The authorities in the Cayman Islands are increasingly relying upon the powers afforded to them under the Proceeds of Crime Act to prevent people from dealing with property which is the subject of an investigation.
The Cayman Islands are widely known for their central role in the international financial system, primarily for the funds industry but increasingly so for their role in the burgeoning field of cryptocurrency trading platforms, and the wider applications of blockchain technology. This means there is an ever-increasing volume of intangible assets, and therefore property, entering the Cayman Islands.
Whether an inquiry is initiated by the Cayman Islands Bureau of Financial Investigation, or done in conjunction with law enforcement agencies from other jurisdictions, the Prosecutors office is being considerably more pro-active in restricting access to property when the property itself or those connected to it are the subject of investigation. They do so by the use of Property Freezing Orders. These are a form of civil restraint and so this is no requirement for arrest or criminal charge.
Under Section 82(2) of the Proceeds of Crime Act a property freezing order is an order that specifies or describes the property to which it applies and prohibits any person to whose property the order applies from in any way dealing with the property.
For property to be subject to a Property Freezing Order, the property the order relates to must be, or include, ‘Recoverable Property’ (Section 82(4)(a)(i) POCA).
Recoverable Property is property obtained through unlawful conduct (Section 123(1) POCA). This does not mean the person whose hands the property now rests need have committed any crime, as long as the asset can be traced from the original criminal activity to this point.
As a Property Freezing Order is to prevent dissipation of assets before an investigation has concluded whether or not they should properly be restrained and forfeited. The Court must be satisfied there is a ‘good arguable case’ that the property specified was obtained through unlawful conduct.
In Director of the Assets Recovery Agency v Szepietowski  EWCA Civ 766, the Court of Appeal of England and Wales found that a good arguable case meant a case which was beyond merely speculative, but one which stood a good prospect of succeeding at trial.
This provides significant scope to challenge what can be draconian orders. We specialise in forcing the applicant to tightly define each asset specified in the proposed order, and then perform a comprehensive review of their asset tracing exercise that purports to link the property to prior criminal conduct.
Given the international nature of the cases we are asked to advise upon we have particular expertise in cross-border asset tracing, and the rules relating to presenting evidence obtained from different jurisdictions obtained by external law enforcement agencies.
If you have been informed that the authorities are intending to seek a Property Freezing Order while an investigation is undertaken, and you require advice or assistance in relation to any aspect of such an application Oliver Grimwood has significant experience in this area. He and other members of our specialist team can be contacted to assist on email@example.com or +1(345)949-0123.