Chapter 16
Proceeds of crime requests
Background
Domestic legislation
History
16.7In 1991, New Zealand enacted the Proceeds of Crime Act. This Act allowed for the proceeds of serious criminal offending to be restrained during court proceedings and confiscated following a conviction.
16.8When MACMA was enacted in 1992, provision was made for foreign restraining, forfeiture, and pecuniary penalty orders to be registered in the High Court and to be enforced through the Proceeds of Crime Act. It also permitted New Zealand authorities to apply for a search warrant or an interim restraining order in respect of tainted property relating to a foreign serious offence and believed to be located in New Zealand. To give effect to the MACMA provisions, the Proceeds of Crime Act was substantially amended.
16.9Over time, the Proceeds of Crime Act became ineffective, as it failed to address the growing problem of how members of organised criminal groups were often able to distance themselves from the commission of specific offences and therefore avoid being subject to orders. To address this, CPRA was enacted in 2009. CPRA created a conviction-based regime in relation to instruments of crime and a non-conviction-based regime to deal with proceeds of crime or property assessed to be from unlawfully derived income.
16.10The non-conviction-based regime, or “civil” regime, operates independently of any criminal proceedings that may be under way or contemplated. Under the non-conviction-based regime, two types of confiscation orders are available, namely:
- an assets forfeiture order in respect of tainted property; and
- a profit forfeiture order for any unlawfully derived benefits.
Both orders require that the property or benefits in question must have been derived from significant criminal activity, that is, offending punishable by five years’ imprisonment or more, or that has generated at least $30,000 in profit. Under the conviction-based regime, only an instrument forfeiture order is available, which is primarily dealt with in the Sentencing Act 2002.
MACMA sections 54 to 62
16.11When CPRA came into force, MACMA was substantially amended. As amended, MACMA allows New Zealand to assist a foreign country by:
- obtaining a search warrant, a production order, or an examination order to identify or trace the relevant property or the owners of that property;
- obtaining an interim foreign restraining order to secure the relevant property pending a further request;
- registering and enforcing a foreign restraining order to secure the property pending the resolution of the foreign court proceedings; or
- registering and enforcing a foreign forfeiture order.
16.12This assistance is possible only if the request from the foreign country relates to a “criminal proceeding or investigation” concerning proceeds or instruments of crime. The interpretation provision of MACMA extends the definition of “criminal investigation or proceeding” to allow such assistance if the foreign country is using, or intends to use, a non-conviction-based confiscation regime.
International obligationsTop
16.13New Zealand has made extensive commitments as to how it will provide assistance to foreign countries in confiscating proceeds and instruments of crime.
The Financial Action Task Force (FATF) Recommendations
16.14Recommendation 38 of the FATF Recommendations states:
Mutual legal assistance: freezing and confiscation
Countries should ensure that they have authority to take expeditious action in response to requests by foreign countries to identify, freeze, seize and confiscate property laundered; proceeds from money laundering, predicate offences and terrorist financing; instrumentalities used in, or intended for use in, the commission of these offences; or property of corresponding value. This authority should include being able to respond to requests made on the basis of non-conviction-based confiscation proceedings and related provisional measures, unless this is inconsistent with fundamental principles of their domestic law. Countries should also have effective mechanisms for managing such property, instrumentalities or property of corresponding value, and arrangements for coordinating seizure and confiscation proceedings, which should include the sharing of confiscated assets.
To assist in complying with this Recommendation, FATF released a best practice paper.
The Harare Scheme
16.15Part VI of the Harare Scheme sets out the measures that state parties should consider having in place to assist each other in freezing, restraining, seizing, forfeiting, confiscating, and disposing of proceeds and instruments of crime. The Model Legislation builds on Part VI of the Scheme and provides model provisions and associated explanatory notes in relation to these issues.
The United Nations Convention against Transnational Organised Crime (UNTOC)
16.16Articles 13, 14, and 18 of UNTOC deal with international cooperation for the purposes of confiscation, the disposal of confiscated proceeds of crime or property, and mutual legal assistance generally.
The United Nations Convention against Corruption (UNCAC)
16.17Asset recovery is explicitly stated as a fundamental principle of UNCAC, and countries are required to take measures that will support the tracing, freezing, seizure, and confiscation of proceeds of corruption. Chapter V of the Convention specifies how this cooperation and assistance should be rendered.
