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Criminal Forfeiture under Kenya's Proceeds of Crime and Anti-Money Laundering Act: Nature and Challenges

Document Cited in Related
Vincent
Published date01 November 2020
Pages657-676
DOI10.3366/ajicl.2020.0344
Date01 November 2020
INTRODUCTION

The aim of criminal forfeiture is to deprive offenders of the proceeds of their criminal conduct, to deter the commission of further offences and to reduce the profits available to fund further criminal enterprises.1 The proceedings are in personam and are undertaken as part of the sentencing process.2 This infers that an accused person should have committed an offence and a trial conducted to prove one's guilt or innocence. If convicted, the accused is deprived of the benefit he received from the offence.3 Thus, upon completion of the criminal trial, separate but linked forfeiture proceedings are begun. These proceedings aim at determining the amount of benefit the defendant received from the commission of the offence convicted of and thereafter stipulate the amount the defendant is to forfeit to the state. However, it may be permitted to take away the defendant's property of equal value to the benefit received.4

Criminal forfeiture does not function as the imposition of a fine.5 This is because the aim is to take away the benefit the defendant gained from committing the offence convicted of whereas the imposition of a fine aims at punishing the offender.6 Further, criminal forfeiture targets only the property of the defendant and not that of third parties since it seeks to deprive the benefit he personally gained from committing the offence.7 To effectively prove a claim for criminal forfeiture, there is a need to show a direct cause-and-effect connection between the offence and the benefit sought to be forfeited.8 Accordingly, it should be proven that the property is derived directly or indirectly as a benefit of the offence the defendant is convicted for. This can be done through the ‘but for test’. That is, the proceeds of an offence comprise any property, real or personal, tangible or intangible, that the wrongdoer would not have obtained or retained, but for the crime committed.9 Criminal forfeiture proceedings are civil in nature. Hence, the rules on the nature of evidence and its production, as well as the burden of proof applicable, are on a balance of probabilities.

Kenya's asset forfeiture regime does provide for criminal forfeiture and is contained in a number of pieces of legislation. However, of these statutes the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA) 2009 has the widest scope and contains the most comprehensive provisions on asset forfeiture. POCAMLA seeks to ‘to provide for the identification, tracing, freezing, seizure and confiscation of the proceeds of crime, and for connected purposes’.10 This permits its broader application in locating and confiscating the proceeds of various offences. The key concept is thus ‘offence’ which under the statue is defined as any act that is a crime under any Kenyan law.11 Therefore, POCAMLA's provisions can facilitate the forfeiture of proceeds from a wide variety of crimes whereas the other statutes apply to forfeiture of proceeds from specific offences. Hence this article will focus only on the criminal forfeiture regime under POCAMLA.

Criminal forfeiture is generally done in three phases, but in certain instances the first stage may be skipped. These phases are: restraint,12 confiscation and13 realisation.14 The restraint stage seeks to avoid dissipation of targeted property that is likely to be the subject of a confiscation order. The confiscation stage entails the court making an inquiry and determination of the benefit the defendant gained from particular criminal conduct. The realisation stage involves enforcement of the confiscation order given. This is done by seeking a court order to direct any person holding realisable property15 to surrender it to a management receiver. This is carried out only where necessary, for example if the fulfilment of the confiscation order can only be done by taking over realisable property. These phases are effected through court proceedings where the relevant orders are issued. During these procedural steps the defendant and affected persons are given an opportunity to oppose the applications. This is through filing applications for exclusion of one's interests.

Criminal forfeiture proceedings are instituted as part of the sentencing process to deprive the benefit gained from the offence one has been convicted of.16 The benefit is taken away by calculating in monetary terms what the defendant obtained from committing the offence they have been convicted of and requiring payment of the said amount. In these proceedings the applicant (ARA director), by a preponderance of the evidence, must establish the requisite nexus between the benefit and the crime. Importantly, criminal forfeiture is only applicable to recover the benefit gained from criminal conduct – it cannot target instrumentalities of crime.

This article seeks to evaluate the substantive law and the procedure governing criminal forfeiture under POCAMLA so as to identify the gaps in the provisions and challenges that may be encountered when undertaking the process further to providing possible means of addressing the identified issues. It is important to note at the commencement of this examination that, despite POCAMLA being in inforce since 2010, Kenyan jurisprudence on the application of criminal forfeiture is very limited. This is due to the extant situation of the statute's underutilisation. Therefore to fill this gap reference will be made to court decisions from the UK and South Africa. This will assist in identifying viable interpretation of the Kenyan provisions and for benchmarking. Justification for doing so is premised on the fact that both countries have advanced greatly in terms of the functional capabilities of their courts in dealing with criminal forfeiture matters. Additionally, the three jurisdictions follow the common-law tradition and have similar legislation, having based their forfeiture regimes on international conventions and Financial Action Taskforce Recommendations.17

 INITIATING PROCEEDINGS, <italic toggle="yes">LOCUS STANDI</italic> AND COURT JURISDICTION

Generally, before initiating legal proceedings, it is important to establish the date of accrual as it is linked to the limitation of actions, that is the period beyond which proceedings may not be instituted.18 In relation to criminal proceedings, the statute of limitations does not apply. Hence, a criminal trial can be instituted at any time. Subsequently, since criminal forfeiture is part of the sentencing process, restriction of time does not apply. Nonetheless, POCAMLA came into effect on 28 June 2010, therefore strictly it should only apply to crimes committed after this date in accordance with the nullum crimen sine iure principle.19

However, section 52(3) POCAMLA states that targeted benefits include those received or retained from an offence ‘at any time, whether before or after the commencement of this act’.20 This implies that forfeiture proceedings apply retrospectively to criminal trials started before the statute's commencement date. This provision is in conflict with section 62(1) which requires the court to consider only the benefit gained ‘at any time after the commencement of this act’ in calculating the actual criminal benefit gained by a defendant. Nevertheless, the preferred application is in accordance with section 52(3) since retrospective application permits the fulfilment of parliament's rationale in enacting POCAMLA: that of taking away criminal benefit already gained.21

Locus standi refers to the person having the right or capacity to bring legal proceedings. Under Kenyan law the general powers of prosecution are granted to the Director of Public Prosecution (DPP).22 Additionally, the DPP is permitted to undertake the recovery of assets which become liable to forfeiture after the conclusion of proceedings conducted by the Office.23 However, these powers of the DPP have been restricted since the Assets Recovery Agency (ARA) has the sole mandate to implement POCAMLA provisions on criminal and civil forfeiture.24

Regarding court jurisdiction, under Kenyan law, it emanates from statute or the constitution or both. Having the relevant jurisdiction permits a court to proceed with a matter and finally give its judgment. In criminal forfeiture, jurisdiction can be exercised by various courts. It will depend on the court granted power, under statute or the constitution, to deal with a particular crime. Accordingly, it will be the court that adjudicated on a specific criminal case since forfeiture is part of the sentencing process.25 Notably, neither POCAMLA nor any other regulation sets a lower minimum amount for triggering confiscation investigation and subsequently forfeiture proceedings. The inclusion of a minimum threshold would assist in providing guidance to the ARA in deciding instances where criminal forfeiture is appropriate.

 PRESERVING TARGETED PROPERTY BEFORE TRIAL

It is necessary to prevent the dissipation of property that is likely to be the subject of a confiscation order. A restraint order seeks to preserve any targeted property by prohibiting any person from dealing with particular property26 hence, making it available for fulfilment of the final order, if it is eventually given.27 Failure to do so may render the final orders nugatory when granted. A restraint order can be sought during the trial process, or after the conclusion of a trial and conviction of the defendant. It can also be applied for at the beginning of a criminal investigation but before the institution and conclusion of criminal proceedings.28 POCAMLA provides for two types of restraint order: a temporary order and a substantive order. A temporary restraint order (TRO) is granted after an ex parte hearing whereas a substantive restraint order (SRO) is made after an inter-parties hearing. Application for both types of order is made by the ARA director.29

A TRO is applied for in instances where an individual has not been charged with an offence but there is an...

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