A 'tainted gift' refers to a transfer of property or an asset that is suspected to be connected to the proceeds of crime. It can mean any property or asset gifted during a specified period before or after the commission of the relevant crime by a person who is under investigation for a crime, if law enforcement suspects the asset or property was acquired through the proceeds of criminal activity.

Under the Proceeds of Crime Act 2002 (POCA), any assets that are found to be the proceeds of crime (or that are intended to be used in committing a crime) can be seized by law enforcement authorities. POCA has provisions specifically for tainted gifts and instructs the police and other agencies to treat them as though they were still part of the defendant’s assets for the purposes of recovering or confiscating them.

Unfortunately, this sometimes means that innocent people can find their assets subject to confiscation orders. Money or assets, sometimes of significant value, may be taken away from them unexpectedly. Naturally, this can cause serious challenges for people affected in this way. It is important to speak to a solicitor at the earliest opportunity if you are faced with this possibility.

Here, the expert criminal defence solicitors at JMW explain the concept of a tainted gift, what you should do if you believe you have received one, and what your legal rights are to defend your property if you find it subject to a restraint or confiscation order.

What counts as a tainted gift?

Law enforcement agencies such as the police, the Serious Fraud Office and the National Crime Agency often try to identify tainted gifts during investigations into various types of financial crime. The purpose of this is to determine whether individuals have transferred criminally obtained assets to someone else, to avoid having them confiscated. If these agencies can prove that the assets in question constitute a tainted gift, they may be liable for confiscation following a conviction. When determining whether a gift is tainted, the burden of proof lies with the prosecution. They must prove, on the balance of probabilities, that the gift in question is tainted. This means that it is more likely than not that the gift was derived from criminal conduct.

The agencies that can investigate financial crimes in the UK are not limited to those listed above. The full list includes:

• HM Revenue and Customs (HMRC)
• The National Crime Agency
• The Serious Fraud Office
• The Crown Prosecution Service
• The police
• The Financial Conduct Authority

There are several considerations that will need to be examined to determine whether or not a particular asset constitutes a tainted gift.

The first is that the gift must have been made by the defendant at a time when they are alleged to have committed an offence or at any time afterwards. The timeline can also include certain gifts that were made before, and this depends on whether or not the defendant is considered to have lived a ‘criminal lifestyle’ by the authorities. If not, exchanges or transfers can only be considered tainted if they happened after the date on which the crime is alleged to have taken place. JMW can advise on whether transfer of an asset falls within the scope of the tainted gift provision.

If the defendant lived a criminal lifestyle in the opinion of investigators, gifts can be considered tainted if they were given or received within the six years prior to the commencement of legal proceedings. Finally, the asset must be of sufficient value to make it liable to confiscation.

The gift does not need to have been given freely (sometimes referred to in proceedings as given ‘without consideration’). An exchange in which an asset was sold at a price significantly below its market value can also be considered a tainted gift for the purposes of confiscation proceedings.

How do authorities seize tainted gifts?

During an investigation, the authorities will try to identify and track the assets that could be proceeds of crime. There are a number of powers under POCA by which they can do this. For example, they may seek an Account Freezing Order to restrict access to a particular bank or building society account while they investigate the funds therein. They may apply for a restraint order containing a term obliging the defendant or named recipient of the supposed gift to transfer interim control of the asset to the Crown.

Once it is secured, the confiscation order may compel the recipient of the tainted gift to either surrender the asset itself or pay an equivalent monetary value. In some cases, assets may be physically seized, but there are several other approaches to enforcement that authorities can use. For example, failure to comply with the order can lead to legal consequences for the recipient, including additional fines or imprisonment, even if they are not alleged to have committed a crime as part of the original investigation.

If an asset is deemed a tainted gift, the court can issue a confiscation order against the recipient of the gift. The prosecution must demonstrate that the gift is tainted to secure a confiscation order. Authorities do not always need to prove that the recipient of the gift knew of its criminal origins in order to recover it.

Are there legal options to fight a confiscation order?

The recipient of a tainted gift has the right to present a defence during any confiscation proceedings. They may argue that the asset was not derived from criminal activities or that it should not be considered a tainted gift. If the recipient can satisfy the court that they received the gift ‘in good faith and for value’ (i.e. they paid a fair price for the asset), they may be able to retain the gift. This submission will be stronger if the innocent recipient had no knowledge of the criminal conduct and received the gift without any suspicion. Instructing a solicitor with extensive knowledge and experience in confiscation proceedings is vital, as they will be able to build a case and structure a suitable defence.

Once a confiscation order has been issued, the recipient of the tainted gift can appeal the decision. This is often challenging because the procedure provides an opportunity for third-party recipients to challenge the evidence prior to the making of a confiscation order. As a consequence, appeals need to be accompanied by good reasons why the recipient did not intervene before the order was made. The team at JMW has a strong track record of success in this area, including in lodging appeals or mounting a defence against allegations of financial crime.
For more information about tainted gifts, investigations and mounting a defence, contact JMW Solicitors today. Call us on 0345 872 6666 or use our online enquiry form to request a call back at your convenience.