Serious Fraud Office: increased use of restraint expected

9 August 2012

On becoming the new Director of the SFO, David Green QC said "The SFO is here to stay. It is and will remain a key crime fighting agency targeting top-end fraud and corruption .... We will press for all the tools necessary to maximize our impact."  

Huw Jones reported for Reuters that Mr Green's first public speech gave more insight into his intentions for the SFO and that ”The SFO's proceeds of crime operations will become a division in its own right to increase confiscation of criminally obtained assets and compensation of victims."

The concept that convicted criminals should not benefit financially from the proceeds of their crime has been enshrined in legislation for some years.  The Proceeds of Crime Act 2002 empowers the Crown Court to make an Order restraining the assets of individuals and companies being investigated and/or prosecuted, both pre or post charge, to preserve the value of assets for possible future confiscation. 

If the SFO intends to increase confiscation of the proceeds of crime, the first step must involve more individuals becoming the subject of draconian Restraint Orders, which limit access to funds for ordinary living expenses to £250 per week. Bank accounts are "frozen" and normal monthly payments, such as mortgage, rent, utility bills etc cease.  The restrained person must provide detailed financial information, supported by documentary evidence, to negotiate an increase, which is not retrospective - meaning enormous pressure to work quickly.  The use of restrained funds for legal fees is prohibited, so third party or public funding is necessary. 

Unless extensions can be agreed with the prosecutor, Restraint Orders impose tight deadlines for repatriation of funds and full and frank disclosure of finances and financial transactions, possibly going as far back as the previous 6 years. If company accounts are involved, it means the instant paralysis of the restrained person's business and possibly, the appointment of a Management Receiver to operate the business.

Crucially, despite the pressure of lack of access to funds and strict time limits, information provided to the prosecutor must be accurate and complete.  Failure to provide such information or to breach the provisions of the Order can result in prosecution for contempt of Court, carrying a maximum sentence of 2 years imprisonment upon conviction. These Orders can continue for a number of years, especially if obtained at the start of an investigation and must be complied with until discharged by the Court.

The far reaching effects of Restraint Orders are always shocking, invasive and distressing for recipients but if the SFO Proceeds of Crime Unit is to be strengthened, in order to increase confiscation, it seems likely that we will see more frequent use of this powerful prosecution tool in the future.  

Of course, Restraint Orders alone do not lead to confiscation, they are merely a means of preserving assets and the anticipated increase in their use will only prove justified if other measures to be put in place by the new Director succeed - therein lies the real challenge for the SFO.

Co-authored with Jane Parker

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