For many people who receive or are served with a Crown Court Restraint Order, this will be the first time they have had anything to do with the criminal justice system. In some circumstances it will follow swiftly on from an arrest and/or the execution of a search warrant of their home or business premises, and may have been accompanied by the seizure of cash or property. In others it will simply come alone and without warning, complete with a penal notice to warn the recipient of dire consequences of any failure to comply.
What is a Restraint Order?
The powers to obtain one (in most cases) come from Part 2 of the Proceeds of Crime Act 2002 (POCA), which is about the Crown Court’s power to make Confiscation Orders against people convicted of criminal offences. These are draconian orders and, despite the name, not about confiscating assets that are identifiably the proceeds of crime. In many cases, a convicted defendant will face an order quantified by reference to all of his available assets – plus, importantly, any assets he has transferred for no value (or for less than they were worth) to someone else (so-called ‘tainted gifts’).
The idea of a Restraint Order, then, is to make sure at the outset of an investigation that the maximum possible assets will be available to pay a Confiscation Order. It is designed to prevent people spending or transferring their assets while the case runs its course (and, if the court decides to order it, to require the recipient to disclose their assets and/or ‘repatriate’ them to the UK).
What effects can it have?
The problem of course with such a power is that it can cause severe injustice, both to the people accused of crime themselves (who, it must be remembered, are innocent until proven guilty) and to third parties, including people who co-own property with suspects or who are recipients of so-called ‘tainted gifts’. Investigations, especially into complex financial crime, can take many months or even years to reach a final result, during which time a perfectly innocent person can be denied access to their assets (they may even have a receiver appointed to manage them). Some orders can cover all of a person’s property, subject only to a small allowance for reasonable living expenses. Though recipients are urged to take legal advice, frozen funds cannot be used to pay for it. In practice, help from family or friends, in the short term at least, is frankly essential.
Can I challenge a Restraint Order?
The good news is that it is possible to apply to the court to have a restraint order discharged or varied. Investigators, prosecutors and courts are not perfect, and in many cases a restraint order will go too far or target the wrong people or assets; a successful applicant may also be able to recover their costs. The key will often be to scrutinise the witness statement that the investigators presented to the court when applying for the order, and to note any inaccuracies or omissions. In some cases the most that can be done is to increase the living expenses allowance or get variations to allow relatively uncontroversial transactions (to let out a house, for instance). In others, the whole basis for the order may be flawed, and it may be susceptible to challenge.
What are the risks to me?
More broadly, of course, it will always be prudent to consider the broader risks that come with the situation that has given rise to the order. Recipients will often have no actual involvement in criminal conduct, and investigators may ultimately accept that this is true. But the fact of the restraint order necessarily means that there is a criminal investigation afoot, and anyone thought to have received property from a suspect may in due course also become a suspect. It will also usually be prudent to take a long view to anticipate what might happen at the end of the case in terms of a Confiscation Order and its enforcement. In many cases there are steps that can be taken to deal with or mitigate the risks that come with being either the target or on the periphery of a criminal case.
What should I do now?
The bottom line with a Restraint Order is that though it may have serious effects and it must be taken seriously, it is absolutely not equivalent to a judgment that any assets listed in it are tainted or that anyone made subject to it (either as a suspect or a third party) is guilty of any offence. For good or ill, it is very much the start of the process rather than the end of one. The opportunity to take advice at that early stage of the process is also the opportunity to start taking control of it, and to ensure you have the best possible chance of a swift and positive outcome.
If you would like to discuss any of the issues raised in the above article, please contact John Binns in the strictest confidence.
John Binns is a partner at BCL specialising in all aspects of business crime, with a particular interest in confiscation, civil recovery and money laundering under the Proceeds of Crime Act 2002 (“POCA”). His business crime experience includes representing suspects, defendants and witnesses in cases invoking allegations of bribery and corruption, fraud (including carbon credits, carousel/MTIC, land-banking, Ponzi and pyramid scheme frauds), insider trading, market abuse, price-fixing, sanctions-busting, and tax evasion. He has coordinated and undertaken corporate investigations and defended in cases brought by BEIS, the FCA, HMRC, NCA, OFT, SFO and others.