Schedules Schedule 9 – Cryptoassets: civil recovery Part 1 – Amendments of Part 5 of the Proceeds of Crime Act 2002 Chapter 3E: Forfeiture of cryptoassets following detention or freezing order
Section 303Z41 provides that a judicial authority may order the forfeiture of some or all of the cryptoassets detained in pursuance of an order under Chapter 3C, or frozen in a wallet under an order made under Chapter 3D, if satisfied that the cryptoassets are recoverable property or intended for use in unlawful conduct. Subsection (5) provides for the payment of reasonable legal expenses that a person has (or may reasonably incur in), except in Scotland. Subsection (8) provides that a judicial authority may not order the forfeiture of cryptoassets pursuant to subsection (4) if section 303Z45(1) applies. That section deals with joint and associated property. In those circumstances, where no agreement can be reached regarding the interests of associated or joint property holders of the relevant cryptoassets and the case must be transferred to the High Court, or Court of Session, the powers conferred on a magistrates’ court or sheriff cease to apply.
	Section 303Z42 sets out further detail about the forfeiture of cryptoassets. Subsection (4) specifies that an order for the forfeiture of cryptoassets held in a wallet administered by a cryptoasset service provider requires the provider to transfer those assets into a crypto wallet nominated by an enforcement officer. Once the transfer is executed the freezing order will cease to apply and the prohibition on making withdrawals or payments, or using the crypto wallet in any other way, will no longer apply. Subsections (7) to (10) provide for consequential amendments, in order to provide for an alternative means by which cryptoassets can be forfeited when held by a cryptoasset service provider. The powers would provide a contingency to overcome future technical barriers around the forfeiture of cryptoassets administered by a third party. Subsections (10) to (12) provide for certain consultation requirements to apply prior to the Secretary of State making regulations under subsection (7) regarding cryptoasset forfeiture orders.
	Sections 303Z43 to 303Z46 set out how associated and joint property is to be dealt with when forfeiture is applied for.
	Section 303Z43 sets out the circumstances in which the provisions on associated property and joint property in sections 303Z44 and 303Z45 apply. The term "associated property" is defined in subsection (3) and subsection (2) specifies how property is jointly owned in England and Wales and Northern Ireland.
	Section 303Z44 provides that a judicial authority may order that a person who holds associated property or who is an excepted joint owner may retain the property but must pay the law enforcement agency a sum equivalent to the value of the recoverable share. This section applies where there is agreement amongst the parties as to the extent of the recoverable portion of the cryptoassets. Subsection (6) also permits exclusions for legal expenses, except in Scotland.
	Section 303Z45 describes how a judicial authority can deal with a person who holds associated property or who is an excepted joint owner but where there is no agreement under section 303Z44. If an order for forfeiture of part of the cryptoasset (including the associated property) is made, and the court considers it is "just and equitable" to do so, it may also order that the excepted joint owner’s interest will be extinguished, or that the excepted joint owner’s interest will be severed, and it may order that a payment be made to that individual.
	Section 303Z46 provides that, where a judicial authority makes an order for the forfeiture of only some of the cryptoassets or decides not to make a forfeiture order at all, and the law enforcement agency appeals, it may also apply to the judicial authority which made that decision for an extension of the account freezing order pending the appeal. The application continues the wallet freezing order may be made without notice.
	Section 303Z47 provides for a right of appeal against a forfeiture decision made under sections 303Z41 to 303Z45. The time-period for the lodging of an appeal is 30 days from the day that the court makes the order. If the appeal is upheld, it may order the release of the whole or part of the funds. If a forfeiture order is successfully appealed, and the cryptoassets are released, any interest which accrued during the time that the assets were held by the enforcement officer must also be returned to the person from whom they were seized, or the person by or for whom the crypto wallet was administered immediately before the freezing order was made.
	Section 303Z48 makes provision for the realisation or destruction of cryptoassets. Subsections (2) to (4) provide that the enforcement officer must realise the cryptoassets or make arrangements for their realisation, subject to any appeal rights against the forfeiture being exhausted. Subsection (6) provides that, where it is either not reasonably practicable for the enforcement officer to arrange for the realisation of the cryptoassets in question, or where there are reasonable grounds to believe that the realisation of the cryptoassets would be contrary to the public interest (having regard in particular to how likely it is that the re-entry of the cryptoassets into circulation would facilitate criminal conduct by any person), the cryptoassets may be destroyed. The realisation of a particular cryptoasset may be contrary to the public interest in cases where it is (or is part of a class of cryptoassets which are) used predominantly or exclusively for criminal purposes such as money laundering.
	Section 303Z49 provides for the order in which the proceeds should be realised.
	Section 303Z50 makes provision for the release of detained cryptoassets to their true owner. Two cases are provided for. Subsection (4) relates to a person who claims that some or all of the cryptoassets rightfully belong to them, and they were deprived of them through unlawful conduct. An example of this would be a person who claims that the cryptoassets were stolen from them. If the court is satisfied, it may order the applicant’s cryptoassets to be released to that individual.
	Subsection (6) relates to the case of any other true owner who is not the person from whom the cryptoassets was seized. Here, if the court is satisfied, the cryptoassets may be released – but only if the person from whom they were seized does not object. That proviso is intended to prevent the court from becoming involved in a complicated ownership dispute between the person from whom the cryptoassets were seized and the rightful owner of those assets. Unlike subsection (4) the court will have to be satisfied that the cash is not recoverable property or intended for use in unlawful conduct before it can release to a claimed owner.
	Section 303Z51 makes provision for the release of cryptoassets held in a crypto wallet to their true owner. As with section 303Z50, two cases are provided for.
	Section 303Z52 provides that where no forfeiture is made, following seizure, or from the date upon a prohibition was imposed on the use of cryptoassets held in a crypto wallet, the person from whom the cryptoassets were seized, or the person by or for whom the crypto wallet was administered immediately before the freezing order was made, may apply to the court for compensation, where the circumstances are exceptional.
	Section 303Z53 provides that the Director of Public Prosecutions or the Director for Public Prosecution in Northern Ireland may appear in proceedings on behalf of a constable or an accredited financial investigator, if asked to do so and if it is considered appropriate for them to do so.