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Confiscation v Compensation

Confiscation proceedings are conducted under the Proceeds of Crime Act 2002 (POCA). POCA is designed to deprive a convicted defendant of the financial benefits gained through criminal conduct, thereby having a deterrent effect.

The Crown Court has powers found in the Criminal Courts (Sentencing) Act 2000 to impose compensation orders. Compensation is an order by the Court for the victim of a crime to be compensated for personal injury, loss or damage arising from the offence(s) of which the defendant is convicted.

POCA does make provision (see subsections (3A) and (6) of S13 POCA 2002 (as amended by S6 of Serious Crime Act 2015)) for a compensation order to be paid from a confiscation order if the defendant is not able to pay both. The confiscation regime overlaps with the court’s power to make such orders because any amount that could otherwise be used to pay compensation will also be classified as an ‘available asset’ to be paid in satisfaction of a confiscation order. Any amounts paid over in satisfaction of a confiscation order go, not to a victim, but to the state, with a proportion being passed to the enforcing authorities.

Victims will experience difficulties when they seek to recover losses and defendants will also experience difficulties when they seek to agree confiscation orders when they find themselves at the mercy of third parties.

Although a confiscation order under POCA 2002 is generally mandatory once the relevant requirements are met, the position changes when the civil proceedings for compensation have started or are anticipated. In such circumstances, confiscation becomes discretionary, allowing the court to give priority to the civil proceedings. This means that the assets can be realised and paid to the aggrieved party rather than being taken by the state. However, the court may be unable to make an order for compensation because of existing charges and freezing orders against realisable assets. Whilst the Court does have the power to order both compensation and confiscation provided the defendant has the means to pay them, the Crown cannot recover twice where the victims are certain to be compensated. It is important to note that the court is only empowered to award compensation to the victim of an offence on the indictment. Therefore if a person is found in possession of the proceeds of a fraud, but is convicted only of money laundering, the criminal court is powerless to direct that those funds be repaid to the victims of the fraud.

There is no structured procedure for the determination of appropriate levels of compensation and, because victims have no locus standing in proceedings, if the prosecutor omits to ask the court to make a compensation order, the victim of the crime is left with no remedy.

The Crown Court has significant powers to enforce a confiscation order however compensation orders are enforced by Magistrates’ Court as a fine.

As stated above, where the Crown Court is satisfied that the defendant does not have sufficient assets available to satisfy both a confiscation and a compensation order, it may be that the compensation order is paid out of assets recovered for the confiscation order.

About the author

Raymond Davidson

Raymond has been specialising in Forensic Accounting and Litigation work for over 30 years, is a Fellow of the Institute of Chartered Accounts in England and Wales and trained by the Academy of Experts to act as a Mediator.



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