New restraint and confiscation rules: what has changed?

Restraint and confiscation are different

A restraint order is a protective order made by the Crown Court. It prohibits specified people from dealing with property so that it remains available if a confiscation order is later made. Depending on the case, the order may cover named assets or all realisable property, including property acquired after the order and property held outside England and Wales. Applications are frequently made without notice because advance warning may defeat their purpose. A restraint order can be made before charge once a criminal investigation has begun, provided the statutory conditions are met. It does not transfer ownership of the assets to the prosecution and it is not a determination of guilt. Nevertheless, breaching its terms can have serious consequences, so the correct response is to seek advice and, where appropriate, apply to vary or discharge the order rather than simply ignoring it. Confiscation normally follows conviction. The court first considers the benefit obtained from criminal conduct and then determines the amount the defendant is required to pay. The order is a personal monetary order. It is not necessarily limited to the particular cash or property said to represent the proceeds of the offence, which is why legitimately acquired assets may still be exposed to enforcement.

A statutory test for the risk of assets disappearing

The most important restraint reform places the real risk of dissipation test expressly into the Proceeds of Crime Act 2002. In addition to satisfying one of the existing statutory conditions, the prosecution must show a real risk that property which could be used to satisfy a confiscation order will cease to be available unless the court intervenes. The court must now consider a defined range of matters. These include the nature of the property, any steps already taken to dispose of or conceal it, how easily the person holding it could move it, evidence of that person’s character, the nature of the alleged criminal conduct, the suspected benefit and the stage reached in the proceedings. This largely codifies principles developed by the courts, but it gives both sides a clearer framework. The allegation itself does not remove the need to establish a genuine risk. Equally, the court is not limited to evidence of an attempted transfer: the type and location of an asset, access to overseas structures or the ease with which funds can be moved may all be relevant. A well-prepared defence response should address the statutory factors directly rather than relying on a general assurance that nothing will be dissipated.

Living expenses and the effect of delay

A restraint order may contain exceptions for reasonable living expenses and, where appropriate, for the continuation of a trade, business, profession or occupation. The new rules tell the court what it must consider when setting a living-expenses allowance. The starting point is the person’s standard of living immediately before the order, although a standard of living reasonably believed to result from criminal activity is discounted. The court must also consider the likely duration of the order, the person’s means, the value of the restrained property compared with the likely confiscation liability, and expenditure needed to preserve or improve the value of an asset. The Act also gives a more structured test where an order has remained in place but criminal proceedings have not started within a reasonable time. Relevant matters include the time elapsed, the prosecution’s explanation, the complexity and international scope of the investigation, the nature of the order and its impact on everyone affected. This does not create an automatic expiry date, but it strengthens the basis for a focused application where an investigation is drifting and the restraint is causing substantial prejudice.

Can restrained funds now pay defence legal fees?

The Act contains a proposed mechanism allowing a court to release a specified total for reasonable legal expenses relating to the offence at the centre of the restraint order, subject to conditions. That reform is not yet fully operational. The June commencement regulations expressly excluded the provisions that would remove the present restriction and introduce the new exception; only the regulation-making power was commenced. As at 5 August 2026, restrained funds therefore generally still cannot be released to pay legal expenses for defending the offence with which the confiscation proceedings are concerned. This is an area that should be checked again when regulations and a further commencement date are announced.

A clearer objective for confiscation

The Act introduces a principal objective for the exercise of confiscation powers: to deprive the defendant of the benefit of criminal conduct so far as that benefit is within the defendant’s means. Courts, prosecutors, investigators and receivers must use their powers in the way they consider will best further that objective. That wording matters because confiscation can produce very large figures and can affect property that is not itself the proceeds of crime. The new objective does not make the regime lenient, but it reinforces the need to identify the actual benefit and the defendant’s means accurately. Proportionality remains central to the exercise.

Changes to the criminal lifestyle rules

If a defendant is found to have a criminal lifestyle, the court considers benefit from general criminal conduct rather than only the offence of conviction. Statutory assumptions may then be applied to property, income and expenditure over the relevant period. This can increase the alleged benefit substantially and place a heavy evidential burden on the defendant to explain the legitimate source of assets and spending. The new law gives the prosecutor discretion over whether to ask the court to make a criminal lifestyle determination. It also reduces from three to two the number of qualifying offences needed to trigger one route into the lifestyle provisions. The test is broadened in certain respects to include offending from which the defendant intended to benefit, even if the intended gain was not ultimately obtained. Further offences involving brothels and environmental crime have also been added to the statutory list. There remains a safeguard where applying an assumption would create a serious risk of injustice. The court must consider all the circumstances, give appropriate weight to the available evidence and take account of any explanation for why evidence that would disprove an assumption cannot be produced. In practice, early collection of bank statements, tax records, contracts, loan documents and evidence of gifts or inheritances will often be crucial.

Hidden property can be added to the available amount

One of the most significant changes concerns hidden property. Where criminal benefit exceeds the current value of the defendant’s free property and tainted gifts, the court may determine that some or all of the difference represents property hidden by or on behalf of the defendant. The value found can then be included in the available amount used to calculate the confiscation order. The court cannot simply assume that every shortfall is hidden wealth. It must consider other explanations, including ordinary expenditure and changes in asset values. That is likely to make the quality of the financial evidence particularly important. A defendant who can demonstrate where money went, why an asset fell in value or how liabilities arose is in a much stronger position than one who leaves an apparent gap unexplained. The rules on tainted gifts have also been clarified. A gift made after the offence can be treated as tainted and, where the relevant conduct comprises several offences at different times, the earliest offence provides the starting point. This can affect spouses, partners, relatives, companies and others who received property or hold it jointly. Those third parties may need their own representation to protect their interests.

Some benefit calculations may now be fairer

Not every change favours the prosecution. The Act gives the court an express power to reduce a benefit figure, including to zero, where a person intended to have only limited control over property, held it temporarily, or is treated as obtaining property because offending allowed them to retain something they already owned, and the full figure would be unjust. This may be important in cases involving an account used briefly to receive or transfer funds, although it is not an automatic exemption for a money mule or intermediary. The court must examine the person’s intended control, the period for which the property was held and all the surrounding circumstances. Other amendments refine valuation. Where only part of an asset was obtained through criminal conduct, only that proportion is taken into account. New rules address property bought with a criminally obtained mortgage, property later sold, destroyed cryptoassets and foreign-currency sale proceeds. The broad theme is that the benefit calculation should reflect economic reality more closely, but the detail can require expert accounting and valuation evidence.

Confiscation proceedings should become more structured

The previous language of postponing confiscation proceedings for up to two years has been replaced by a more active timetable. Before the sentencing hearing ends, the court must set deadlines for the prosecution’s statement of information, the defendant’s response, any further information and the final confiscation hearing. The timetable can later be revised, but the aim is to identify delay and disputed issues much earlier. The court may also direct an early resolution of confiscation meeting. The prosecutor, defendant and any relevant third party meet after the necessary financial statements have been exchanged to discuss criminal benefit, the recoverable amount and the available amount. If agreement is reached, the court may be able to make an order on the papers, subject to any issues such as compensation that still require a hearing. If agreement is not possible, an early resolution hearing can narrow the issues and set the next steps. For defendants, this means that the financial case can no longer be treated as something to address once sentencing is over. Instructions, records, valuations and expert evidence may be needed at an early stage, and missed deadlines can seriously weaken the response.

Not all the reforms are in force

The June commencement order brought most of Schedule 21 into force, but not all of it. In addition to the legal-expenses exception, the new enforcement-plan regime, revised default-term machinery and provisional discharge provisions remain prospective. It is therefore important to distinguish between what Parliament has enacted and what courts can presently apply. The position may change through further commencement regulations.

What should you do if assets are restrained?

Do not transfer, sell, charge or otherwise deal with property contrary to the order. Preserve the documents showing ownership, legitimate source of funds, liabilities and the needs of anyone affected. If the allowance for living or business expenses is unworkable, or if jointly owned property has been swept too widely into the order, an application can be made to vary it. Where the order was made without notice, the evidence and disclosure supporting it should be scrutinised carefully, including the alleged risk of dissipation. In confiscation proceedings, the prosecution’s figures should never be accepted merely because they appear in a formal statement. Benefit, criminal lifestyle, tainted gifts, hidden property and available amount are separate questions. Each may turn on different evidence and each can materially affect the final order.

How Chetwode can help

Chetwode Criminal Defence Solicitors represents individuals and businesses facing fraud, money-laundering and other allegations involving restraint and confiscation. We can advise on the scope of a restraint order, applications to vary or discharge it, disclosure of assets, the prosecution’s benefit calculation, allegations of hidden property and the protection of third-party interests. We can also work with forensic accountants and valuers where expert evidence is required, respond to the statutory confiscation statements, negotiate at an early resolution meeting and represent you at contested hearings. Early advice is particularly important because decisions taken during the investigation and the first confiscation timetable can affect the financial outcome months or years later. If you or your business has been served with a restraint order, or the prosecution has indicated that it will seek confiscation, contact Chetwode promptly so that the order and the underlying figures can be assessed before avoidable problems develop.