Tainted Gifts in Confiscation Proceedings
The tainted gifts regime under the Proceeds of Crime Act 2002 represents a draconian and particularly technical aspect of confiscation proceedings that can, if not properly dealt with, greatly impact the defendant and third parties, most often the defendant’s family members.
The aims of the regime
The provisions prevent individuals convicted of crimes (from which they benefited financially) from circumventing confiscation of those assets by giving the proceeds of their crime to others. At first glance this may be an understandable aim, but the relevant provisions are particularly onerous for defendants and invariably engage overlapping areas of criminal and civil law, especially equitable principles concerning property rights and entitlements. First though, as will be discussed, the term ‘gift’ does not hold its normal meaning in such this context.
What is a ‘tainted gift’?
Under the POCA regime these include transfers made by the defendant for which money or an asset has been received, the value of which is significantly less than the value of the transferred property.
If a defendant has a criminal lifestyle (as defined in the legislation), the court will assume that every transfer made in the 6 years preceding the relevant date (usually when the defendant was charged) is a tainted gift. This assumption will apply unless the defendant can prove otherwise, or it would be unfair. A transfer made before the start of the 6-year period, where the defendant has a criminal lifestyle, will be considered to be a tainted gift if it was obtained through the defendant’s criminal conduct.
If the defendant does not have a criminal lifestyle, a tainted gift is a transfer made by the defendant at any time after the date when the offence was committed.
In assessing whether a transfer constitutes a tainted gift it is important to think critically about the actions of the giver of the gift, the actions of the recipient of the gift, and of their wider proprietary interests under the law.
In short, transfers may, at first glance, appear to constitute gifts but on inspection may actually represent property held on trust for the defendant by the recipient. Establishing whether the ‘beneficial interest’ (i.e. an interest in property that one does not legally own) has been properly transferred between individuals often requires the gathering of evidence that reflects the intentions of the parties at the time of the transfer and the way that the asset has been dealt with since. The examination of contemporaneous records, such as declarations of trust establishing the joint ownership of property or coherently explaining the absence of such evidence, is key in establishing the true foundation of any given transfer.
What effect will a finding of tainted gifts have on my interests as a defendant in confiscation proceedings?
When dealing with assets and money that belong to the defendant, the court will require the defendant to pay back what he has available to him, although it may revisit this on application by the prosecution if the defendant later has demonstrably more money available.
If, however, it can be proven on the balance of probabilities that a tainted gift was given, the value of that gift at the time of the transfer will be added to the defendant’s available amount irrespective of whether the gift has been dissipated entirely.
What effect will an adverse finding against the defendant have on the recipient of the tainted gift?
The court will first look to the defendant to satisfy the amount payable under the confiscation order, including any amount that represents tainted gifts. Enforcement action will be taken against the defendant who could be ordered to serve a sentence in default of payment of the ordered amount.
If, however, monies remain owing, the court can appoint a receiver to recover assets from the recipient. The court cannot confer this power without first giving the recipient the opportunity to make representations, but it remains the case that the person who received, perhaps unwittingly, a gift many years before and had no involvement in the original offence can find themselves entangled in court proceedings where they must now navigate a minefield of legal concepts and jargon.
How we can help
We have had proven success in rebutting allegations of tainted gifts through our rigorous scrutiny of the prosecution case, meticulous approach in analysing evidence and expert legal knowledge.