Restraint orders

---

During the course of a criminal investigation or criminal proceedings, restraint orders can be used as a method of freezing assets that may later be confiscated.

The decision whether or not to apply for a restraint order and if so, the timing of that application are important strategic decisions for the prosecuting authority. Such a decision will only usually be taken following careful consideration of all the facts and circumstances of the case. 

 An application for a restraint in respect of most offences can be made at any time after an investigation has commenced. In a large number of cases, being served with a restraint order may be the first indication that you have that you or your company is under investigation.

The prosecution will therefore be mindful of the timing of the service of restraint orders as it “forces their hand”. They will be mindful that once a suspect has been served with a restraint order, they will be aware of the criminal investigation and may be in a position to abscond and/or to destroy evidence or otherwise interfere with the course of the investigation. To this end, the prosecuting authority will have to balance the pros and cons of an early application. 

Most prosecuting authorities will determine that it will be in the public interest to make an application:

where the investigation is not likely to be compromised to a significant extent; 

• where there are reasonable grounds to suspect that the defendant has benefited from criminal conduct; and
• there is a real prospect that substantial realisable assets will be dissipated, unless a restraint order is granted. 

The judge may only grant a restraint order pursuant to section 41 Proceeds of Crime Act where any of the five conditions set out in section 40 is met. 

Criminal investigation and Benefit

A restraint order can be applied for if a criminal investigation has been started in England and Wales with regard to an offence and there is reasonable cause to believe that the alleged offender has benefited from his criminal conduct. 

Criminal Proceedings and Benefit

An application for a restraint order may also be made once proceedings in respect of an offence have been started in England and Wales. Again, the prosecution must show a reasonable cause to believe that the defendant has benefited from criminal conduct. 

Confiscation proceedings

The prosecution may apply for a restraint order where the prosecutor has applied for or will apply for the Court to:

• reconsider making a confiscation order; or
• reconsider the benefit figure; or
• make a confiscation order where a defendant absconds after conviction or committal; or
• make a confiscation order where a defendant absconded more than two years previously but was neither acquitted nor convicted in commenced criminal proceedings. 

Before an order can be granted, the Court must also be satisfied that there is reasonable cause to believe that the defendant has benefited from his/her criminal conduct.

 The prosecution may make an application for a restraint order if the prosecutor has commenced or will commence:

• an application for the Court to reconsider a benefit figure from an earlier confiscation order, and 

• if there is reasonable cause to believe that the Court will decide that the amount found under the new benefit calculation of the defendant's benefit exceeds the relevant amount. 

A restraint order may be granted if the prosecutor has applied for or will apply for the Court to reconsider the amount available to satisfy a confiscation order. The Court must be satisfied that there are reasonable grounds to believe that the Court will decide that the amount found under the new calculation of the available amount will exceed the relevant amount. 

With regards to the latter three conditions (above), they will not be satisfied if it can be shown and the Court accepts that either there has been undue delay in making the application, or the prosecutor does not intend to proceed.

As the term "reasonable cause to believe" is not defined in the legislation or relevant case law, defence teams should be alert to the room for manoeuvre. The fact that the term is not clearly defined, provides an area for argument. The notion clearly requires something more than suspicion and defence teams should be ready to test this. Although, it does not require the prosecutor to adduce as much evidence as would be required for the normal criminal standard, the belief must be rational and based on adequate supporting evidence. 

In each and every case, the prosecution must show that there is a real as opposed to a fanciful risk that assets will be dissipated in the event that a restraint order is not made. Defending restraint order proceedings will necessarily involve analysis of the risk of dissipating assets and presentation in a way that shows that the risk is not real. The prosecutors will seek to show that such a risk exists and your defence team must be diligent in defending against this prosecution view. 

A good example of this can be shown from the Court of Appeal case of Re B [2008] EWCA 1374 where the Court of appeal in agreeing with the defence, held that both the prosecutor and the judge should explain how it can be said there is a real risk of dissipation of assets in the future, when the defendant had every opportunity of doing so in the past and had not done so.

Where the defence are able to show that the value of the proposed assets are such that they will all be utilised to pay for living expenses in the period prior to the conclusion of the criminal proceedings, it is accepted that it would not be appropriate to apply for a restraint order. This aspect of defending restraint proceedings, may involve complex forensic analysis especially where the proceedings may take years to finally conclude.

Where assets are seized the circumstances and logistics of what happens depends on whether it is case of seizure of assets before conviction or seizure of assets after conviction. Where the seizure of assets is prior to conviction, those suspected of criminal conduct are entitled to request the release of reasonable sums to meet general living expenses. Whilst it is generally accepted that it would not be appropriate to apply for a restraint order where the value of a defendant's assets are such that they will all be used to pay living expenses in the period prior to the conclusion of the criminal proceedings, this will need to be carefully considered and when defending restraint proceedings, this should not be taken for granted and forensic calculations should be presented when defending restraint order applications.

 A restraint order may be made following an application by a prosecutor or an accredited financial advisor. If the application is made by an accredited financial investigator, they must be accredited by the National Policing Improvement Agency (NPIA) to exercise Part 2 powers and will usually be an employee of the police force financial units (FIUs) or of Customs and Excise. 

Where the application is made by an accredited financial investigator, it must be authorised by: 

- a police officer not below the rank of Superintendent

- an officer of HM Revenue and Customs of similar rank; or

- an accredited financial investigator designated by the Secretary of State. 

The amount of assets or property that can be restrained will be dependent on the likely amount of the confiscation order. As it is highly likely that enquiries into the assessment of the likely confiscation order will be in the early stages, regrettably, the Court will generally permit the prosecutor a degree of latitude in the assessment of the amount of benefit, and therefore the amount of the restraint order.

Where the prosecutor is going to ask the Court to decide whether the defendant has a criminal lifestyle and has benefited from general criminal conduct, the court may grant an order where the defendant will be restrained from dealing with all of his assets ("general restraint"). 

Where a Criminal lifestyle is not being suggested by the prosecutor and the extent of the proceedings is to determine whether the defendant has benefited from his particular criminal conduct, a defendant will be restrained from dealing with specific assets which together total in value the amount of his benefit from particular criminal conduct ("specific restraint"). 

Where the amount the defendant has benefited from particular criminal conduct exceeds the value of all his assets it will be appropriate to restrain the defendant from dealing with all of his assets. 

Any person who holds assets jointly with the defendant may be specifically restrained from dealing with those jointly held assets. The recipient of a tainted gift may be restrained from dealing with any realisable property they hold up to the current value of the gift. 

Realisable property is defined as any free “property” held by the defendant and any free property held by the recipient of a “tainted gift”. 

The term "property" covers all property wherever it located and includes real or personal property, money, or other intangible or incorporeal property or a thing in action. 

A person “holds” property if he holds an interest in it. A person obtains property if he obtains an interest in it, and one person transfers property to another, if the first one transfers or grants an interest in it to the second. References to an interest, in relation to property other than land, include references to a right (including a right to possession). 

It must be borne in mind that if the defendant or the recipient of a tainted gift has any interest in the property, the whole of the property is realisable property and may be subject to restraint proceedings. 

Property is free property unless it is the subject of:

• a forfeiture order either under the Misuse of Drugs Act 1971 or the Terrorism Act 2000,

• a deprivation order under the Powers of Criminal Courts (Sentencing) Act 2000.

• an interim receiving order, a recovery order or an order for the detention or forfeiture of seized cash under the civil recovery provisions of the Proceeds of Crime Act 2002. 

As Companies have their own legal personality separate and distinct from their owners, they do not fall within the definition of realisable property. However, where a suspect or defendant is in control of a company and it has been used to facilitate a criminal offence, the court may then treat it as the realisable property of the defendant. 

Prior to conviction, it is important to ensure that any restraint order does not operate to preclude the company engaging in legitimate business activity. To this end, it is important to ensure that any restraint order allows for the company assets to be released to facilitate such lawful trading and activity.

Where a suspect or a defendant disposes of or transfers property to another person for a considerably lower value than the property is worth, it will be tainted if it was made at any time after the commission of the offence in question.

Where a Court has determined that a defendant has a criminal lifestyle, any gift made by the defendant within a six year period prior to the commencement of proceedings is caught by the proceedings. In addition, any gift made at any time is caught, if the gift:

• i. was obtained by the defendant as a result of or in connection with general criminal conduct;
• ii. or represents property obtained as a result of or in connection with general criminal conduct.