324.Sub-paragraph (1) of paragraph 1 provides that Schedule 1 applies to terrorist cash, that is cash which is intended to be used for the purposes of terrorism, consists of resources of a proscribed organisation or is earmarked as terrorist property. Part 5 of the Schedule explains what is meant by cash which is earmarked as terrorist property.
325.Sub-paragraph (2) of paragraph 1 defines cash for the purposes of Schedule 1 and makes it clear that the definition applies wherever the cash is found in the United Kingdom. The definition of cash is intended to cover the most readily realisable monetary instruments used by terrorists; the order making power in sub-paragraph (3) enables the Secretary of State to prescribe by order (subject to the negative resolution procedure) monetary instruments as the need arises.
326.Sub-paragraph (1) of paragraph 2 enables an authorised officer (defined at paragraph 19 as a customs officer, immigration officer or constable) to seize cash if he has reasonable grounds for suspecting that it is terrorist cash as defined in sub-paragraph (1) of paragraph 1 of the Schedule. In normal circumstances, if the authorised officer only has reasonable grounds for suspecting that part of the cash in question is terrorist cash, then he may only seize that part. However, where the cash is in a non-divisible form (such as travellers’ cheques), this will not be possible, and sub-paragraph (2) allows him in these circumstances to seize all of the cash including the non-terrorist part. Sub-paragraph 4(2) makes further provision as to what is to happen in such circumstances.
327.The effect of paragraph 3 is that cash may not be detained for more than 48 hours except by order of a magistrates’ court or justice of the peace (or a sheriff in Scotland). Under sub-paragraphs (6), (7) and (8) , a magistrate may make an order for continued detention if satisfied that there are reasonable grounds for the officer’s suspicion and that the continued detention is justified for the purposes of investigating its intended use, whether or not it consists of the resources of a proscribed organisations or its origin. The magistrate may also make an order for continued detention if consideration is being given to the bringing of criminal proceedings, or if such proceedings have been commenced and not concluded. Detention orders must be renewed every three months, but must not last for more than a total of two years from the date of the first order (sub-paragraph (2)). Paragraph 9 makes provision for any victim to intervene in the detention proceedings.
328.Paragraph 4 provides that cash detained for more than 48 hours must be paid into an interest-bearing account unless it is required as evidence of an offence or evidence in proceedings under this Schedule. Sub-paragraph (2) provides that where part of the cash seized is not terrorist cash (as explained above, this may occur, for example, where the cash is in the form of a travellers’ cheque), the non-terrorist part must be released at the time it is paid into the interest-bearing account.
329.Paragraph 5 envisages two situations in which cash or any part of the cash may be released to the person from whom it was seized. Firstly, the magistrates’ court (or a sheriff in Scotland) may do so in response to an application by the person from whom the cash was seized on the grounds that it no longer satisfies any of the conditions in paragraph 3 for its detention. Secondly, an authorised officer may release cash or any part of it after notifying the justice, magistrates’ court or sheriff if satisfied that the detention can no longer be justified. Paragraph 9 makes provision for a victim who claims the terrorist cash to apply for it to be released to him.
330.The effect of paragraph 6 is to enable the magistrates’ court or sheriff to order the forfeiture of cash or any part of it if satisfied that the cash or part is terrorist cash.
331.Where the cash belongs to joint tenants, one of whom did not obtain it through terrorism, the order may not apply to so much of the cash as the court thinks attributable to the “innocent” partner’s share. An example of this might be the joint bank account into which terrorist proceeds has been paid by one signatory and clean money by the other. If the former withdraws all the cash and it is subsequently seized, the “innocent” partner’s share of the money will not be forfeited.
332.Under paragraph 7, appeals must be lodged within 30 days. A successful appeal would result in the cash being paid back, together with any accrued interest. Sub-paragraph (6) provides for the situation where an organisation is deproscribed following a successful appeal to the Proscribed Organisations Appeal Commission (POAC), and a forfeiture order has been made in reliance (in whole or in part) on the fact that the organisation is proscribed. In such cases, the person whose cash has been forfeited may appeal at any time before the end of the period of 30 days beginning with the date on which the deproscription order comes into force, but only where the cash was seized on or after the date of the initial refusal to deproscribe against which the appeal to POAC was brought.
333.Paragraph 9 provides for those who claim ownership of the cash or any part of it that is detained. The court may release the cash to the applicant if it is satisfied that he was a victim of criminal conduct (as defined in paragraph 19) and that the cash belongs to him. However, it may not release the cash to him if the property that the applicant was originally deprived of was itself property obtained through criminal conduct. So a thief who is deprived of the property that he has stolen cannot benefit from these provisions. The victim’s application may be made at the time of a detention hearing under paragraph 3, a forfeiture hearing under paragraph 6 or any other time.
334.Paragraph 10 provides that where no forfeiture order is made following the detention of cash the person from whom it was seized or the person to whom the cash belongs may apply to the court for compensation. If cash has not been held in an interest bearing account because it is needed as evidence, sub-paragraph (2) allows the court to pay an amount of compensation in respect of the interest lost. Sub-paragraph (4) also gives the court discretion to pay compensation where loss has occurred and the circumstances are exceptional. This applies whether or not interest has been paid. Where as a result of proceedings under paragraph 9, cash is returned to a victim, it is not thought appropriate that compensation should be payable and sub-paragraph (10) reflects this.
335.Paragraphs 11 to 16 say what “property earmarked as terrorist property” means. It covers:
property obtained through terrorism, and
property which represents property obtained through terrorism.
336.Paragraph 11 defines when property is obtained through terrorism. A person will obtain property through terrorism if he obtains it:
by or in return for acts of terrorism – for example by being paid to commit murder, or
by or in return for acts carried out for the purposes of terrorism – for example, stealing a car to perpetrate a terrorist act.
337.The purpose of sub-paragraph (2)(a)is to ensure that property counts as having been obtained through terrorism regardless of any investment in that terrorism. So if a person buys guns with honestly come by money, and sells them at a profit, the whole of the proceeds of the sale will count as having been obtained through terrorism, and not just the profit.
338.Sub-paragraph 2(b) provides that it is not necessary to show that property was obtained through a particular act of terrorism, so long as it can be shown to have been obtained through terrorism of one kind or another. So it will not matter, for example, if it cannot be established whether certain funds are attributable to gun smuggling, blackmail, extortion, or stealing from a bank, provided that it can be shown that they are attributable to an act of terrorism, or an act carried out for the purposes of terrorism.
339.Paragraph 12 explains that property may be earmarked as terrorist property even if it is not in the hands of the person who originally obtained it. That is to say, property obtained through terrorism may be followed.
340.Paragraphs 13 to 15 describe circumstances in which property is treated as representing property obtained through terrorism.
341.Paragraph 13 provides that, if property obtained through terrorism is disposed of, the proceeds of the disposal represent the property disposed of. In other words, property obtained through terrorism may be traced into other property. For example, if a person obtains a car in return for carrying out an act of terrorism, and then sells it, the cash that he obtains in return will be property earmarked as terrorist property. The same principle will apply again when he spends the cash.
342.Paragraph 14 provides that where property obtained through terrorism is mixed with other property, then the portion of the mixed property which is attributable the property obtained through terrorism will itself represent property obtained through terrorism. So, for example, if the car mentioned above is sold and the cash paid into a bank account which is in credit through deposits from honest sources, then a proportion of any cash withdrawn from that bank account will be property earmarked as terrorist property. Again, the same principle will apply if representative property is mixed with other property.
343.Paragraph 15 provides that if profits accrue in respect of the property obtained through terrorism, or representative property, the profits are also to be treated as representative property. So, for example, if property obtained through terrorism is placed in a bank account and interest is credited to the account, any cash taken from the account may be seized.
344.Paragraph 16 sets out exceptions as to when property that would by virtue of paragraphs 11 to 15 be earmarked as terrorist property is not to be treated as such. The effect of paragraph 12 is that where, for example, someone is given a car in return for action of a terrorist nature, and then sells the car to someone else, the car continues to be earmarked as terrorist property. This is qualified by sub-paragraph (1) which provides that if the purchaser paid full value for the car, and was unaware of its terrorist origins, the property is no longer earmarked. However, the money paid for the car continues to be earmarked by virtue of sub-paragraph (7).
345.Sub-paragraphs (2) to (6) set out other circumstances in which terrorist property will cease to be earmarked: where a claimant obtains property from a defendant in civil proceedings which are based on the defendant’s criminal conduct (as defined in paragraph 19), and the property would otherwise be earmarked; where a payment is made following a compensation or restitution order under the Powers of Criminal Courts (Sentencing) Act 2000, and the sum or property received would otherwise be earmarked; where an amount is paid in accordance with a restitution order made by the court under the Financial Services and Markets Act 2000 and the amount would otherwise be earmarked; and where restitution is required to be made by the Financial Services Authority under that Act paying an amount which would otherwise be earmarked.
346.“Disposing” of property is a key feature of the provisions at paragraph 12 and 13. Disposal of property may take place, for instance:
where the property is dealt with to some extent only (including where an interest in the property is created); a disposal might also consist of the grant of an interest in a part (sub-paragraph (1) of paragraph 18);
where a person makes a payment, in cash or any other kind of property, to another (sub-paragraph (3) of paragraph 18);
where property changes hands on death (sub-paragraph (4) of paragraph 18).
347.Sub-paragraph (5) is relevant to the protection provided at sub-paragraph (1) of paragraph 16 for persons who obtain property “for value”. It provides that a person obtains property “for value” only when he has given executed consideration for it. That means that if someone obtains property in return for a promise to pay for it or to perform some service in exchange, that will not count as having “obtained for value” until the payment is actually made or the service performed.
348.Sub-paragraph (2) provides that where a person grants an interest in property which is earmarked, that interest is also to be treated as property which is earmarked. For example, if a person grants a lease on a car obtained through terrorism, then the lease on the car should also be treated as being obtained through terrorism i.e. as property which is earmarked.
349.Sub-paragraph (1) of paragraph 19 defines certain terms used in this Schedule.
350.Sub-paragraph (3) provides that the provisions on property earmarked as terrorist property apply to events occurring before commencement of this Schedule. So if cash is obtained through terrorism before commencement of the Schedule, it is still liable to seizure and forfeiture under the Schedule.
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