Is the Division of Criminal Spoils a “Tainted Gift” Under POCA 2002?

The Proceeds of Crime Act 2002 (POCA 2002) is one of the most powerful legal tools used in asset recovery and confiscation cases. Among its provisions is the concept of a tainted gift, which refers to a transfer of assets made by a defendant to another person for less than full market value, potentially making it recoverable by authorities. But does this concept apply when criminals divide the proceeds of an offence among themselves?

Key Considerations

1. Direct Proceeds vs. Gifts

A fundamental distinction in POCA is between assets obtained as direct proceeds of crime and those transferred as a gift. If co-offenders split the proceeds of a criminal act, each is receiving their own share of the illicit gains. This is not a voluntary transfer or a gift in the usual sense, as there is no element of one party giving something to another for free or at undervalue. Instead, it is a predetermined distribution of profits among those involved.

However, if an offender later transfers their share of criminal proceeds to a third party who was not involved in the crime, and this transfer is for less than its true value, it may then be classified as a tainted gift under POCA.

2. Full Market Value Considerations

For a transaction to avoid classification as a tainted gift, the recipient must provide full market value in exchange. The difficulty arises in proving whether a fair exchange took place. For example, if an offender "sells" criminally obtained property to a family member at a significant discount, this could be seen as an attempt to shield assets, making it vulnerable to confiscation.

3. Case Law Guidance

The courts have considered these issues in various cases, distinguishing between the direct acquisition of criminal proceeds and subsequent asset transfers. While direct proceeds are always subject to confiscation, tainted gifts extend liability to secondary transfers where undervaluation can be proven.

Case law suggests that where an individual freely transfers an asset for little or no consideration, it strengthens the prosecution's argument that this was an attempt to frustrate confiscation proceedings.

Key Questions This Raises

❓ When does a transfer cross the line from a division of proceeds to a tainted gift? If one offender receives more than their "fair" share, could it be argued they are concealing assets?

❓ How do courts assess whether a transfer was for ‘less than full market value’? In informal transactions (e.g., gifts to family), how do prosecutors prove the recipient did not provide equivalent value?

❓ Can a co-offender be pursued under POCA if they later give away their share of criminal proceeds? If a defendant uses their share to buy a house in a relative’s name, can this be considered a tainted gift?

❓ How does POCA’s tainted gift provision impact legal defences in confiscation cases? Can defendants argue that a transfer was made for legitimate reasons, or is there a presumption of criminal intent?

❓ What are the practical challenges for forensic accountants in tracing ‘tainted’ asset transfers? Given the complexity of financial transactions, how can forensic analysis distinguish between legitimate transfers and asset shielding?

Conclusion

The division of criminal proceeds among co-offenders is not usually a tainted gift—each party is simply receiving their share of the crime's gains. However, if those proceeds are later transferred at an undervalue to a third party, they may fall within POCA’s tainted gift provisions and be recoverable in confiscation proceedings.

The courts continue to refine their approach to these issues, making it essential to stay informed on evolving case law.