oct ewj 24 online - Flipbook - Page 106
that the NCA proceeded on the basis i) that it was necessary to
be able to identify specific criminal property and criminal conduct before there can be a “proper basis” for a POCA investigation, (whether criminal or civil) and moreover ii) that the
provision of “adequate consideration” anywhere in the supply
chain would prevent any goods imported into the UK from
being identified as criminal property or recoverable property.
Both those propositions are, and are now accepted to be, wrong
as a matter of law.”
must show that they acted in good faith and were not
on notice that the property was obtained by unlawful
conduct. A person who suspected that it was would
not be able to rely on section 308.
“… A purchaser or importer who suspects the goods to be the
product of forced labour or other human rights abuses would
not be able to rely on section 308. If, and to the extent that, the
Judge accepted the NCA’s submission recorded in the final
sentence of [75] that, at any point in a market supply chain
stretching many thousands of miles, the chain could be broken
merely by the use of adequate consideration in any of the
transactions involved, he was wrong to do so.”
These findings followed several concessions by the
NCA, effectively retracting the position it took in the
High Court proceedings.
Conclusion
The Court of Appeal’s judgment provides clarification
on the application of POCA to illegal conduct in supply chains. It limits the “adequate consideration” defence for businesses involved in tainted supply chains.
Companies trading goods with knowledge or suspicion of forced labour involvement could face money
laundering investigations and potential liabilities, including penalties and confiscation of goods. Financial
institutions processing related payments could also be
implicated for handling the proceeds of crime.
Specific Criminal Property and Criminal Conduct
The NCA argued that a POCA investigation would be
“misconceived” without specifically identified criminal
property and conduct.
“An investigation premised on potential breaches of the
Proceeds of Crime Act 2002 (“POCA”) is misconceived. In
the absence of specifically identified criminal property and
criminal conduct, POCA is of no application.”
However, overturning that decision, the Court of
Appeal relied on the definition of “Investigations” in section 341 of POCA. Section 341 (2) provides that:
“For the purposes of this Part a civil recovery investigation is
an investigation for the purpose of identifying recoverable
property or associated property and includes
The NCA’s capacity to investigate such cases, especially
those where proving criminal activity in the supply
chain is challenging, remains uncertain. Nonetheless,
this decision is pivotal, and businesses should reassess
their supply chain due diligence procedures to effectively identify, investigate, and address concerns, particularly in high-risk industries. Given the recent
changes in attributing criminal liability to companies,
businesses must now carefully manage supply chain
risks to avoid potential legal and reputational harm.
a) investigation into whether property is or has been recoverable property or associated property…”
The Court of Appeal found that it was “obvious from
this definition that the investigating body does not
need to know that recoverable property exists before
commencing an investigation, since the specific purpose of that investigation may be to ascertain that fact”.
Author Fatima Jama
Fatima is developing a busy
defence practice in all areas
of Chambers’ work. A considerable part of her practice
includes
private
instructions. Fatima is also
increasingly instructed to
defend allegations of serious drug and firearms offences in the youth court, which often raise issues of
gang affiliation, county lines, and modern slavery.
Alongside this, Fatima is currently assisting a senior
member of chambers in an on-going substantial private prosecution case involving allegations of multimillion-pound fraud.
Adequate Consideration
The NCA argued that if a product had been
transacted for adequate consideration, the product
would not be criminal property for the purchaser. The
High Court agreed, but the Court of Appeal disagreed, stating that adequate consideration by one
party does not preclude the property from being
criminal in the hands of another party with the
requisite knowledge or suspicion.
The Court of Appeal also examined section 308 of
POCA, which sets out the general exceptions to civil
recovery.
“(1)If—
(a) a person disposes of recoverable property, and
Fatima undertakes publicly funded as well as private
work, including pre and post-charge advice. Fatima
has represented a broad range of professionals including company directors and accountants. She is
known for her innovative, thorough approach, and
common touch with clients.
(b) the person who obtains it on the disposal does so in good
faith, for value and without notice that it was recoverable
property, the property may not be followed into that person’s
hands and, accordingly, it ceases to be recoverable.”
If a person disposes of recoverable property and the
person who obtains it on the disposal does so in good
faith, for value and without notice that it was recoverable property, the property may not be followed into
that person’s hands, and accordingly it ceases to be recoverable. However, the fact that the individual paid
the market value for the property is not enough in
and of itself to prevent it from being recoverable. They
EXPERT WITNESS JOURNAL
Fatima has published several articles with a particular
focus on general crime, white-collar crime and financial regulation. Her articles have appeared on Lexology, The Expert Witness Journal and Financial
Regulation International.
www.mountfordchambers.com/profile/fatima-jama/
www.mountfordchambers.com
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