Proceeds of Crime

History

The Proceeds of Crime Act 1991

What is the ITS Proceeds of Crime (POC) Unit?

What the ITS POC Unit does

List of POC services

The process from start to finish

Types of assets

Disposal of assets

POC statistics

History

The Proceeds of Crime Act 1991 came into force on 1 July 1992.  The purpose of the Proceeds of Crime Act 1991 is the confiscation of the proceeds of serious criminal offending.  To date most proceeds of crime cases have been drug related.  The Act directs the Official Assignee for New Zealand to dispose of forfeited assets under the Act, dispose of assets that have been restrained to meet a pecuniary Penalty Order and, in most cases, to take into custody and control assets that are ordered to be restrained by the Court.

The Proceeds of Crime Act 1991

A serious offence is defined in the Act as offending punishable by a sentence to a term of imprisonment of five years or more. This covers the major fraud and dishonesty offences in the Crimes Act 1961 and the drug-dealing offences in the Misuse of Drugs Act 1975.

Confiscation orders can be made in respect of those convicted on indictment of an offence punishable by five years or more imprisonment or for those who abscond before conviction for such an offence.  The Crown may seek two kinds of confiscation orders:

• Forfeiture Orders provide for the forfeiture to the Crown of identifiable property.
• Pecuniary Penalty Orders (PPO) provide for the imposition of a monetary penalty as a measure of the benefits gained by a person from an offence.

What is the ITS Proceeds of Crime Unit?

Although the Official Assignee (“OA”), (who is the statutory authority under the POC Act 1991) was involved with taking custody and control of some property as early as 1993, is was not until 1995, when the 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 Insolvency and Trustee Service (“ITS”) Proceeds of Crime 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 legislated body in New Zealand to manage seized assets connected with proceeds of crime.

The ITS Proceeds of Crime 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.

The ITS Proceeds of Crime Unit works with police officers, other agency enforcement personnel and Crown Solicitors on cases involving restraint and confiscation of assets by providing expertise for efficient and effective asset management and disposal.

What the ITS POC Unit does

Various orders can be made prior to confiscation including a restraining order.  These may be made in relation to property that may be subject to a forfeiture order or a PPO.  Property subject to a restraining order may not be dealt with except as permitted by the Court.  The Official Assignee may be directed to administer the property while it is subject to the order and is required to do so in most cases.  In these cases, the POC Unit will take custody and control of the restrained assets. It will also arrange for necessary transportation of moveable assets, valuations to monitor equity preservation and some costs associated with the management of certain assets.

If restrained property is later the subject of a PPO while under the Official Assignee’s control the Official Assignee must pay the PPO from the disposal of the restrained property.

If property is forfeited, the Official Assignee must obtain Ministerial Directions from the Minister of Justice to sell it on behalf of the Crown.

Services include:

• During restraint period

• Inspection, administration, storage, protection and maintenance of restrained property, (subject to statutory limitations on indemnity)
• Appraisal and inspection of property on regular basis
• Payment of certain costs relating to the preservation of assets

• Forfeiture and PPO phase

• If the respondent is found guilty of serious offences warranting confiscation of assets and the court determines that is the case, the POC unit will start the asset disposal process by applying to the Minister of Justice for directions as to that disposal. On receipt of that direction, the assets will be sold 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).

The process from start to finish

When serious offences 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 Law Office, together with the law enforcement agency heading the case will decide if the case merits further Proceeds of Crime Act action.  If it is decided to proceed as the property may be tainted by the alleged offending or be the proceeds of the criminal activity, then an order is sought by the Crown from the High Court to restrain or confiscate the property.

In the majority of cases the Official Assignee is placed into custody and control of the assets by the Court.  The POC Unit will then arrange for the safe transport and storage of any moveable objects and ensure the ongoing management of real property 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 assets restrained.

If the respondent is convicted, part of the sentencing may include forfeiture of assets.  The forfeiture application process may also be conducted after conviction.  If there are no appeals filed within the statutory period for filing of appeals, then the POC unit begins the process of disposal by applying to the Minister of Justice for directions for disposal of the forfeited assets. Once those directions are received the assets are normally disposed of through public auction.

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 a 28-day appeal period in the case of selling assets to meet a pecuniary penalty order or after receiving ministerial direction in the case of a Forfeiture Order, the POC unit normally disposes of moveable assets through a public auction.  Cash is banked into a trust account.

Real property is sold through appointed local agents on the open market.  All 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:

• The ITS POC unit is 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.
• If there is no conviction, then the assets are returned to the owners.
• Some assets will depreciate if criminal proceedings last for a considerable period of time.
• A respondents living and legal 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.

Following is a table that shows the number of new cases per year since 1995/96 year and the dollar value of assets restrained per year since the 2003/04 financial year.

Following is a table showing the dollar amounts confiscated and subsequently paid to the Crown.