Sally Clark

The new seizure powers are a key aspect of the UK government’s Economic Crime and Corporate Transparency Act 2023 (ECCTA) which specifically target the illicit use of cryptocurrencies and other cryptoassets.

Under these new measures, police and other law enforcement officers will be entitled to seize and apply to the court to detain cryptoassets and related items in the same manner they can currently apply to seize over £1,000 in cash and listed assets including watches and precious metals of that same value. If the court is satisfied that the underlying cryptoassets are derived from unlawful conduct or intended for use in unlawful conduct, it has the power to order the forfeiture of such assets and their conversion into cash.

These new measures were introduced in England earlier this year and, as of yesterday, have now come into force in Scotland supporting the recovery of cryptoassets under the Proceeds of Crime Act 2002 (POCA).

This latest development follows a September High Court case in Edinburgh where cryptoassets were targeted under former confiscation powers. It related to a robbery in March 2020 in which 23.5 Bitcoin, along with a car and other valuable items were stolen. The victim was confronted by three men wielding machetes and threatening physical violence who entered his house and forced him to transfer his Bitcoin into another account linked to John-Ross Rennie.

While denying he was physically present at the robbery, 29-year-old Rennie was indicted for his key role in this offence. He was found guilty of ‘reset’ as prosecutors convinced the court he had knowingly taken possession of the stolen cryptocurrency.

Presiding over this case, Lord Scott sentenced Rennie to a six-month community payback order and ordered him to serve 150 hours of community service. While accepting he did not participate in the robbery, Lord Scott ruled that Rennie’s role was ‘pivotal’ and that without his knowledge, it was hard to see how the offence could have proceeded as it did.

Under the POCA, where an offender has benefited from his particular criminal conduct, the court was requested by the Crown to determine the recoverable amount involved. At the time of this offence, the Bitcoin transferred into Rennie’s account was valued at just under £110,000 and he was presented with a confiscation order for the full amount.
The recoverable amount for the confiscation order was determined by assessing the benefit to the perpetrator from the offence in question.  Regardless of the fact that Rennie no longer held the cryptocurrency, the court’s calculation took into account the property or pecuniary advantage he had obtained as a result of his involvement in this crime, being the value of the Bitcoin at the time it was transferred to his account.

While this High Court case demonstrated the power of the Scottish courts in recovering cryptocurrency and other cryptoassets under the existing POCA powers, these latest seizure enforcement measures will further enable law enforcement agencies to freeze such assets using parallel powers when it comes to cryptoasset service providers such as crypto exchange or wallet providers.

These new powers, along with other measures contained within the ECCTA, will significantly assist law enforcement authorities by widening the circumstances in which their seizure powers can be used for cryptocurrency and other similar assets. This will help ensure cryptoassets can be seized more quickly by courts before they are dissipated by those who use them to mask illegal activities or have acquired them through such means.

Sally Clark is an of counsel at CMS