POCA – What is it and why involve a forensic accountant?

What is POCA?

Proceeds of crime are the money or other assets gained by criminals whilst undertaking criminal activities and money laundering. Authorities, such as The Crown Prosecution Service, have the power to confiscate such money/assets under the Proceeds of Crime Act 2002 (“POCA”).

Amongst other situations, POCA proceedings must be commenced where a defendant is convicted of an offence in proceedings brought before the Crown Court.

How does POCA work?

The first step in the Proceeds of Crime Act process is to determine how much a defendant should pay under a confiscation order. To do this, there are two figures which need to be calculated – the available amount and the benefit figure.

The available amount represents the current value of all assets held by the Defendant. The benefit figure represents the court’s estimate of the value of the criminal benefit, making assumptions as to the assets that have been obtained through illicit means. The benefit amount can include any assets that are tainted by criminal behaviour. For example, if a Defendant purchased a property using the proceeds of crime, the equity of the property is also linked to the proceeds of crime – and is, therefore ‘tainted’. This can increase the benefit amount considerably.

If there is any discrepancy between the available amount and the benefit amount, the Defendant will be asked to explain the shortfall. If a sufficient response cannot be produced, the court may accuse a Defendant of deliberately hiding or undervaluing assets. The terms of the confiscation order will reflect this supposed deception.

Using the benefit figure and the available amount, a final figure known as the recoverable amount is determined. The confiscation order is then made in the sum of the recoverable amount. A confiscation order is an order of the Crown Court which calls for a convicted defendant to pay a particular amount of money to HMCTS immediately or within a fixed period.

What is an Accredited Financial Investigator?

Typically, the ‘benefit’ figure is calculated by an Accredited Financial Investigator on behalf of the Crown Prosecution Service. The training for Accredited Financial Investigator is run by the National Crime Agency and covers areas of financial intelligence, investigation and confiscation. It is intended to equip an officer or employee with the skills needed to put together the likes of a Section 16 Statement of Information in a confiscation case.

The courses run by the National Crime Agency are open to permanent staff employed by organisations empowered to use provisions contained within the Proceeds of Crime Act 2002; this includes police officers and employees from various different regulatory agencies such as the Department for Work and Pensions and the Financial Conduct Authority.

Whilst good written, literacy and numeracy skills are necessary, there is no formal requirement for an Accredited Financial Investigator to have any previous accountancy or financial experience.

Why involve a forensic accountant?

Given the range in background and experience of the Crown’s pool of Accredited Financial Experts, it is no surprise that the competence and experience of Accredited Financial Experts can range significantly. Whilst there are certainly some highly proficient Accredited Financial Experts, I have come across many POCA cases where the work performed by the Accredited Financial Investigator was somewhat lacking. Some of the issues I have found in previous cases include:

• Numerical inaccuracies – such as incorrect tax year allocations, missed transactions, incorrect calculations and transposition errors.
• Double counting – in cases where a Defendant held multiple bank accounts, we have found on multiple occasions that the Accredited Financial Investigator has included credits which are clearly transfers between bank accounts in the calculation of the Financial Benefit, thereby double counting the value.
• Ignoring instructions of the Defendant – we have seen multiple cases where the instructions provided by the Defendant have not been considered by the Financial Investigator. This led to an overestimate of the Financial Benefit as income which had clearly arisen from a legitimate source was included in the Financial Benefit incorrectly.
  Engaging a forensic accountant in POCA cases is a very sensible course of action which will provide peace of mind regarding the value of the Financial Benefit calculated by the Financial Investigator. In many cases, engaging a forensic accountant can result in a substantial reduction in the value of the Financial Benefit through the correction of any errors in the calculation and/or the removal of income that was clearly derived from legitimate sources.

Engaging a forensic accountant in POCA cases is a very sensible course of action which will provide peace of mind regarding the value of the Financial Benefit calculated by the Financial Investigator. In many cases, engaging a forensic accountant can result in a substantial reduction in the value of the Financial Benefit through the correction of any errors in the calculation and/or the removal of income that was clearly derived from legitimate sources.

For further guidance on POCA and when to seek advice, speak to our team today.