, the court is to take into a host of factors outlined above, These orders are commenced by way of a notice of motion in the Supreme Court of NSW.
How does the New South Wales Criminal Assets Recovery Act 1990 (NSW) operate to forfeit property?
This Act is very distinct and unique because it only authorises the NSW Crime Commission to confiscate property from a person who has been convicted. So as long as the Supreme Court finds it is more probable than not that the person has engaged in serious crime related activities that alone will justify confiscation. The Act authorises the NSW Crime Commission to apply for the following orders:
1. Restraining order
A restraining order here prevents a person from disposing, or attempting to dispose of an interest in property. Like the other Acts, property here is given a broad meaning and includes both real property and personal property, tangible and intangible.
However, unlike the other Acts, the Criminal Assets Recovery Act permits the NSW Crime Commission to apply for ex parte restraining orders. This means that the NSW Crime Commission can apply for a restraining order without letting the affected person know.
However, ex parte orders are made with a view to prevent the disposal of assets pending final determination of any forfeiture application.
2. Assets forfeiture order
The main goal of the Act is to ensure forfeiture of assets. The NSW Crime Commission can apply to the Supreme Court for an order so that property can be forfeited or vested in the Crown. It does not matter if there is a pre-existing restraining order for the Supreme Court to grant an assets forfeiture order.
The Supreme Court will make an assets forfeiture order if it is more probable than not that a person engaged in a serious crime related activity. Once an assets forfeiture order is granted, an affected property is forfeited to the Crown and vests in the NSW Trustee and Guardian on behalf of the Crown.
3. Proceeds assessment order
Similar to a pecuniary penalty order, a proceeds assessment order requires a person to pay the NSW Treasurer an amount assessed by the Supreme Court as the value of the proceeds derived from an illegal activity. In calculating this value, the Supreme Court should have regard to the value of the property, the value of the property before and after the illegal activity and the defendant’s level of income.
4. Unexplained wealth order
Sometimes, a person’s wealth cannot be explained in the sense that the source of that wealth cannot be traced or determined to its original source. When this happens, the NSW Crime Commission can apply to the Supreme Court requiring a person to pay the Treasurer an amount assessed as the value of unexplained wealth of that person.
What can I do to challenge one of the above orders?
Having a criminal law specialist on your team is a must if one of the above orders has been granted against you or if there is an application pending.
If there is an order against you, there are a two ways we can assist you in removing the orders.
1. Application To Exclude Property From Forfeiture where Person Is Convicted Of A Serious Offence
We may make an application to the Supreme Court to exclude the property from forfeiture. This will involve presenting a case that clearly shows property and funds being derived from a legitimate source.
We can assist in compiling a brief of evidence that traces the lineage of your property back to a legal source.
This is an action under section 94 of the Proceeds of Crime Act. An application for exclusion from forfeiture is commenced by way of filing a notice of motion to the Supreme Court of NSW, outlining the particulars of the claim.
A hearing date will be set for the application. Before the hearing can be heard, the Commonwealth has the right to examine you in the Administrative Appeals Tribunal.
In this compulsory examination, the Commonwealth DPP will ask you a series of questions relating to the source of the property, and how you came into possessing it. In this examination, you must answer every question directed at you, even if the answers are incriminating, and even if you object to answering the questions.
There is a risk that the answers given may be used by the Commonwealth DPP to prosecute you, and even the potential for the answers to be provided for example to the NSW Director of Public Prosecutions to assist in prosecuting you.
Failure to answer all questions is an offence punishable by law. It is therefore imperative that you receive the best legal advice before being examined.
A similar process is available where the NSW Crime Commission has restrained your property.
It is most important that you act quickly to preserve your property. This is because section 93 imposes a 15 month limitation period from the date of sentence, after which your property will be automatically forfeited.
Any action to exclude property from forfeiture must begin as soon as possible after conviction.
The other option is to make a settlement with the Commonwealth to reach an amicable agreement. This may involve forfeiting part of the property.
Settlement negotiations may also occur with the NSW Crime Commisison.