Proceeds Of Crime

Proceeds of crime refer to assets or money that have been acquired directly or indirectly through criminal activities and are used to buy additional assets. The aim of determining and seizure of assets or profits obtained from crime proceeds is to prevent the chain of crime cycle and prohibit further criminal behavior.

It helps dismantle criminal infrastructure funding terrorism globally through the confiscation of financial resources. The Proceeds of Crime Act has been promulgated to investigate, seize, and recover illegal profits from crime perpetrators. The seized funds are then directed towards public welfare and training people to prevent the occurrence of such crimes.

Proceeds of crime represent any funds, assets, or properties acquired through illegal work such as money laundering, drug trafficking, human trafficking, and fraud. Under the UK 2002 Proceeds of Crime Act, all these remain subject to seizure to disrupt criminal enterprises. The law has allowed law enforcement agencies to confiscate assets connected to criminal activity.

The following offenses come under its purview:

• Concealing: Involves moving, converting, and disguising illegal money to hide the criminal origin while doing layering and placement stages of money laundering.
• Arrangement: Comprises professionals such as accountants to help criminals in money laundering.
• Possession, use, and acquisition: Consists of using illegal funds to acquire, use, or possess criminal real estate, like buying and utilizing assets like yachts from illegal money.

After determining these offenses, agencies like Crown Prosecution Services (CPS) proceeds of crime can start seizure proceedings with respect to individuals guilty of crimes. This allows financial profits concerning illegal activity to be forfeited and distributed to the community.

It aims to curb any criminal activity using barriers against financial incentives for such activities. Moreover, it promotes the implementation of justice by making sure that criminals do not take undue financial advantage from their criminal activities and build a safer society. Furthermore, it acts as a strong deterrent to future criminal activities and destroys any criminal enterprises by eliminating their financial backbone.

One can use multiple ways to spot the assets bought from criminal activities:

• One buys expensive items quickly with cash that exceeds their financial capacity.
• People refuse to divulge their financial activities to financial institutions.
• Clients behave unusually when asking about sources of income.
• People use shell companies or complex structures to obtain funds.
• Huge cash transactions in accounts inconsistent with a real business or work profile of clients.
• Funds move from one account to another rapidly or are used to buy assets.
• One finds that intermediaries come in the way of transactions without justifying their role.

There are many ways to recover the money obtained from criminal activities, including:

• Authorities conduct extensive investigations towards tracking and ascertaining the crime proceeds.
• After that, all findings and asset details have to be presented to the court, which orders the freezing of assets orders to prevent any further embezzlement of the crime proceeds.
• Next, if the court convicts the person of a crime proceeds, then the order of assets and funds confiscation is issued.
• Further, authorities can use asset forfeiture laws to confiscate criminal proceeds permanently.
• However, in certain cases, civil proceedings can be used to recover assets or funds made out of criminal activity.
• For cross-border recovery or seizure of crime proceeds, international organizations cooperate to do the needful process.
• Finally, the assets or funds seized during the operation become available for public welfare, funding community works, and building infrastructure for the detection and prevention of crime proceeds.

Let us use a few examples to understand the topic.

Example #1 

Let us assume that in Old York City, a retailer named Noah Dresses is operated by Joe Doe. Owner Joe states that he sells dresses to locals and online. But his shop didn’t have many customers, yet he maintained a staff of 5 employees and a luxurious lifestyle. It occurred to authorities that something was wrong with his income in relation to his business status. After carefully examining his bank accounts in secret, investigators found that he had never received enough sales profits to sustain the business.

Therefore, after careful monitoring of his activities, authorities discovered that the profits were from illegal arms sales. Hence, after collecting ample evidence, they seized his business and presented him to the court under the Proceeds of Crime Act. As a result, the court found Joe guilty of using crime proceeds to fund his business and transforming them into legal money through money laundering.

Example #2

An online article published on 02 Aug 2024 discusses the forfeiture of KSh 63 million from Virtual Financials International Limited as per the high court's order that declared it as criminal proceeds. Justice made it mandatory that the funds kept in the equity bank be transferred to the assets recovery agency. Regarding the seizure, the account has Sh 60.7 million, and $17000 has been confiscated, which was kept for salaries and dividends as claimed by the company director.

However, the judge set aside the arguments as they were found to be insufficient explanations. It happened because the judge found that the director is the main shareholder in many interrelated companies, signaling the use of the tactic of money laundering. Furthermore, the assets recovery agency offered evidence to prove that all these related accounts received huge deposits from doubtful sources. As a result, the company dismissed the claim of a company of legitimate financial services.