Criminal Proceeds Management

History

The Criminal Proceeds (Recovery) Act 2009

What is the Criminal Proceeds Management Unit (CPMU)?

What the CPMU does

List of CPM services

The process from start to finish

Types of assets

Disposal of assets

Criminal Proceeds (POC Act 1991) statistics

History

The Proceeds of Crime Act 1991 (POCA 1991) was the original conviction based asset confiscation legislation that conferred on the Official Assignee the role of criminal asset recovery, management and disposal. That Act has been repealed and replaced by the Criminal Proceeds (Recovery) Act 2009 (CPRA 2009) and new provisions in the Sentencing Act 2002.

The Criminal Proceeds (Recovery) Act 2009 is designed to establish a regime for the forfeiture of property that has been derived directly or indirectly from significant criminal offending without the need for a conviction, and the forfeiture of instruments of crime when a conviction has been entered. Under the now repealed POCA 1991, most proceeds of crime cases have been drug related.

The Criminal Proceeds (Recovery) Act 2009

A key purpose of the Criminal Proceeds (Recovery) Act 2009 is to better address serious and organised crime. The Act does this through establishing a civil forfeiture regime, and by improving the instruments forfeiture regime.

The CPRA 2009 directs the Official Assignee for New Zealand (OANZ) to take into custody and control assets that are ordered to be restrained or forfeited by the Court. It also directs the OANZ to: dispose of confiscated assets (being both instruments of crime and assets confiscated under an asset forfeiture order in civil and non conviction based cases); dispose of assets that have been restrained to meet a profit forfeiture Order (PFO) in civil cases; and enforce PFOs where assets do not meet the amount specified to be repaid by the respondent.

The civil regime enables the Courts to order forfeiture of unlawfully derived property or an amount of property assessed to be the value of a person’s unlawfully derived income. The changes to the instruments forfeiture regime established by the previous legislation mean that people who forfeit an instrument of crime following conviction (for example, a house used to grow cannabis) will have that forfeiture taken into account in their overall sentence.

Most pertinent to the Official Assignee criminal proceeds management function is that the CPR Act;

• enables civil profit forfeiture orders to be established as a debt to the Crown;
• provides that the recovery of any such debt to the Crown will be undertaken by the Official Assignee; and,
• provides the Official Assignee with powers to realise forfeited assets from a forfeiture order 20 days after all appeals have been resolved, also;
• provides that restraining orders must be renewed every 12 months as necessary; and,
• increases the penalties in the Act to a level designed to more likely deter breach.

What is the Criminal Proceeds Management Unit? (CPMU)

Although the Official Assignee (“OA”), (who is the statutory authority under the CPR Act 2009 for custody and control of restrained and forfeited assets) was involved with taking custody and control of some property as early as 1993 under the repealed Proceeds of Crime Act 1991, it was not until 1995, when that Act had time to bed in and be used, that the OA was involved with the disposal of confiscated assets as agent of the Crown.

The Official Assignee Proceeds of Crime Unit (OAPOC Unit) was set up to take on the ever increasing workload of restraint and confiscation cases in 2002. Through the statutory appointment of the Official Assignee, the unit is the only agency in New Zealand authorized to manage and dispose of seized assets connected with proceeds of crime. With the change of legislation in 2009, the unit changed its name to the Criminal Proceeds Management Unit.

The CPM Unit is managed centrally from our Napier office. Case fieldwork is also coordinated from that office. Further resources required to assist in cases, including staff, are provided by the regional offices closest to where the case may be located and specialist agents who are contracted on a case by case basis.

The CPM Unit works with Police officers, Police prosecutors, Crown Solicitors, Crown Law and other agency enforcement personnel, on cases involving restraint and confiscation of assets by providing expertise for efficient and effective asset seizure, management and disposal.

What the CPM Unit does

Various orders can be made prior to confiscation of assets, including a restraining order. These may be made in relation to property that may ultimately be subject to an Instrument Forfeiture Order (IFO), an Asset Forfeiture Order (AFO), or a Profit Forfeiture Order (PFO). Property subject to a restraining order may not be dealt with except as permitted by the Court. The Official Assignee is required by statute to administer the property while it is subject to the order. The CPM Unit will take custody and control of the restrained assets. The unit will also arrange for necessary transportation of moveable assets and valuations of assets to monitor equity preservation and costs associated with the management of certain assets.

If restrained property is later the subject of a Profit Forfeiture Order the Official Assignee must pay the PFO from the disposal of the restrained property. Any residual debt to the Crown is money owing to the Crown and the Official Assignee has a statutory obligation to pursue that debt, using any legal means available for recovery.
If property is forfeited by an IFO or an AFO, the Official Assignee will dispose of the asset by realization or other means as agent on behalf of the Crown.

Services provided by the CPM Unit include:

During restraint period

• Seizure, inspection, administration, storage, protection and maintenance of restrained property, (subject to statutory limitations on indemnity)

• Appraisal and inspection of property on a regular basis

• Payment of certain costs relating to the preservation of assets

• Act as an independent agent to sell assets if orders to do so are made by the Court

During the Instrument Forfeiture, Asset Forfeiture and Profit Forfeiture phase

• If the respondent is found guilty of serious offences warranting confiscation of instruments and the Court determines that is the case and makes and Instrument Forfeiture Order under section 142 of the Sentencing Act 2002 during sentencing, the CPM unit will dispose of the confiscated assets by whatever means are considered appropriate. That is usually by public auction.
• Funds paid into the Proceeds of Crime Trust account will then be paid to the Crown Consolidated Revenue Account.
• Financial conflicts, third party payments and other costs associated with the criminal and confiscation proceedings are dealt with.
• Assets not confiscated are returned to their owner(s).
• If a civil confiscation order (Asset forfeiture Order) is made against assets, the CPM Unit will dispose of the assets in the best way possible after the specified 6 month stand down period after the expiration of the appeal period, or seek orders of the court for an earlier sale to preserve the value of the asset.
• Funds from the sale will be held in the Official Assignee Criminal Proceeds Trust Account until the expiry of the specified period and then paid to the Crown Consolidated Account.
• In the case of a Profit Forfeiture Order, the CPM Unit will, after the specified period has expired, sell all assets held under restraint to meet the maximum amount payable. Any surplus will be repaid to the respondent.
• In the event that insufficient assets are held to meet the maximum amount payable, the OA will act as agent for the Crown to pursue the debt as a civil debt owing to the Crown.

The process from start to finish

Instruments Confiscation

Qualifying Instrument Forfeiture offences

When qualifying instrument forfeiture offences¹ are identified, appropriate charges made and there is an ongoing investigation into the possibility of asset restraint or seizure connected with a possible conviction for those offences, the Crown Prosecutor, together with the Police Unit heading the case, will decide if the case merits further Proceeds of Crime action. If it is decided to proceed, an order is sought by the prosecutor from the High Court (or District Court if the charge is being tried in that Court) to restrain (or confiscate the property as part of sentencing).

Official Assignee Custody and Control

The Official Assignee is placed into custody and control of all assets in all cases by effect of sections 24, 25 and 26 of the CPR Act. The CPM Unit will then arrange for the safe transport and storage of any moveable objects and ensure the ongoing management of real property (land) as appropriate to the circumstances of the individual cases. The primary objective during this phase of the operation is the preservation of the value of the restrained assets (section 80 CPR Act).

On Conviction

If the respondent is convicted, and the prosecutor has sought an instruments forfeiture order, the sentencing will include a decision on the forfeiture of assets. If there are no appeals filed within the statutory period for filing of appeals, then the CPM unit begins the process of disposal. The assets are normally disposed of through public auction.

Civil Confiscation

In the case of a civil confiscation case, the process is the same as for instruments during the restraint phase. However, unlike an instruments case, there is no need for a prosecution to be occurring, or even charges to be laid. The legal test for civil confiscation matters is that on the balance of probabilities the person has unlawfully benefitted from significant criminal activity. However, there has to be sufficient evidence to show that the assets are the profit of probable criminal offending, or the assets are tainted by that offending.

In Rem and in Personam

The difference between instruments forfeiture and civil forfeiture is that civil forfeiture is a recovery of an asset (or value) for the state and is an action against the asset (in rem), as opposed to a sanction against the person or respondent (in personam) as in an instrument forfeiture matter.

Types of assets

Restrained property takes many forms and can encompass anything acquired as proceeds of crime, or anything used to commit a crime. Restrained assets can include:

• Cash, shares, foreign currency, bank accounts, bonus bonds and other cash type assets
• Precious metals as bullion, coins
• Art collections, antique furniture
• Vehicles, motorcycles, boats and aircraft
• Real estate, farms, lifestyle blocks
• Businesses
• Personal property such as jewellery, furniture & effects
• Animals such as race horses and stock

Disposal of assets

After the appropriate appeal period or specified period of 6 months has passed, the CPM unit normally disposes of moveable assets through a public auction. Cash is banked into a trust account.

Real property is usually sold through appointed local agents on the open market. Property is sold subject to the market in that locality.

Statistics

Care must be used in interpreting the following statistics.  There is no correlation between the value of goods seized in a given year and the value of the net proceeds for the year for any or all of the following reasons:

• Prior to the Criminal Proceeds (Recovery) Act 2009, the CPM Unit was not in custody and control of assets in all cases and therefore cannot record them.
• Assets restrained in any given year are very rarely disposed of in that year.
• The restrained assets are returned to the owners in some circumstances.
• Some assets will depreciate if criminal proceedings last for a considerable period of time.
• A respondent’s living and other expenses may be paid from their seized property if so ordered by the Court, which reduces the value of assets that may ultimately be forfeited to the Crown.
• Sometimes material cannot be safely sold, and must be destroyed, such as assets that could be used as drug related equipment or assets that are heavily contaminated with drug related chemicals.
   

The table below shows

1. the number of new cases per year since the 1995/96 year and
2. the dollar value of assets restrained per year since the 2003/04 financial year.

The table below shows the dollar amounts confiscated and subsequently paid to the Crown.

Footnote

¹ Section 5 CPR Act 2009 definitions – means an offence punishable by a maximum term of imprisonment of 5 years or more; and includes an attempt, to commit, conspiracy to commit, or being an accessory to an offence if the maximum term of imprisonment for that attempt, conspiracy or activity is 5 years or more