Mon 20 Nov 2023

Proceeds of Crime and Cryptoassets - Catching up with the Criminals

The Proceeds of Crime Act 2002 ("the 2002 Act") and its predecessor, the Proceeds of Crime (Scotland) Act 1995, have for decades provided regimes for the criminal confiscation - and, introduced by the 2002 Act, civil recovery - of the financial benefit of unlawful conduct in Scotland. Such regimes, as with most things, require freshening up every now and again. In particular, the 2002 Act requires to keep up to date with new and emerging forms of unlawfulness, criminality and methodologies of money laundering.

The UK Government has, as part of the recently assented Economic Crime and Corporate Transparency Act 2023 ("the 2023 Act"), made significant updates to the scope and operation of the 2002 Act. Of particular note, for these purposes of this article, is the move to include the confiscation and civil recovery of Cryptoassets within the 2002 Act regime.


Cryptoassets are a store of value which can be transferred or exchanged digitally and are secured cryptographically. They exist electronically and use a peer-to-peer system. Cryptoassets can include well known cryptocurrencies such as Bitcoin and other assets such as non-fungible tokens (NFTs).

Advocates of Cryptoassets will speak to the advantages of the fact that there is no central bank, government or central management of Cryptoasset systems and the benefits of such limited regulation. What is also clear, however, is that Cryptoassets are increasingly being used by criminals and their associates for unlawful purposes including the moving and laundering of the profits of crime.

The recent update of the 2002 Act reflects an attempt to clamp down on the criminal use of Cryptoassets.

Changes to the Regime

Some notable changes across the criminal confiscation and civil recovery regimes include:

  • The introduction of a new meaning of "Cryptoasset" and the concept of a "cryptoasset-related item" as a new class of seizeable property;
  • The introduction of powers allowing officers to seize Cryptoassets, including, during the course of an investigation without first having arrested someone for an offence and to enable officers to seize cryptoasset-related items;
  • Provision for an officer to apply to the relevant court for a crypto-wallet freezing order where they have reasonable grounds for suspecting that cryptoassets are recoverable property or are intended for use in unlawful conduct;
  • Provision for the forfeiture of detained cryptoassets or cryptoassets subject to a freezing order where they are recoverable property or are intended for use in unlawful conduct
  • Provision for the courts to enforce confiscation orders, including the powers of the court to order the realisation and payment to court (or destruction) of cryptoassets;
  • The introduction of a new power for both Sheriffs and Enforcement Administrators allowing them to destroy cryptoassets where it is not possible to realise the asset or there are reasonable grounds to believe that the realisation of the asset would be contrary to the public interest (i.e. its onward use is likely to facilitate criminal conduct);
  • The new power of the courts to order a "relevant financial institution" to pay over to the court money which is payable by an accused under a confiscation order. This extends a power previously only available in relation to banks to other organisations including electronic money institutions.

While not all of the 2023 Act is yet in force, it will be interesting to see what impact these changes have on the operation on the criminal confiscation and civil recovery regime and its success as a whole. 

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