Criminal Proceeds Management
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 That Act was repealed and replaced by the Criminal Proceeds (Recovery) Act 2009 (CPRA 2009) and new provisions in the Sentencing Act 2002 in December 2009.
The CPRA 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. Most criminal proceeds cases have historically been drug related.
The Criminal Proceeds (Recovery) Act 2009
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 forfeited under the sentencing provisions of the Sentencing Act 2002 and assets confiscated under Asset Forfeiture Orders in civil 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 CPRA 2009;
- 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 28 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 a breach of legislation.
What is the Criminal Proceeds Management Unit (CPMU)?
Although the Official Assignee (“OA”), (who is the statutory authority under the CPRA 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 an agent of the Crown.
In 2002 the OACU (then known as the Official Assignee Proceeds of Crime Unit) was set up to take on the ever increasing workload of restraint and confiscation cases. 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 (CPMU).
The CPMU duties are managed centrally from our Napier office and case fieldwork is coordinated from the permanent team based in Auckland. Further resources required to assist in cases are provided by specialist trained Ministry staff and agents who are contracted on a case by case basis.
CPMU members work 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 Criminal Proceeds Management Unit (CPMU) 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 CPMU, acting for the OA, 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 ability 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 an agent on behalf of the Crown.
Services provided by the CPMU include:
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 CPMU 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 an Asset Forfeiture Order (AFO) is made against assets, the CPMU will dispose of the assets in the best way possible after the statutory appeal period has expired and then hold funds from the sale for the specified 6 month stand down period. The funds are then paid to the Crown Consolidated Account.
In the case of a Profit Forfeiture Order (PFO), the CPMU will, after the specified periods have 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 under a PFO, the OA can act to pursue the debt as a civil debt owing to the Crown as an agent for the Crown.
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 instrument of crime action. If a decision is made 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 the specified assets (or to forfeit the asset as part of sentencing).
Official Assignee Custody and Control
The Official Assignee is placed in custody and control of all assets in all cases by effect of sections 24, 25 and 26 of the CPRA 2009. The CPMU will then arrange for the safe transport and storage of any moveable objects and ensure the on-going management of real property (land) as appropriate to the circumstances of the individual cases. The primary value of the restrained assets (section 80 CPRA 2009).
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, then the CPMU begins the process of disposal. The assets are normally disposed of through public auction.
In the case of a civil confiscation case (AFO or PFO), 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 occur, or even for 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
- 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
- Personal property such as jewellery, furniture & effects
- Animals such as race horses and stock
Disposal of assets
Real property is usually sold through appointed local agents on the open market. Property is sold subject to the market in that locality.
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 CPMU 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
- The number of new cases per year since the 1995/96 financial year and
- The dollar value of assets restrained per year since the 2003/04 financial year.
|Year||New cases||$ value of restrained assets|
|1995 - 1996||6|
|1996 - 1997||13|
|1997 - 1998||21|
|1998 - 1999||19|
|1999 - 2000||19|
|2000 - 2001||9|
|2001 - 2002||15|
|2002 - 2003||20|
|2003 - 2004||33||$NZ9,141,835.34|
|2004 - 2005||30||$NZ8,153,081.34|
|2005 - 2006||41||$NZ13,934,413.20|
|2006 - 2007||26||$NZ11,159,259.23|
|2007 - 2008||33||$NZ10,876,282.05|
|2008 - 2009||35||$NZ24,189,380.72|
|2009 - 2010||58||$NZ30,766,611.23|
|2010 - 2011||56||$NZ23,947,951.57|
|2011 - 2012||92||$NZ75,489,598.55|
|2012 - 2013||89||$NZ67,179,080.78|
|2013 - 2014||84||$NZ59,307,357.56|
|2014 - 2015||84||$NZ62,396,440.73|
|2015 - 2016||88||$NZ122,572,033.07|
1Section 5 CPRA 2009 definitions – means an offence punishable by a maximum term of imprisonment of five 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 five years or more.