Criminal Proceeds Management

A key purpose of the CPRA 2009 is to better address serious and organised crime. The Act does this through establishing a civil forfeiture regime, and by improving the instruments forfeiture regime.

The CPRA 2009 directs the Official Assignee for New Zealand (OANZ) to take into custody and control assets that are ordered to be restrained or forfeited by the Court. It also directs the OANZ to: dispose of confiscated assets (being both instruments of crime forfeited under the sentencing provisions of the Sentencing Act 2002 and assets confiscated under Asset Forfeiture Orders in civil cases); dispose of assets that have been restrained to meet a Profit Forfeiture Order (PFO) in civil cases; and enforce PFOs where assets do not meet the amount specified to be repaid by the respondent.

The civil regime enables the Courts to order forfeiture of unlawfully derived property or an amount of property assessed to be the value of a person’s unlawfully derived income. The changes to the instruments forfeiture regime established by the previous legislation mean that people who forfeit an instrument of crime following conviction (for example, a house used to grow cannabis) will have that forfeiture taken into account in their overall sentence.

Most pertinent to the Official Assignee criminal proceeds management function is that the CPRA 2009:

• enables civil profit forfeiture orders to be established as a debt to the Crown;
• provides that the recovery of any such debt to the Crown will be undertaken by the Official Assignee; and,
• provides the Official Assignee with powers to realise forfeited assets from a forfeiture order 28 days after all appeals have been resolved; also,
• provides that restraining orders must be renewed every 12 months as necessary; and,
• increases the penalties in the Act to a level designed to more likely deter a breach of legislation.

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Although the Official Assignee (“OA”), (who is the statutory authority under the CPRA 2009 for custody and control of restrained and forfeited assets) was involved with taking custody and control of some property as early as 1993 under the repealed Proceeds of Crime Act 1991, it was not until 1995, when that Act had time to bed in and be used, that the OA was involved with the disposal of confiscated assets as an agent of the Crown.

In 2002 the OACU (then known as the Official Assignee Proceeds of Crime Unit) was set up to take on the ever increasing workload of restraint and confiscation cases. Through the statutory appointment of the Official Assignee, the unit is the only agency in New Zealand authorized to manage and dispose of seized assets connected with proceeds of crime. With the change of legislation in 2009, the unit changed its name to the Criminal Proceeds Management Unit (CPMU).

The CPMU duties are managed centrally from an undisclosed location. Further resources required to assist in cases are provided by specialist trained Ministry staff and agents who are contracted on a case by case basis.

CPMU members work with Police officers, Police prosecutors, Crown Solicitors, Crown Law and other agency enforcement personnel, on cases involving restraint and confiscation of assets by providing expertise for efficient and effective asset seizure, management and disposal.

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Various orders can be made prior to confiscation of assets, including a restraining order. These may be made in relation to property that may ultimately be subject to an Instrument Forfeiture Order (IFO), an Asset Forfeiture Order (AFO), or a Profit Forfeiture Order (PFO). Property subject to a restraining order may not be dealt with except as permitted by the Court. The Official Assignee is required by statute to administer the property while it is subject to the order. The CPMU, acting for the OA, will take custody and control of the restrained assets. The unit will also arrange for necessary transportation of moveable assets and valuations of assets to monitor equity preservation and costs associated with the management of certain assets.

If restrained property is later the subject of a Profit Forfeiture Order the Official Assignee must pay the PFO from the disposal of the restrained property. Any residual debt to the Crown is money owing to the Crown and the Official Assignee has a statutory ability to pursue that debt, using any legal means available for recovery.

If property is forfeited by an IFO or an AFO, the Official Assignee will dispose of the asset by realization or other means as an agent on behalf of the Crown.

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During restraint period

• Seizure, inspection, administration, storage, protection and maintenance of restrained property, (subject to statutory limitations on indemnity)

• Appraisal and inspection of property on a regular basis

• Payment of certain costs relating to the preservation of assets

• Act as an independent agent to sell assets if orders to do so are made by the Court

During the Instrument Forfeiture, Asset Forfeiture and Profit Forfeiture phase

• If the respondent is found guilty of serious offences warranting confiscation of instruments and the Court determines that is the case and makes an Instrument Forfeiture Order under section 142 of the Sentencing Act 2002 during sentencing, the CPMU will dispose of the confiscated assets by whatever means are considered appropriate.

• Funds paid into the CPMU Trust account will then be paid to the Crown Consolidated Revenue Account.

• Financial conflicts, third party payments and other costs associated with the criminal and confiscation proceedings are dealt with.

• Assets not confiscated remain with their owner(s).

• If an Asset Forfeiture Order (AFO) is made against assets, the CPMU will dispose of the assets in the best way possible after the statutory appeal period has expired and then hold funds from the sale for the specified 6 month stand down period. The funds are then paid to the Crown.

• In the case of a Profit Forfeiture Order (PFO), the CPMU will, after the specified periods have expired, sell all assets held under restraint to meet the maximum amount payable. Any surplus will be repaid to the respondent.

• In the event that insufficient assets are held to meet the maximum amount payable under a PFO, the OA can act to pursue the debt as a civil debt owing to the Crown as an agent for the Crown.

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The process from start to finish

Restrained property takes many forms and can encompass anything acquired as proceeds of crime, or anything used to commit a crime. Restrained assets can include:

• Cash, shares, foreign currency, bank accounts, cryptocurrency/crypto assets and other cash type assets
• Precious metals as bullion, coins
• Art collections, antique furniture
• Vehicles, motorcycles, boats and aircraft
• Real estate, farms, lifestyle blocks
• Businesses
• Personal property such as jewellery, furniture & effects
• Animals such as race horses and stock

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After the appropriate appeal period or specified period of 6 months has passed, the CPMU normally disposes of moveable assets through a public auction. Cash is banked into a trust account.

Real property is usually sold through appointed local agents on the open market. Property is sold subject to the market in that locality.

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Care must be used in interpreting the following statistics. There is no correlation between the value of goods seized in a given year and the value of the net proceeds for the year for any or all of the following reasons:

• Prior to the Criminal Proceeds (Recovery) Act 2009, the CPMU was not in custody and control of assets in all cases and therefore cannot record them.
• Assets restrained in any given year are very rarely disposed of in that year.
• The restrained assets are returned to the owners in some circumstances.
• Some assets will depreciate if criminal proceedings last for a considerable period of time.
• A respondent’s living and other expenses may be paid from their seized property if so ordered by the Court, which reduces the value of assets that may ultimately be forfeited to the Crown.
• Sometimes material cannot be safely sold, and must be destroyed, such as assets that could be used as drug related equipment or assets that are heavily contaminated with drug related chemicals.

The table below shows

1. The number of new cases per year since the 1995/96 financial year and
2. The dollar value of assets restrained per year since the 2003/04 financial year.

¹Section 5 CPRA 2009 definitions – means an offence punishable by a maximum term of imprisonment of five years or more; and includes an attempt to commit, conspiracy to commit, or being an accessory to an offence if the maximum term of imprisonment for that attempt, conspiracy or activity is five years or more.