A Note on the Proceeds of Crime (Recovery and Management) Act 2022

The Proceeds of Crime (Recovery and Management) Act 2022 (POCA) was passed by the National Assembly and assented to by President Muhammadu Buhari in May 2022. The Act is enacted to make comprehensive provisions for seizure, confiscation, forfeiture, and management of properties reasonably suspected to have been derived from unlawful activities.

POCA provides for the recovery of proceeds from criminal activities whether or not there has been a conviction for the crime. It also governs the receipt and management of stolen public funds which have been stashed in offshore banks or used to acquire assets in foreign countries. The term “proceeds of crime” refers to assets, money and properties acquired by criminals as a result of their criminal activities. “Proceeds” is defined to mean property, whether wholly or partly derived or realised, directly or indirectly, from an unlawful activity, and whether the property is situated within or outside Nigeria. Even though the passage of the new law is a welcome development, there are several issues that arise from the provisions of the Act and they will be discussed below.

The first issue is about the need for transparency and accountability in the management of the proceeds of crime. Transparency and accountability in the management of assets seized by some anti-corruption agencies have been a sore point in public discourse. There are media reports of suspected cases of misappropriation of properties seized by officers of anti-corruption and security agencies. (https://punchng.com/justice-ministry-syndicate-sells-recovered-fg-properties-pockets-proceeds/). The immediate past Chairman of the Economic and Financial Crimes Commission (EFCC), Mr Ibrahim Magu, was allegedly suspended, investigated and removed from office, partly on allegations of diversion of seized and recovered assets by the anti-corruption agency which he headed.

It was expected that a proceeds of crime law will standardize the processes for the management of seized assets, establish objective standards of accountability and transparency, and vest the administration of seized assets in an agency different from the one that made the seizure. This is, however, not the case as section 3 of POCA provides that the relevant organisation shall enforce and administer the provisions of the Act and establish a Proceeds of Crime (Management) Directorate which shall among other things take over and assume responsibility for the proper and effective management of properties forfeited to the Federal Government of Nigeria. Section 5 (2) vests forfeited properties in the relevant organisation for and on behalf of the Federal Government of Nigeria. The relevant organization manages the property after seizure and manages the bank accounts at the Central Bank where the proceeds of sale are lodged.

Section 83 of POCA identifies eighteen agencies as “relevant organisations” and permits the Attorney General of the Federation to expand the list as he deems fit. Each of the relevant organizations is empowered in section 81 (2) to issue guidelines, as may be necessary for the exercise of any of the duties, functions, or powers of their Directorates.

This portends the danger of a chaotic and unwieldy crime proceeds management environment. A preferred alternative would be for the Attorney-General of the Federation to deploy the powers vested through Section 81 to consult with the relevant organisations and make regulations for a standardised automated asset forfeiture management system expedient for the efficient implementation of the provisions of this Act. The establishment of a centralized agency might better serve the interest of transparency and accountability in the management of seized assets and guard against the misappropriation of proceeds of crime and the further looting of recovered loot.

Globally, non-conviction based forfeiture has been touted as an important tool in mitigating criminal activity and deterring corrupt practices. The United Nations Convention Against Corruption supports the practice of non-conviction based forfeiture by providing in article 54 (1) (c) that each State Party may consider taking such measures as may be necessary to allow confiscation of such property without a criminal conviction in cases in which the offender cannot be prosecuted by reason of death, flight or absence or in other appropriate cases.

While the EFCC Act only provides for conviction-based forfeiture, section 48 of the Corrupt Practices and other related Offences Act makes provision for the practice of non-conviction based forfeiture in certain outlined circumstances. POCA builds on the growing practice of non-conviction based forfeiture. Non-conviction based forfeiture enables the asset of a person to be seized and forfeited to the federal government without the prosecution of the owner of the asset for a crime or without the conviction of the owner of the asset of a crime. Part IV of POCA provides for the recovery and forfeiture of proceeds of crime, instrumentality of unlawful activity, abandoned properties or unclaimed properties reasonably suspected to be proceeds of unlawful activity, without conviction. Judicial oversight of the non-conviction based forfeiture processes will be crucial to the proper administration of justice. Non- conviction based proceedings are civil proceedings under POCA and as such, the standard of proof shall be on a balance of probabilities. Section 74 of POCA places on the defendant, the burden of proving that he is the legitimate owner of the assets suspected to be proceeds of crime or derived from unlawful activity or that the assets are of legitimate origin and not proceeds of unlawful activity.

POCA expands this scope of sections 333, 338 of the Administration of Criminal Justice Act and section 48 (3) of the Corrupt Practices and other related Offences Act, to cover properties reasonably suspected to be proceeds of unlawful activity even when those properties are not intended to be used or actually used in unlawful activity. POCA provides for a two-step process for non-conviction based forfeiture. The process starts with an ex parte application for a preservation order and ends with a motion on notice for a forfeiture order. Section 9 (3) provides that the Court shall make a preservation order where there are reasonable grounds to believe that the property concerned—

(a) represents the proceeds of unlawful activity, whether they are—

(i) in the hands of the person who unlawfully acquired the property in the first instance, or

(ii) traced to any person to whom the property that represents the proceeds have been passed;

(b) is involved in the facilitation of unlawful activity; or

(c) is intended to be used to facilitate unlawful activity.”

A preservation order shall be granted by the Court to preserve property reasonably suspected to have been derived from unlawful activities and represents instrumentality of unlawful activity or unclaimed property. The relevant organization can take possession of the property upon issuance of the preservation order and a restraining order can be issued against any person from dealing in any manner with the property. The preservation order has to be published in any widely circulating national newspaper for the notification of interested parties. Section 10 of POCA imposes on an interested party, the obligation to disclose reasons which the person intends to rely on in opposing the preservation order or applying for the exclusion of his interest from the operation of the preservation order. The preservation order has a 60 day life span and is renewable for a maximum of 180 days. A non-conviction based forfeiture order can only be granted upon a motion on motion.

It would appear that POCA might bring an equitable resolution to the clamor of state governments for refund of moneys illegally taken from the coffers of the state government and transferred outside the country. Section 70 of POCA provides that the President may, subject to the approval by Federal Executive Council authorise the expenditure for money in the Confiscated and Forfeited Properties Account to be used to (b) compensate any State which has suffered grave pecuniary loss on account of the offence or conduct that gave rise to the confiscation or forfeiture order. It is to be noted that the section provides for compensation to the State at the discretion of the Federal Executive Council and not a mandatory refund of the stolen funds to the State government. This provision is entirely discretionary and it is unfortunate that POCA missed this opportunity to ensure some equity between the federal and state government on this type of matter. It is fair that the federal government is entitled to a reasonable deduction of expenses it incurred in obtaining the funds from the foreign government but the bulk of the money ought to go to the state government which is the true victim of the crime. Leaving a state’s looted funds entirely with the federal government and at the discretion of the President and Federal Executive Council as currently provided in the Act goes against the just application of the principle of restitutionary relief in criminal cases which is aimed at compensating the victim of the crime. Article 57 (1) and (2) of the United Nations Convention against Corruption highlights the need to return assets to the victim of the crime who are “prior legitimate owners” and “bona fide third parties”. It provides thus –

“Article 57

  1. Property confiscated by a State Party pursuant to article 31 or 55 of this Convention shall be disposed of, including by return to its prior legitimate owners, pursuant to paragraph 3 of this article, by that State Party in accordance with the provisions of this Convention and its domestic law.
  2. Each State Party shall adopt such legislative and other measures, in accordance with the fundamental principles of its domestic law, as may be necessary to enable its competent authorities to return confiscated property, when acting on the request made by another State Party, in accordance with this Convention, taking into account the rights of bona fide third parties.”

The extra-territoriality flavor of POCA is worth noting. Section 67 provides that (1) Where the Court under this Act orders forfeiture of any property, which was established to be the proceeds of unlawful activity or instrumentality of an unlawful activity within Nigeria and the other constituents of the instrumentality of the unlawful activity is situate in a foreign country, the relevant organisation under the direction of the Attorney-General of the Federation shall initiate proceedings, including by way of mutual legal assistance in that foreign country for the recovery of the forfeited property. (2) Where it is established that a convicted person has any asset or property in a foreign country, acquired as a result of an unlawful activity, the relevant organisation under the direction of the Attorney—General of the Federation shall apply for the asset or property, subject to any treaty or arrangement with that foreign country, to be forfeited to the Federal Government of Nigeria.

The absence of a mechanism for accountability of relevant organizations is a significant gap in POCA. There is no penalty for default of relevant organizations. There is in fact a feeble attempt to grant immunity to relevant organizations in section 66. Section 66 of POCA will certainly fail the tests of sections 33 and 44 of the Constitution. The limited protection will be section 78 of POCA that provides that a civil action shall not be commenced against the relevant organisation before the expiration of a period of 30 days after written notice of intention to commence the suit shall have been served on the relevant organization. Members of staff of relevant organizations will only be indemnified by the relevant organizations in proceedings brought against them in their official capacity where the act complained of is not beyond their powers.

In conclusion, the passage of the Proceeds of Crime (Recovery and Management) Act 2022 is commendable. However, the Act must remain under review and necessary scrutiny for the purpose of making changes that will ensure that the law is able to achieve its objectives in a manner that is effective, efficient and fair.