The financial year 2018/19 saw a record £51 million collected through cash forfeiture under chapter 3 of Part 5 of the Proceeds of Crime Act 2002 (‘POCA’). Those who consider this to be a draconian scheme, allowing courts to order the forfeiture of large sums of money without anyone being convicted of any crime, will not welcome this development. Moreover, a recent cash forfeiture case highlights some unanswered questions in relation to one strand of cash forfeiture, where cash is forfeited on the basis that it is “intended by any person for use in unlawful conduct”. This aspect of cash forfeiture, where the courts do not even have to be satisfied that there has been any criminal conduct yet, is the focus of this article. What are the parameters of that power and how might it have been misapplied?
Part 5, chapter 3 of POCA – an overview of cash forfeiture
Under sections 289 and 294 POCA, an authorised person (e.g. a police constable or an accredited financial investigator) may search for or seize cash that they reasonably suspect to be (a) recoverable property (i.e. the proceeds of unlawful conduct) or (b) intended by any person for use in unlawful conduct. This article is concerned with that second possibility.
The amount of cash must not be less than the minimum amount of £1000. “Cash” is defined in section 289(6) POCA and as well as notes or coins in any currency, it includes cheques and betting receipts, among other things. Any cash seized may be detained for 48 hours. This may be extended by a magistrates’ court for up to six months if it is satisfied that there are reasonable grounds for suspecting (a) or (b), and that the continued detention is justified while the cash is further investigated, or proceedings are being considered or have already begun for an offence with which the cash is connected.
A senior officer (as defined in section 297A(6) POCA) may give a notice for the purpose of forfeiting detained cash if satisfied of (a) or (b). Then the cash is detained until it is forfeited, the notice lapses, or the cash is released under section 297F POCA. While the cash is detained, an application for forfeiture may be made to a magistrates’ court.
Under section 298(2) POCA, the magistrates’ court may order the forfeiture of the cash if satisfied that the cash is (a) recoverable property, or (b) intended by any person for use in unlawful conduct. If the cash is forfeited, any party to the proceedings may appeal to the Crown Court under section 299 POCA. The appeal to the Crown Court is a rehearing of the application for forfeiture. These are summary proceedings that are civil in nature, so the court need only be satisfied on the balance of probabilities. The focus is on the cash, not on the person, so the person who possessed the cash need not ever be the subject of criminal proceedings.
When hearing the application for forfeiture, the magistrates’ court or Crown Court is not concerned with whether the cash was lawfully seized in the first place (see Secretary of State for the Home Department v Tuncel  1 WLR 3355).
Purpose and interpretation of section 298(2)(b)
The rationale for a simplified regime under chapter 3 of Part 5 (the seizure, detention and forfeiture of cash) is that the possession of large quantities of cash (as distinct from other types of property) is said to be inherently suspicious in an age of electronic banking (see R(Merida Oil Traders Ltd) v Central Criminal Court and others  EWHC 747 (admin) at [57-8]).
The purpose of section 298(2)(b) of POCA was considered in Begum v Chief Constable of the West Midlands Police  EWHC 2304 (Admin) at . Aikens LJ described the summary forfeiture of lawfully obtained property as “a draconian step” and the provision must be construed narrowly, even in the context of a statute whose purpose is to strip those who intend to commit crimes of “the wherewithal to commit future unlawful conduct”.
“Unlawful conduct” must be criminal conduct (section 241 POCA), although only the general type of criminal conduct need be identified, not any specific offence (see Director of the Assets Recovery Agency v Green  EWHC 3168 (Admin)). In Begum the Divisional Court said that “use” in the context of section 298(2)(b) means “the application” of the cash for the purpose of unlawful conduct. It was concluded in that case that having undeclared savings did not constitute use of that money in benefit fraud, as the money was not itself used as part of the unlawful conduct.
A recent case
Home Office v MK (unreported, 27 September 2019) was a cash forfeiture appeal in the Crown Court under section 299 POCA. The appellant had arrived in the UK with £1000 in cash and several bank statements (which the Crown Court found to be fraudulent) to show he could support himself while in the UK. He said he was entering the country as a tourist and would leave again in seven days. He was refused entry, but he then claimed asylum and he was placed in immigration detention. Six days later a Home Office financial investigator interviewed him in detention and seized the £1000 cash. A week after later being released from detention, the appellant was found sleeping rough as he had no money, and he was given accommodation and financial support.
The basis for the Home Office’s seizure and subsequent application for forfeiture of the cash was that the appellant intended to use it to support himself in the UK by paying for food and shelter, while illegally overstaying. The Crown Court rejected that submission. It dismissed the appellant’s appeal, however, and ordered forfeiture on the basis that the cash had been intended for use in an attempt to obtain leave by deception (an offence under section 24A of the Immigration Act 1971). This basis for the application was raised by the bench during the oral hearing and had not previously been argued by the Home Office. The Crown Court acknowledged that at the point of seizure there was no such intention to use the cash to obtain leave by deception, as the appellant was already in immigration detention. The Crown Court nonetheless ordered forfeiture. It said that the only reason the cash was not formally seized at the airport (when he did have the relevant intention) was to permit an interview to take place before seizure.
Perhaps to reflect the fact that the power under s.298 is exercised at the discretion of the court (as it “may order forfeiture”), the Crown Court considered whether it was “right and proportionate” to forfeit the cash. In concluding that it was, they relied on a finding that the Home Office could continue to monitor the appellant’s presence in the UK if he is obligated to keep in touch with them to obtain money for food and lodgings. There had not been, however, any suggestion during the proceedings that the appellant was at risk of absconding.
This judgment raises some interesting questions in relation to s.298(2)(b).
Is intention at the time of forfeiture relevant?
As forfeiture proceedings are the culmination of a scheme beginning with search and seizure, it might be assumed that the relevant intention assessed in relation to forfeiture is that which exists at the point of seizure. The point is not beyond argument, however, given that the language of s.298(2)(b) refers to the Court’s assessment of what “is intended” (present tense) at the time of forfeiture.
The competing arguments might be summarised as follows.
In support of an argument that the Court is only concerned with what was intended at the time of seizure are the following matters:
- The language of section s.241(3)(b), the provision which defines “unlawful conduct”, refers to the court being satisfied that a person “intended” cash for use in unlawful conduct.
- There is an element of common sense to considering a person’s intention proximately to the time he or she was actually in possession of the cash (as opposed to considering their intention in relation to cash detained by the police).
- Without the point having been expressly considered, the cases appear to have proceeded on the assumption that it is sufficient if there was – at one time – an intention to use the case in criminality (see for example Tuncel, supra).
On the other hand, section 298(2)(b) could easily have used the same past tense, to specify that the court must find that the cash was intended for use in unlawful conduct. Instead it uses the present tense – suggesting a requirement for a current intention. Such an approach is also arguably more closely aligned with the purpose of the section to prevent the use of cash in future criminality, which would not apply if, for example, the intention had dissipated at the point of forfeiture. A distinction may be drawn here between the justification for seizure and detention (a temporary measure to prevent the imminent commission of a crime) and forfeiture (a permanent deprivation of the cash).
The point may be illustrated in this way.
A man of good character, D, has £5,000 cash seized which he admits he planned to use it to hire a hit man to kill his wife, who had been having an affair. Seizure at this point would plainly fall within the scope of the provision – the planned use of the cash is for unlawful conduct and seizure operates to prevent the commission of the crime. The cash is detained. D’s wife then dies of natural causes before the forfeiture application is made. There is no evidence that D is involved in any other criminality. At the time of the forfeiture application it cannot be said that D has any future intention of using the cash in unlawful conduct and, contesting the forfeiture, D states that he plans to donate the cash to charity. What is the correct approach?
Is intention before seizure relevant?
In MK, the alleged unlawful conduct was not only impossible at the point of forfeiture; it was already impossible at the point of seizure. By that point the appellant was in immigration detention, his attempt to obtain entry to the UK having failed. Regardless of the relevance or not of the intention at the time of forfeiture, it cannot be right to forfeit cash if it is agreed that there was no relevant intention even at the point of seizure. Even if the court finds – as it did in MK – that the relevant intention existed six days earlier and the delay in seizing the cash is understandable, forfeiture of that cash does nothing to achieve the aim of preventing future criminal conduct. This is particularly so where the Home Office’s own case was that at the point of seizure the appellant only intended to use the cash to pay for food and shelter.
There is a way that cash can be forfeited when it has been used in past unlawful conduct. If an individual is convicted of an offence, a deprivation order may be made under section 143 of the Powers of Criminal Courts (Sentencing) Act 2000. If section 298(2)(b) is used to deprive someone of cash used in past unlawful conduct, despite a finding that at the point of seizure it was no longer intended for unlawful conduct as the provision requires, then this would circumvent the requirements of section 143 of the 2000 Act. Those requirements include a criminal conviction and, under section 143(5), the need to have regard to the likely financial and other effects on the offender of making the order.
When is cash used in unlawful conduct?
The Crown Court in MK was surely right that using cash to pay for food and shelter would not be using it in unlawful conduct, even if that food and shelter would have been used while committing the offence of overstaying. The use of the money would be too far removed from the allegedly intended offence: it was not being applied to the criminal purpose, as Begum requires.
Yet what if the use of the cash is more closely linked to but not necessarily a part of the alleged offending? How integral to the elements of the criminal offence should the use of the money be? Where is the line to be drawn?
In the case of MK, it might well be said that D used the £1000 cash as part of a scheme to enter the UK by deception (in pretending to be a short-term tourist). Yet there was nothing deceptive whatsoever about the cash. The appellant did in fact possess it. The deception would have been in saying that he only intended to stay for seven days. If anything the £1000 cash demonstrated he had the wherewithal to stay longer. Again, remembering the purpose of section 298(2)(b) to prevent crime, and the need to construe it narrowly, it is questionable whether “use in unlawful conduct” should be interpreted as including such presentation of lawfully obtained money at a border.
Scope for future challenges
Practitioners dealing with cash forfeiture cases should be mindful of the potential uncertainty around section 298(2)(b). There is clearly room for the section to be relied upon in ways that may not stand up to further judicial scrutiny, particularly in unusual cases such as MK. This is particularly concerning where a client may be otherwise vulnerable, such as those without leave to remain (Home Office Immigration Enforcement were responsible for over £1m of the cash forfeited in the last year). There may be some scope for asking courts to consider exercising their discretion not to order forfeiture, as regardless of the answers to the above questions, there is little (if any) justification for depriving an individual of their money when it is found that their only current intention is to use it legitimately for food and shelter. Otherwise, although it may not always be feasible, there could be scope in many cases for applying to state a case to the High Court. If nothing else a judgment of that court would help to clarify the parameters of this potentially very severe provision.