Asset Recovery Comparative Guide - - British Virgin Islands

1 Civil

1.1 Civil proceedings: (a) What remedies for asset recovery are available in your jurisdiction? (b) What type of assistance will be provided to those seeking substantive relief in your jurisdiction when faced with the dissipation of assets? (c) Can civil proceedings run in parallel to criminal proceedings relating to the same matter or does one take precedence over the other? (d) Can evidence gathered in criminal proceedings be used in civil proceedings? (e) Are foreign freezing orders/injunctions enforceable in your jurisdiction and what are the limitations to registration/enforcement of such foreign orders? (f) What other considerations should be borne in mind in relation to civil asset recovery proceedings in your jurisdiction?

(a) What remedies for asset recovery are available in your jurisdiction?

The remedies that are available to a claimant will be determined by the cause of action pursued in the civil proceedings.

Broadly speaking, there are two categories of remedy: common law and equitable. There are also statutory mechanisms that may be utilised to ultimately effect a recovery – for example, through compulsory insolvency procedures.

A successful claim in tort will generally lead to an award of damages. This includes claims that are often seen in fraud litigation cases, including claims for deceit and unlawful means conspiracy.

Equitable remedies are entirely discretionary. Claims for breaches of fiduciary duty, dishonest assistance, knowing receipt and breach of trust can all lead to the granting of equitable of remedies. The nature and scope of these are not limited; but in asset recovery cases, litigants commonly seek:

equitable compensation;
an account of profits;
injunctions; and
orders for specific performance.

Additionally, the court can impose a constructive trust over an asset where it would be unconscionable for the holder of the asset to deny the claimant's beneficial interest in that asset. Constructive trusts can be imposed in a variety of situations – for example, where a person holds an asset that has been misappropriated from a claimant by means of fraud.

(b) What type of assistance will be provided to those seeking substantive relief in your jurisdiction when faced with the dissipation of assets?

If a risk of dissipation can be sufficiently established, the court may grant a freezing order prohibiting a person from diminishing the value of its interest in assets located in the British Virgin Islands or worldwide (generally up to the value of the claim). The order may be directed:

at the defendant personally; or
against third parties in circumstances where it is reasonably believed that they hold assets for the defendant's benefit.

Proprietary injunctions can also be imposed where the applicant believes that it is the rightful owner of property held by the respondent. The applicant need not establish a risk of dissipation.

In more extreme cases, the court may also appoint an equitable receiver over property in which the applicant has a legal or equitable interest.

Furthermore, if a person has an arguable beneficial interest in the shares of a BVI company, it may seek the issuance of a stop notice from the court office or a stop order from the court under Part 49 of the Civil Procedure Rules 2000. As long as the stop notice is in force, neither the company nor the keeper of the share register may register any transfer of the stock or take any step mentioned in the stop notice until 14 days after sending a notification of the proposed registration or other step to the applicant. A stop order is more robust, as it may prohibit the taking of certain specified steps set out in the order.

(c) Can civil proceedings run in parallel to criminal proceedings relating to the same matter or does one take precedence over the other?

There is no statutory bar to conducting civil proceedings in parallel with criminal proceedings. However, the defendant may apply for a stay of the civil proceedings until the criminal proceedings have been disposed of. Whether the court grants a stay is a matter of its discretion. The starting position is that a claimant has the right to have their claim decided. It is for the defendant to show why that right should be delayed. A stay will not be granted simply to serve the tactical advantages that the defendant might want to retain in the criminal proceedings (Panton v Financial Institutions Services Ltd (Jamaica) [2003] UKPC 95 [11]).

(d) Can evidence gathered in criminal proceedings be used in civil proceedings?

It is unlikely that material gathered in pending criminal proceedings will be available for use in civil proceedings. As Lord Reid stated in Conway v Rimmer (1968) I All ER 874:

it would generally be wrong to require disclosure in a civil case of anything which might be material in a pending prosecution, but after a verdict has been given, or it has been decided to take no proceedings, there is not the same need for secrecy.

Witness statements may be used with the permission of the witness, which will usually be requested from the Office of the Director of Public Prosecutions. Evidence obtained by the police through the use of their compulsory powers must not be disclosed to a third party unless the owner of the material has given permission or is compelled to do so by the court.

(e) Are foreign freezing orders/injunctions enforceable in your jurisdiction and what are the limitations to registration/enforcement of such foreign orders?

Foreign injunctions are not directly enforceable in the British Virgin Islands. However, the court has the power to grant freestanding freezing orders in aid of foreign proceedings (Broad Idea v Convoy Collateral (2021 UKPC 24) and Section 24A of the Eastern Caribbean Supreme Court Act 1969).

(f) What other considerations should be borne in mind in relation to civil asset recovery proceedings in your jurisdiction?

If a claim is undefended, a claimant may apply for the court to enter a judgment in default against the defendant. However, unless there are assets in the jurisdiction, it may be difficult (although not impossible) to enforce a default judgment abroad. Accordingly, a claimant may wish to consider applying for summary judgment on its claim under Part 15 of the Civil Procedure Rules 2000, which will usually entail the court giving a more comprehensive analysis of the merits of the claim before entering judgment.

1.2 Asset freezing: (a) What provisional/interim measures to secure assets are available in your jurisdiction? (b) What are the evidentiary and procedural requirements for obtaining provisional/interim measures? (c) Are any alternatives to provisional measures available in your jurisdiction? (d) Once the assets have been secured, how are they generally managed? What specific considerations and concerns should be borne in mind in this regard? (e) What other considerations and concerns should be borne in mind at this stage of the process?

(a) What provisional/interim measures to secure assets are available in your jurisdiction?

A person may apply for a freezing order in support of domestic proceedings or in aid of foreign proceedings where an asset flight risk can be established. If the person claims to have a beneficial interest in an asset, the court may also grant a proprietary injunction over a specific asset in the jurisdiction.

(b) What are the evidentiary and procedural requirements for obtaining provisional/interim measures?

An applicant for a freezing order must establish in evidence that:

the applicant has been granted or has a good arguable case for being granted a judgment or order for the payment of a sum of money that is or will be enforceable through the process of the court;
the respondent holds assets against which such a judgment could be enforced; and
there is a real risk that, unless the injunction is granted, the respondent will deal with such assets (or take steps which make them less valuable) other than in the ordinary course of business, with the result that the availability or value of the assets is impaired and the judgment is left unsatisfied (Convoy Collateral Ltd v Broad Idea International Ltd [2021] UKPC 24 per Lord Leggatt).

The court may also grant a freezing order against a non-cause of action defendant which holds assets that are (arguably) beneficially owned by the defendant (TSB Private Bank International SA v Chabra [1992] 1 WLR 231).

A proprietary injunction does not require a risk of asset dissipation, but the claimant must have a proprietary interest in the relevant asset(s).

The court may grant an interim order on an application made without notice for a period of not more than 28 days (unless any of these rules permits a longer period) if it is satisfied that:

in a case of urgency, no notice is possible; or
to give notice would defeat the purpose of the application (CPR 17.1(4)).

The court may also appoint an equitable receiver over assets. The requirements are as follows:

There must be sufficient evidence to show a good, arguable case;
There must be a real risk of dissipation of assets; and
The applicant must show it is "just and convenient" to appoint a receiver (Alexandra Vinogradova v Elena Vinogradova (BVIHCMAP 2018/052)).

(c) Are any alternatives to provisional measures available in your jurisdiction?

A person may commence substantive civil proceedings in the British Virgin Islands against a defendant in or outside of the jurisdiction. If the claim is extraterritorial in nature, the claimant will need to seek the court's permission to serve the claim outside of the jurisdiction in accordance with Part 7 of the Civil Procedure Rules 2000.

Alternatively, a creditor may wish to seek redress by means of the BVI insolvency regime. Pursuant to Section 162 (1) of the Insolvency Act 2003 a creditor of a BVI company may apply for the appointment of a liquidator on the grounds that:

the company is insolvent;
the court is of the opinion that it is just and equitable that a liquidator should be appointed; and
the court is of the opinion that it is in the public interest for a liquidator to be appointed.

If appointed, a liquidator will take steps to gather in the assets of the company for the benefit of its creditors and members.

(d) Once the assets have been secured, how are they generally managed? What specific considerations and concerns should be borne in mind in this regard?

Assets such as money in bank accounts can be frozen without active management. Physical property, such as yachts and real estate, may require active management in order to ensure that the value of the asset does not materially depreciate during the pendency of the litigation.

Of particular importance to companies that undergo trade is the insertion of what is known as an ‘Angel Bell exception' into any freezing order made against it. This exception exists to permit a business to continue to trade despite the operation of a freezing order.

(e) What other considerations and concerns should be borne in mind at this stage of the process?

A freezing order often contains provisions requiring a respondent to disclosure the existence, value and whereabouts of its assets to ensure that the freezing order is effective.

Applicants should be mindful that they are responsible for the costs reasonably incurred by third parties in complying with the terms of a freezing order. They must usually also provide an undertaking to the court confirming that they will compensate the respondent for any damages caused by the order in the event that it is set aside.

An applicant should be made aware that it may be necessary to take active steps to police the freezing order, including, among other things:

an application for disclosure;
cross-examination;
the sequestration of assets; and
most significantly, proceedings for contempt of court.

1.3 International cooperation: (a) What is the process for requesting assistance in asset recovery investigations? What specific considerations and concerns should be borne in mind at each stage of the process (tracing; freezing; confiscation; disclosure)? (b) What types of international assistance can be obtained in civil asset recovery proceedings? (c) With what level of detail and specificity should the documents to be obtained from other jurisdictions be described (eg, is a generic description or category of documents permissible, or is the exact date and name required)? (d) How will the courts in your jurisdiction respond to a foreign request for assistance? What specific considerations and concerns should be borne in mind in this regard?

(a) What is the process for requesting assistance in asset recovery investigations? What specific considerations and concerns should be borne in mind at each stage of the process (tracing; freezing; confiscation; disclosure)?

The Evidence (Proceedings in Foreign Jurisdictions) Act, 1988 governs incoming requests for assistance by a foreign judicial authority in relation to civil or commercial matters. The act supplements the 1970 Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, to which over 40 countries have acceded.

The scope of assistance that may be given in the British Virgin Islands under the Evidence (Proceedings in Foreign Jurisdictions) Act, 1988 extends, among things, to:

the examination of witnesses;
the provision of information; and
the preservation and detention of property.

The procedure is set out in the act and, in respect of a request to obtain evidence form a witness located in the jurisdiction, in Part 71 of the Civil Procedure Rules 2000. Pursuant to Part 71, an application:

may be made without notice; and
must be supported by an affidavit which exhibits the relevant request (translated into English, if necessary).

(b) What types of international assistance can be obtained in civil asset recovery proceedings?

The British Virgin Islands is a party to the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. In civil or commercial matters, a judicial authority of a contracting state may, in accordance with the law of that state, request the competent authority of another contracting state, by means of a letter of request:

to obtain evidence (including by way of witness evidence and the provision of documents); or
to perform some other judicial act.

The expression ‘other judicial act' does not cover:

the service of judicial documents;
the issuance of any process by which judgments or orders are executed or enforced; or
orders for provisional or protective measures.

An application to the BVI High Court is made in order for it to issue a letter of request, which will then be sent to the judicial authority in the foreign country. The procedure for securing witness testimony abroad (which may include ancillary production of documents) is set out in Part 33 of the Civil Procedure Rules 2000 and applies whether or not the foreign country is a contracting state of the Hague Evidence Convention.

Even if all that is sought abroad is the provision of documents, the BVI court has the inherent jurisdiction to order the issue of a letter of request (Panayiotou v Sony Music Entertainment (UK) Ltd [1994] Ch 142).

(c) With what level of detail and specificity should the documents to be obtained from other jurisdictions be described (eg, is a generic description or category of documents permissible, or is the exact date and name required)?

An applicant is not entitled to seek an order for a request that is in substance a request for general discovery. The letter of request must be confined to particular documents, although these may be described compendiously.

Further, in order to be the subject of a letter of request:

a document must:
- be admissible in evidence; and
- be directly material to an issue in the action; and
the court must be satisfied that:
- the document exists or did exist; and
- it is likely to be in the possession of the person from which production is being sought (Panayiotou v Sony Music Entertainment (UK) Ltd [1994] Ch 142)

(d) How will the courts in your jurisdiction respond to a foreign request for assistance? What specific considerations and concerns should be borne in mind in this regard?

The Evidence (Proceedings in Foreign Jurisdictions) Act, 1988 governs requests for assistance by a foreign judicial authority in relation to civil or commercial matters. The scope of assistance that may be given in the British Virgin Islands under the act extends, among things, to:

the examination of witnesses;
the provision of information/documents; and
the preservation and detention of property.

To render assistance under the act, the BVI court must be satisfied that:

the application is made in pursuance of a request issued by an authorised court or tribunal in a foreign jurisdiction; and
the evidence to which the application relates is to be obtained for the purposes of civil proceedings:
- that have been instituted before the requesting court; or
- the institution of which is contemplated before that court.

The High Court will not:

make an order requiring any steps to be undertaken that could not be required in domestic proceedings; or
require the production of documents other than particular documents that are likely to be in the respondent's possession, custody or power.

Pursuant to Part 71 of the Civil Procedure Rules 2000, an application:

may be made without notice; and
must be supported by an affidavit exhibiting the relevant request (translated into English, if necessary).

1.4 Cryptocurrencies: (a) Do cryptocurrencies constitute ‘property' for interim remedy/enforcement purposes? (b) Does your jurisdiction have experience with investigations, interim remedies or enforcement actions in respect of cryptocurrencies? (c) How will the question of governing law and jurisdiction be determined in respect of cryptocurrencies? (d) Are there any other considerations that should be borne in mind in this regard?

(a) Do cryptocurrencies constitute ‘property' for interim remedy/enforcement purposes?

Yes. In Philip Smith v Torque Group Holdings Ltd [2021] ECSCJ No 626, the British Virgin Islands Commercial Court held that cryptocurrencies constitutes ‘property' in the insolvency context. In arriving at his decision, Justice Wallbank applied the decision of the English High Court in AA v Persons Unknown [2019] EWHC 3556 (Comm) which held that bitcoin can constitute property for the purposes of a proprietary injunction.

While there appears to be no published authority in the British Virgin Islands concerning enforcement, it is reasonable to assume that the BVI court will also consider that cryptocurrency is property for the purposes of enforcement, thus following the position in England (Danisz v Persons Unknown [2022] EWHC 280 (QB) and Ion Science v Persons Unknown).

(b) Does your jurisdiction have experience with investigations, interim remedies or enforcement actions in respect of cryptocurrencies?

In ChainSwap Limited v Persons Unknown BVIHC (COM) 2022/0031, ChainSwap applied for:

a worldwide freezing order against persons unknown who were alleged to have stolen digital coins;
an order for service outside the jurisdiction by alternative means; and
a letter of request to be issued to the authorities in Croatia seeking the provision of certain information in aid of its underlying claim.

In granting the application, Justice Jack, sitting in the BVI Commercial Court, also noted that had a proprietary claim been established, the cryptocurrency would have constituted property for the purposes of a proprietary injunction.

In Mr Dollar Bill Ltd v Persons Unknown [2021] EWHC 2718 (Ch), the English High Court granted an alleged cryptocurrency fraud victim a Norwich Pharmacal and Bankers Trust disclosure order against two bitcoin exchanges to assist the victim in tracing its missing bitcoin. Decisions of the English courts are persuasive in the British Virgin Islands, and it is therefore likely that disclosure relief will be available to victims of a wrongdoing in the crypto context.

(c) How will the question of governing law and jurisdiction be determined in respect of cryptocurrencies?

The lex situs of crypto currency is an important factor that will inform what is considered to be the governing law of a claim, which in turn is an important factor when considering whether the British Virgin Islands is the appropriate jurisdiction in which to determine the claim. The approach adopted by the English courts has generally been that crypto assets are to be treated as being located in the place where the individual or company that owns the asset is domiciled or resident.

In Ion Science Ltd v Persons Unknown (unreported, 21 December 2020), the English High Court formed the view that the lex situs of crypto assets was the place where the person or company that owns it is domiciled. This approach was followed in Fetch.ai Ltd v Persons Unknown Category A [2021] EWHC 3054 (Comm). However, more recently, in Tulip Trading Ltd (a Seychelles company) v Van Der Laan [2022] EWHC 667 (Ch), Justice Falk appeared to prefer residency over domicile. Unlike the earlier decisions, in Tulip the court was considering a fully contested jurisdiction challenge.

On balance, therefore, the current position appears to be that lex situs will be determined by residency, although the law on this issue is by no means settled.

(d) Are there any other considerations that should be borne in mind in this regard?

The question of where digital currency is located is important particularly in relation to extra territorial claims. The reason for this is that a number of the procedural ‘gateways' for serving a claim outside of the British Virgin Islands are available only:

for claims that concern property in the jurisdiction (Civil Procedure Rule 7.3(6)); or
where, for example, damage has been sustained in the jurisdiction (Civil Procedure Rule 7.3(4)).

2 Investigations

2.1 Who identifies the assets in civil and criminal asset recovery proceedings?

In civil matters, it is for the claimant to establish the whereabouts of assets. There are number of tools available to the claimant to facilitate this, such as the following:

The court may require a judgment debtor to submit to oral examination about its assets (Civil Procedure Rule 44).
If there is a pattern of wilful evasion of a judgment debt, the court may require a third party to disclose information to aid in the enforcement of the judgment (UVW v XYZ (Claim BVI HC (COM) 108 of 2016).
Post-judgment freezing orders often contain asset disclosure provisions.
A Bankers Trust disclosure jurisdiction is exercisable where, on the face of it, the court is satisfied that funds held by, or passed through, the third party belong to the claimant (whose funds have been misappropriated). The disclosure will assist the applicant in tracing its assets.

In criminal matters, the Proceeds of Criminal Conduct Act 1997 (as amended) contains the core provisions for the confiscation of proceeds of crime and investigatory powers to aid confiscation investigations. An investigation into whether a person has benefited from his or her criminal conduct, or into the extent or whereabouts of the benefit from his or her criminal conduct, is principally conducted by the Royal Virgin Islands police force; although other agencies such as the Financial Investigation Agency can also act in relation to a confiscation investigation.

2.2 How are the targets of the investigation identified?

In civil proceedings an applicant may seek a disclosure order against a third party that has become mixed up in wrongdoing. This type of order, under the court's Norwich Pharmacal jurisdiction, can be used to identify unknown wrongdoers so that a claim may be advanced against them.

2.3 What role (if any) may regulatory/law enforcement bodies play in locating assets in aid of civil proceedings?

The regulatory/law enforcement bodies generally do not play a role in locating assets in civil proceedings. However, the BVI legislature intends to introduce a civil forfeiture regime into the Proceeds of Criminal Conduct Act 1997. It appears that this will provide a platform for non-conviction basis asset recovery proceedings.

2.4 Will regulatory/law enforcement bodies share evidence to be used in civil asset recovery/tracing proceedings?

Requests for the disclosure of material will usually be made to the police or the Office of the Director of Public Prosecutions. Such requests will be considered on a case-by-case basis and only if the third party can demonstrate a genuine interest in the proceedings or contemplated proceedings. It would be unusual, however, to disclose material before any enforcement of criminal proceedings has been completed (Conway v Rimmer (1968) I All ER 874).

The consent of the maker of a witness statement is usually required before the statement (and exhibits) can be disclosed, unless the court orders otherwise.

Under English law, material seized by the police in connection with the investigation must not be disclosed unless:

the owner has consented; or
a witness summons has been served on the relevant police officer.

It is likely that the BVI authorities will adopt a similar stance.

The Financial Services Commission must not disclose any material or information obtained in the performance of its functions unless one of the statutory ‘gateways' is satisfied, including disclosure required by order of the BVI courts (Financial Services Commission Act 2001, Section 49A).

2.5 Are there restrictions on the use of documents/ information obtained as part of civil or criminal proceedings in either local proceedings or foreign proceedings?

The Eastern Caribbean Supreme Court Civil Procedure Rules 2000 make provision for the subsequent use of disclosed documents:

CPR28.17 (1) A party to whom a document has been disclosed may use the document only for the purpose of the proceedings in which it is disclosed, unless –

(a) the document has been read to or by the court, or referred to, in open court; or

(b)(i) the party disclosing the document and the person to whom the document belongs; or (ii) the court; gives permission

With regard to witness statements, the rules provide as follows:

CPR29.12 (1) Except as provided by this rule, a witness statement may be used only for the purpose of the proceedings in which it is served.

(2) Paragraph (1) does not apply if and to the extent that the –(a) court gives permission for some other use of it; (b) witness gives consent in writing to some other use of it; or (c) witness statement has been put in evidence.

Material obtained during the course of a criminal investigation is unlikely to be disclosed until those proceedings have ended (Conway v Rimmer (1968) I All ER 874). Disclosure of such material in civil cases will be assessed on a case-by-case basis. There is generally a strong public interest in maintaining the confidentiality of documents provided by a party for the purposes of a criminal prosecution, but this protection is subject to the interests of justice (Taylor v Director of the Serious Fraud Office [1999] 2 AC 177).

2.6 What different sources of information can be drawn upon in an asset recovery investigation (eg, public information; government agency information; company information); and what restrictions and requirements apply in this regard?

Information concerning companies incorporated in the British Virgin Islands can be obtained from the BVI Registry of Corporate Affairs. This information is generally limited and includes:

a company's constitutional documents;
its date of incorporation; and
its current status.

There are no restrictions on how this information may be deployed.

On the other hand, the use of information disclosed under compulsion is restricted for use in the proceedings in which it is disclosed, unless the court orders otherwise.

2.7 Under what circumstances will a criminal asset recovery investigation be initiated in your jurisdiction?

The court can make an order for confiscation under the Proceeds of Criminal Conduct Act 1997 to recover alleged proceeds of crime from a defendant following conviction. The authorities may then commence a confiscation investigation into whether a person has benefited from a crime, which may lead to a confiscation order being made against that individual.

2.8 What specific considerations and concerns should be borne in mind in cross-border investigations?

In civil cases where there is a heightened risk of asset dissipation or evidence spoliation, it is particularly important to conduct investigations in secret before the target is put on notice that formal action may be taken against it. In order to militate against this risk and maintain secrecy, an applicant may request that the foreign court:

seal the record of any disclosure proceedings commenced by the applicant; and/or
order that any third party that has been ordered to provide disclosure be enjoined from disclosing the fact or existence of the proceedings.

3 Criminal

3.1 Asset tracing: (a) What different sources of information can be drawn upon in an asset recovery investigation (eg, public information; government agency information; company information); and what restrictions and requirements apply in this regard? (b) What investigative techniques can be used to gather evidence in your jurisdiction; and what restrictions and requirements apply in this regard? (c) What other considerations and concerns should be borne in mind at this stage of the process?

(a) What different sources of information can be drawn upon in an asset recovery investigation (eg, public information; government agency information; company information); and what restrictions and requirements apply in this regard?

Asset tracing as part of a criminal investigation can be pursued by one of a number of public agencies in the British Virgin Islands, but is limited by:

the resources of those agencies; and
the restricted powers of the criminal courts to order the disclosure of information.

Information about companies incorporated in the British Virgin Islands can be obtained by investigators from the BVI Registry of Corporate Affairs, but this information is generally limited. Government agencies will sometimes share information on a voluntary basis with criminal investigators.

There is generally no restriction on the use that can be made of this information in a criminal investigation. The criminal courts have a general power to exclude evidence that was obtained unlawfully or improperly, but probative evidence is usually admissible unless the process by which it was obtained was seriously improper.

(b) What investigative techniques can be used to gather evidence in your jurisdiction; and what restrictions and requirements apply in this regard?

The police and other public agencies in the British Virgin Islands have limited investigative resources. However, the Financial Investigation Agency (FIA) will analyse and sometimes share information relating to the commission of financial offences with domestic and international law enforcement agencies. The FIA receives suspicious transaction reports from banks and others in the financial services industry and these can generate information that has evidential value. Large cash seizures are common in the British Virgin Islands and these in themselves can be a valuable source of information. In general, there are no restrictions on the use that can be made of information.

(c) What other considerations and concerns should be borne in mind at this stage of the process?

In general, asset tracing in the British Virgin Islands is more effectively pursued by civil processes. This may change if the statutory powers of civil recovery are developed and enhanced to match those in other Caribbean jurisdictions.

3.2 Confiscation: (a) What confiscation mechanisms are available in your jurisdiction? (b) How do these different mechanisms work in practice? (c) Are any procedural tools available in your jurisdiction that can enhance the effectiveness of the confiscation regime or capture a wider range of assets? (d) Can secondary proceeds be confiscated in your jurisdiction? (e) Is value-based confiscation allowed in your jurisdiction? If so, how does this work in practice? (f) Can the property of third parties or close relatives be confiscated in your jurisdiction? How are third-party interests addressed? (g) Can confiscated assets be used to provide restitution to the victims of crime? (h) Can confiscated assets be used to satisfy civil claims for damages or compensation arising from the offence? (i) Is confiscation possible without a conviction in your jurisdiction? If so, how does this work in practice?

(a) What confiscation mechanisms are available in your jurisdiction?

The Proceeds of Criminal Conduct Act 1997 (as amended) (PCCA) permits:

the confiscation of assets held by a person – including a company – that has been convicted of a criminal offence or offences; and
the seizure and forfeiture of cash that is obtained by criminal conduct or used in the commission of an offence.

These are different processes: the confiscation provisions apply where there has been a conviction; while the cash seizure and forfeiture provisions are based on a simple civil recovery process.

The model in each case is the Proceeds of Crime Act 2002 (POCA) and preceding legislation in the United Kingdom.

The general confiscation procedure is modelled on the post-conviction confiscation provisions in Part 2 of POCA. The procedure does not specifically target assets that are themselves the proceeds of crime. It obliges a convicted defendant to pay money or disgorge assets – even legitimately acquired assets – up to the value of the amount by which an offender benefited from the offence. If there is a pattern of offending, there is an assumption that all property held by a convicted defendant or acquired by it in the preceding period represents the benefit from criminal conduct unless the defendant can prove otherwise. Default sentences of imprisonment – consecutive to any sentence served for the underlying offences – are imposed as an enforcement mechanism.

The cash seizure and forfeiture provisions of the PCCA closely follow the equivalent provisions in Chapter 3 of Part 5 of POCA. They apply to cash that "directly or indirectly represents a person's proceeds of criminal conduct or is intended for use in criminal conduct".

This broadly corresponds to the definition of ‘recoverable property' in Part 5 of POCA, but the British Virgin Islands does not yet have a general equivalent of the provisions in Part 5 for the civil recovery of assets other than cash that are obtained by criminal conduct.

Various BVI statutes permit the forfeiture of specific items of property that are used in the commission of crime or are connected to criminal conduct. The Asset Seizure and Forfeiture Act 2020 creates mechanisms for the management and ultimate distribution of those assets.

(b) How do these different mechanisms work in practice?

Confiscation: Confiscation proceedings are heard by a criminal court – either the magistrates court or the Criminal Division of the High Court – as an adjunct to the sentencing process.

Following conviction, the prosecution serves a statement on the defendant and the court setting out what it alleges to be:

the defendant's benefit from the offences of which it has been convicted; and
if there is a relevant pattern of offending, the wider benefit from criminal conduct.

Where there is a pattern of offending, there is an assumption that property acquired or transferred by the defendant in the preceding six-year period will be treated as the benefit from criminal conduct, unless it can show that the property has a legitimate origin.

The statement will also list:

the known assets (‘realisable assets') of the defendant; and
any ‘gifts' made by it after the offences were committed. A ‘gift' for these purposes is the transfer of property to another person for which anything less than market value was received.

A defendant's benefit is the value of the property that it obtained through its offending.

The defendant will then be required to provide details of:

any assets it holds; and
sums received or transferred in the relevant period.

The court will hold a formal and often detailed hearing to determine the amount of the confiscation order. In that hearing, which is conducted by a magistrate or judge alone (there is no jury), the court determines the amount of the defendant's benefit and makes a confiscation order in that amount, unless the defendant can show that its realisable assets fall short of the benefit, in which case the court makes an order in that lesser sum.

Cash seizure and forfeiture: This is a simpler, summary process. The prosecutor applies to the magistrates court for an order permitting the detention of the cash that has been seized. There is then a hearing at which the prosecutor must satisfy the court, on the balance of probabilities, that the cash represents the proceeds of a person's criminal conduct or is to be used in the commission of crime.

(c) Are any procedural tools available in your jurisdiction that can enhance the effectiveness of the confiscation regime or capture a wider range of assets?

The High Court can and generally will make a restraint order prohibiting the defendant from dealing with its assets once criminal proceedings have been instituted. This preserves the assets so that they are available for confiscation if there is a conviction in due course. Once there is a conviction, the court will order disclosure by the defendant of his or her assets. Where a confiscation order is made, it can be reinforced by the appointment of a receiver and/or charging orders over relevant property. The court also has powers to enforce the order through bankruptcy or other insolvency proceedings.

(d) Can secondary proceeds be confiscated in your jurisdiction?

Yes.

Criminal confiscation does not require the confiscated asset to be the proceeds of the crime in question. The defendant's realisable assets include property that has been bought with the proceeds or crime or exchanged for it.

Cash forfeiture applies to cash that is acquired by the sale of assets that themselves represent the proceeds of crime. If and when the PCCA is extended to allow for the civil recovery of assets other than cash – including funds held in bank accounts – it is anticipated that the proceeds of crime will be recoverable by the forfeiture of any assets for which they have been exchanged.

(e) Is value-based confiscation allowed in your jurisdiction? If so, how does this work in practice?

Yes, to the extent that the value of a post-conviction confiscation order will be an amount that represents the offender's benefit from criminal conduct, however that money is obtained.

(f) Can the property of third parties or close relatives be confiscated in your jurisdiction? How are third-party interests addressed?

The property of third parties is treated as the asset of the defendant for the purposes of determining the defendant's available assets, if he has or she made a gift caught by Section 4 of the PCCA to the third party. In other words, any asset that has been transferred to a third party for less than market value after the relevant offence or offences have been committed is treated as an asset of the defendant for the purposes of confiscation.

A defendant's interest in a jointly owned asset is treated as his or her property for the purposes of confiscation – for example, a jointly owned house is vulnerable to restraint and an order for sale even if the ultimate amount that is the subject of confiscation is limited to the defendant in the property.

There is no general rule that makes the assets of a spouse of family members available for confiscation. However, assets held by a spouse in particular are likely to be regarded as the assets of a defendant, where the inference is that they have been acquired by the defendant's criminal conduct and are being shielded by the spouse's nominal ownership or control.

In calculating a defendant's assets, court judgments and debts to preferential creditors are discounted. Third parties may assert an interest in any property that might be available for confiscation and the court will determine the amount of the third-party interest, if any, and discount it.

(g) Can confiscated assets be used to provide restitution to the victims of crime?

Yes.

A criminal court can make a compensation order in favour of the victim of a crime. Where there is a confiscation order under the PCCA, and a compensation order, and the defendant does not have the means to satisfy both orders, Section 7(3) of the PCCA permits the court to order that all or part of the confiscation order be used for the purposes of satisfying the compensation order.

(h) Can confiscated assets be used to satisfy civil claims for damages or compensation arising from the offence?

Yes, the proceeds of a confiscation order can be used to satisfy a concurrent compensation order where there are insufficient funds to satisfy the order otherwise.

(i) Is confiscation possible without a conviction in your jurisdiction? If so, how does this work in practice?

With cash that represents the proceeds of criminal conduct, the summary process for forfeiture does not depend on criminal conviction.

Either:

the cash is seized in anticipation of an application for forfeiture under the PCCA; or
an application can be made in relation to cash that is seized using other police powers, often pursuant to arrest.

If the court is satisfied that the cash represents a person's proceeds of criminal conduct or is for use in the commission of an offence, the magistrates court can order its forfeiture without the need to prove a specific predicate offence nor to obtain a criminal conviction. A similar test will probably apply when the PCCA is extended to reflect the wider civil recovery regime in Part 5 of POCA.

3.3 Repatriation: (a) What provisions (if any) govern the repatriation of assets in your jurisdiction? What specific considerations and concerns should be borne in mind in this regard?

(a) What provisions (if any) govern the repatriation of assets in your jurisdiction? What specific considerations and concerns should be borne in mind in this regard?

Statutory powers of repatriation are limited at present, although voluntary arrangements have been made in specific cases.

4 Trends and Predictions

4.1 How would you describe the current asset recovery landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

It appears that the legislature may intend to introduce a non-conviction based civil forfeiture regime into the Proceeds of Criminal Conduct Act 1997. This would enable the authorities, or potentially a receiver appointed by the court, to investigate, seize and ultimately forfeit assets that appear to be the product of unlawful conduct without the need for a predicate offence.

5 Tips and Traps

5.1 What would be your recommendations for effective asset tracing and recovery and what potential pitfalls would you highlight?

In cases of urgency and/or where the subject of a civil investigation presents a risk of asset dissipation, the court will allow applications for interim measures (including disclosure and freezing orders) to be made urgently on an ex parte basis. However, applications made without notice to a respondent will always be vulnerable to a set-aside application once the subject becomes aware of the order. It is therefore important that the applicant disclose all matters that may be relevant to the application, including factors that may detract from the merits of the application at the ex parte stage, to forestall any argument that the applicant misled the court and did not comply with the duty of full and frank disclosure.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

British Virgin Islands: Asset Recovery Comparative Guide