The seizure of assets through the Proceeds of Crime Act (POCA)

The rising usage of cryptocurrency represents an almost unprecedented change in the way that assets are viewed under the law. Digital currencies work through transactions that are recorded and maintained by a decentralised system, differentiating them almost entirely from traditional currency forms. 

The cryptocurrency market has seen rapid growth since its inception with the total cryptocurrency currency market having a value estimated at over $15 trillion. As one would expect, when the Proceeds of Crime Act (2002), or POCA, was originally enacted, it did not contain any powers to allow law enforcement agencies the ability to seize cryptoassets as the technology simply did not exist at that time. 

This was of major concern to the government as the lack of regulation in this area has meant that cryptocurrency has become a haven in which money can be moved without the usual level of scrutiny. The use of crypto assets allows money to be laundered quickly and anonymously under the noses of law enforcement. 

The anonymous nature of cryptocurrency, coupled with the lack of regulation and the law enforcement agencies inability to act against crypto assets under POCA has meant that for people under investigation, cryptocurrency became a way in which assets could be hidden. As a result of this, law enforcement and the government in the UK has looked to amend the POCA to be able to seize cryptoassets during investigations.  

Changes to the law

The government wanted to update the POCA legislation and create cryptoasset-specific civil forfeiture powers to better recover and control cryptoassets connected to investigations or proceedings. A significant chance came following the Economic Crime and Corporate Transparency Act 2023, received royal assent in October last year. That act aimed at combating economic crime by enhancing transparency in corporate ownership and improving the integrity of business practices. The proposed aim of this is to mitigate the risk posed by parties that cannot be prosecuted. It would ensure that they cannot use their funds for any further criminal or terrorist purposes by holding them as cryptoassets.

There are two main categories of asset recovery powers, which relate to criminal and civil matters respectively. Criminal powers, or ‘in personam’ powers, are used to impose an order against a person convicted of a crime, who is found to have benefited from that crime. Civil powers, or ‘in rem’ powers, order the seizure of assets that have been deemed to have been obtained through unlawful conduct or are intended for use in unlawful conduct. The reforms made to POCA to include cryptoassets pertained to both the criminal and civil powers.

Criminal regime changes