An Appraisal of the Proceeds of Crime (Recovery and Management) Act 2022

Contributor: Udoka Janet

Introduction

The Proceeds of Crime (Recovery and Management) Act, 2022 (POCA), signed into law by President Muhammadu Buhari in May 2022, establishes a framework for the seizure, confiscation, forfeiture, and management of assets believed to be obtained through illegal activities. It allows for the recovery of criminal proceeds without requiring a conviction and regulates the repatriation of misappropriated public funds hidden in offshore accounts. The Act defines “proceeds of crime” broadly, including assets derived from unlawful activities, regardless of their location. While this law represents a significant advancement, certain provisions pose legal and practical challenges that warrant further examination^[1].

Review of some key provisions of the act:

1. Seizures and forfeitures typically follow law enforcement activity by certain government organisations^[2].

Organizations generally obtain their recovery authority from the provisions outlined in their founding statutes. For example, Section 2(c) of the Economic and Financial Crimes Commission (EFCC) Act grants the Legal and Prosecution Unit of the EFCC the authority to commence proceedings aimed at recovering assets or property that may be forfeited. In contrast, the Proceeds of Crime Act (PCA) presents a novel framework by assigning powers and responsibilities not to individual agencies, but rather to a coalition of various law enforcement and security entities, collectively termed “Relevant Organizations” within the Act.^[3]

The Relevant Organisation is responsible for the enforcement and administration of the PCA. Its authority and responsibilities specifically relate to property that has been seized and is under its control and custody as mandated by a court order. This type of property is designated as “controlled property” in the Act.

According to the Act, the Relevant Organisation must undertake all actions deemed “reasonably necessary” to safeguard and manage the controlled property, which includes:

1. Engaging in any civil or criminal proceedings that impact the controlled property;
2. Realising, managing, or otherwise handling controlled property that consists of securities or investments; and
3. In instances where a business is included as part of the controlled property:
4. Hiring or dismissing employees within the business; and
5. Taking any necessary steps to ensure the business operates on a solid commercial foundation.

In summary, the Act grants the Relevant Organisation the authority to make decisive actions and critical choices regarding the controlled property to guarantee its preservation and effective management.

1. Recovery of cash

The legislation authorizes a designated officer to confiscate and hold any cash being transported into or out of Nigeria if there are justifiable reasons to believe that the cash is derived from illegal activities, is meant for use in committing a crime, or surpasses the legally established limit without being reported to the relevant authorities. Additionally, the Act broadens the definition of “cash” to encompass “jewelry and gold,” thereby expanding the scope of the Money Laundering Act 2022, which initially mandated declarations solely for cash and negotiable instruments.

Cash may be detained for a period of seven days, excluding Saturdays, Sundays, and public holidays, to allow the designated officer sufficient time to apply to the court for an order to extend the detention of the cash^[4]. The court can extend detention periods as long as they don’t exceed three months from the issuance date, and further detention orders must not exceed 12 months from the original order. The court can also release detained funds upon request from the individual, provided they can prove that the funds were lawfully acquired. This allows for a fair and efficient detention process^[5].

1. Confiscation of proceeds of crime: conviction-based recovery

Section 33 of the Act outlines the procedures for the seizure of assets obtained through the criminal actions of a convicted individual. The main aim of this provision is to prevent a convicted individual from profiting from their illegal activities by establishing a robust system for assessing and seizing the total gains from such conduct. Furthermore, the Act grants the court the authority to issue both restraint and confiscation orders. A restraint order serves to prevent the defendant from managing any realizable assets that they possess or control. The relevant authority must file a request for this order through an ex parte motion, as specified in Section 36 of the Act^[6].

Confiscation orders issued under Section 52(2) of the Act are designed to ensure the recovery of a monetary amount equivalent to the gains obtained by a convicted individual from their criminal activities. Such an order can be enforced similarly to a judgment in civil proceedings initiated by the appropriate authority to reclaim a debt owed by the individual to the Federal Government of Nigeria.

The courts authorized to handle cases and proceedings related to the Act include the Federal High Court, the High Court of the Federal Capital Territory, and State High Courts. Moreover, the heads of these courts have the authority, as per Section 73(1) of the Act, to appoint special courts to address all matters arising under the Act. Additionally, Section 68 of the Act creates a specific account, referred to as the Confiscated and Forfeited Properties Account, which will be held at the Central Bank of Nigeria. This account will be overseen by the head of the relevant organization, who is tasked with reporting to the Minister of Finance^[7].

1. Non-Conviction-Based Recovery

In the global arena, non-conviction-based asset recovery is viewed as an essential tool for confiscating the proceeds of corruption. This approach enables the confiscation and forfeiture of illicit assets without the requirement of a criminal conviction^[8]. Nonconviction-based confiscation is necessary when an offender is deceased, escaped jurisdiction, or protected from prosecution. This is in line with Article 54(1)(c) of the United Nations Convention against Corruption, which advises nations to adopt measures that allow asset confiscation without a criminal conviction when the perpetrator cannot be prosecuted due to death, flight, absence, or other relevant circumstances. This Act defines “non-conviction-based confiscation” as judicial seizure of property linked to a criminal offense.^[9]. It requires the Relevant Organization to commence civil proceedings^[10] Actions may be initiated for the recovery and forfeiture of proceeds from criminal activities, along with abandoned or unclaimed properties that are reasonably believed to be obtained through unlawful means, without requiring a prior conviction^[11].

1. Establishment of the Proceeds of Crime Management Directorate

The Act authorizes the establishment of the Proceeds of Crime Management Directorate (PCMD or the Directorate) within the designated Relevant Organizations. It grants the Directorate specific functions, which include^[12]:

The Act mandates the following responsibilities regarding the management of forfeited properties:

1. Taking over and assuming responsibility for the proper and effective management of properties forfeited to the Federal Government of Nigeria (FGN).
2. Establishing standards for the handling of forfeited properties.
3. Ensuring accountability in the management of all forfeited properties.
4. Administering forfeited properties effectively.
5. Recommending training related to the management of proceeds of crime and associated matters.
6. Appointing private asset managers and ensuring that such managers are properly bonded and insured.

The Act requires the Directorate to be informed of confiscated property within 14 days for record-keeping purposes. Once a forfeiture order is issued, the Directorate can take possession of the property. Relevant Organizations can establish guidelines for their Directorate’s responsibilities. The Attorney General of the Federation (AGF) and relevant organizations can enact regulations for a standardized automated asset forfeiture management system, crucial for effective enforcement of the Act’s provisions.

1. Administering Courts

The Act allows for adjudication of matters by the Federal High Court, the High Court of the Federal Capital Territory, and State High Courts. The Act also grants the heads of these courts the authority to appoint special courts to address cases related to its provisions. The court can reduce penalties for individuals suspected of or found guilty of an offense upon request from the Relevant Organisation, provided the individual cooperated with the Organisation in apprehension or asset recovery^[13].

Conclusion

The Proceeds of Crime (Recovery and Management) Act, 2022, is a significant step in combating financial crime and asset misappropriation. However, it needs to be improved by setting clear guidelines for the Proceeds of Crime Management Directorate, implementing training programs for law enforcement officials, fostering collaboration among domestic and international agencies for efficient asset recovery, and launching public awareness campaigns to educate citizens about the implications of financial crime and the importance of compliance with the Act. These recommendations will help Nigeria achieve its objectives more effectively, reinforcing its commitment to combat corruption and promote transparency in financial dealings.

SNIPPET: The Proceeds of Crime (Recovery and Management) Act, 2022 (POCA), signed into law by President Muhammadu Buhari in May 2022, establishes a framework for the seizure, confiscation, forfeiture, and management of assets believed to be obtained through illegal activities.

1. A Note on the Proceeds of Crime (Recovery and Management) Act 2022, Available at https://juritrustcentre.org/index.php/information/events/107-a-note-on-the-proceeds-of-crime-recovery-and-management-act 2022#:~:text=In%20conclusion%2C%20the%20passage%20of,is%20effective%2C%20efficient%20and%20fair. Accessed October 2024. ↑
2. Sections 58 – 67 of the Act. ↑
3. The Act defines ‘Relevant Organisation’ to include, the EFCC, Nigeria Police Force, Armed Forces, Department of State Services, Independent Corrupt Practices and other Related Offences, Commission Nigerian Financial Intelligence Unit, Code of Conduct Bureau, Standard Organisation of Nigeria, Federal Inland Revenue Service, Nigeria Customs Service, National Drug Law Enforcement Agency, National Agency for Prohibition of Trafficking in Persons, National Agency for Food and Drug Administration and Control, Nigeria Ports Authority, Nigeria Immigration Service, Nigeria Maritime and Safety Agency, National Inland Waterways Authority, e.t.c. and “such other organisation as the Attorney-General may designate”. ↑
4. The court is expected to adopt procedures similar to those of summary proceedings, as provided for in the High Court (Civil Procedure) Rules 2019. See section 26(5) of the Act. ↑
5. Tochukwu Onyiuke, A Critique of the Nigerian Proceeds of Crime (Recovery & Management) Act 2022 Available at file:///C:/Users/dell/Downloads/AC+2.4.2.10+Onyiuke.pdf accessed October 2024. ↑
6. Ibid. ↑
7. The categories of payments to be made into the Account include money realized from the proceeds of sale, management or other form of disposal of forfeited assets under this Act and other relevant laws; proceeds of any forfeited property acquired in abuse or corruption of office further to section 23(2)(c) of the Code of Conduct Bureau and Tribunal Act 1989; money paid to Nigeria by a foreign country; and money paid to the relevant organization on behalf of the Federal Government in settlement of proceedings connected with this Act and other relevant laws. ↑
8. Greenberg, et al, Stolen Asset Recovery: A Good Practices Guide for Non-Conviction-Based Asset Forfeiture, (World Bank, 2009). ↑
9. Section 82 of the Act. ↑
10. Section 8 of the Act. ↑
11. Olaniwun Ajayi; THE PROCEEDS OF CRIME (RECOVERY AND MANAGEMENT) ACT, 2022: REVITALIZING NIGERIA’S ANTI-GRAFT WAR, Available at https://www.olaniwunajayi.net/blog/wp-content/uploads/2022/05/Proceeds-of-Crime-Act-Revitalizing-Nigerias-Anti-Graft-War.pdf accessed October 2024. ↑
12. Section 3(b)(i) – (vi) of the Act. ↑
13. Section 73(3) of the Act. ↑