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With the Biden administration spotlighting the role of asset confiscation in its new anti-corruption strategy, how can the UK step up its response against criminal assets during the ‘year of action’?
After years of rich, developed countries such as the US and UK ingesting the proceeds of global crime and kleptocracy into their financial and high-end property markets, the penny (or multi-million-dollar condo) has finally dropped.
President Joe Biden’s new robust stance on anti-corruption – set out in the US anti-corruption strategy and the Summit for Democracy launched in December 2021 – recognises that harbouring the proceeds of crimes committed elsewhere is an action not without domestic consequence , ‘tilting the economic playing field’, corrupting democratic institutions and ‘contributing to pricing out families from home ownership through real estate purchases’. The new strategy sets out a bold blueprint for getting to grips with this problem, including through the bolstering of efforts to confiscate and repatriate the proceeds of corruption.
With the full weight of the US machine behind this effort, there is a clear expectation that others will follow suit during the ‘year of action’. Officials ‘on the hill’ who have been privately frustrated by the UK’s slow progress in tackling its role as a safe haven for corruption proceeds have now been given top cover to give the UK a diplomatic blast.
In his statement to the Summit for Democracy, Prime Minister Boris Johnson committed to taking ‘even stronger measures against the illicit finance that undermines democracy everywhere’. However, how far does this extend to tackling the proceeds of crime sequestered in the UK economy?
From Rhetoric to Reality
As noted by my colleague Tom Keatinge in his recent Commentary, there has been no lack of UK rhetoric over the past decade. Specific to asset confiscation, at the time of their launch under the Criminal Finances Act 2017 (CFA 2017), the UK government bombastically claimed that Unexplained Wealth Orders (UWOs) would be the solution to the criminal wealth sequestered in the UK economy. More broadly, the UK’s Asset Recovery Action Plan (2019–2022) promised ‘year-on-year increases in the value of assets denied to and recovered from criminals’.
Far from growing year on year, the value of criminal assets recovered in the UK has, at an aggregate level, stagnated
But how much of this rhetoric has been borne out in reality? And what might greater scrutiny of the UK’s asset confiscation efforts during the ‘year of action’ reveal?
What is already clear is that the much-vaunted UWO has been a cautionary tale on the perils of over-promising and under-delivering. As pointed out in previous RUSI analysis in 2021, while a useful adjunct to the existing Proceeds of Crime Act 2002 investigatory tools, UWOs were always destined to be a ‘Goldilocks’ tool – only to be used in a handful of cases where the conditions were ‘just right’. Their imposition does little to overcome the fundamental capacity issues in non-conviction based civil asset recovery in the UK, as we highlighted in our 2019 research.
However, in analysing the UK’s record on confiscation, it is important to recognise that UWOs are not the only show in town. With one of the widest (and arguably most draconian) ranges of asset confiscation tools in the world at its disposal, the UK ought to be leading the global charge.
Analysis of the UK government’s autumn 2021 asset recovery statistical bulletin paints a very different picture, however. The bulletin, which presents data on the value and volume of assets restrained, seized and recovered, shows that, far from growing year on year, the value of criminal assets recovered has, at an aggregate level, stagnated. The effects of the pandemic will clearly have had an impact; however, this stagnation pre-dates 2020 and can be linked to post-2010 austerity measures.
On a more positive note, digging deeper into the statistics reveals the success of one of the less headline-grabbing tools introduced under the CFA 2017. According to the bulletin, ‘since their introduction in the financial year 2018 to 2019, the volumes seized through Account Freezing Orders (AFOs) … [have] increased by 51%’. These new powers – which, in effect, extend the UK’s cash forfeiture provisions from cash to funds held in bank accounts – have been used to good effect across the board, including in a high-profile case linked to the Azerbaijani Laundromat.
Despite this cause for cautious optimism, the bulletin raises the alarm on a wider issue of concern: the pivot towards the use of quicker – and cheaper – administrative asset forfeiture powers (such as AFOs) has been matched by a downturn in the volume and value of assets pursued via more resource-intensive criminal confiscation routes.
As the statistical bulletin notes, ‘the value of Confiscation Order Impositions has been on an overall downward trend … and is currently at its lowest level of £139m, a decline of 70%’, reflecting the ‘wider shift to the use of civil powers’.
Although this author has continually advocated a pragmatic approach to asset confiscation – a slice of bread being better than no loaf at all – there is a risk that the shift towards less transparent asset confiscation tools – such as AFOs – reduces the impact of the action on the (alleged) perpetrator, who can walk away from the assets without facing the full scrutiny of the criminal process.
A Problem Not of Law but of Enforcement
With the current statistical bulletin pointing to some systemic issues in the regime, how can the UK government demonstrate a real (rather than rhetorical) commitment to reducing the levels of proceeds of crime within its economy in 2022?
First, the UK Home Office should publicly commit to a significant expansion in specialist asset confiscation capacity, both within mainstream policing and within the civil confiscation and international corruption units within the National Crime Agency. It should also commit to reviewing the impacts (positive and negative) of the pivot toward greater use of administrative asset confiscation tools in a future Asset Recovery Action Plan.
Taking action against criminal proceeds is one of the most visible ways to demonstrate the UK’s determination to get to grips with its role as a global facilitator of money laundering
Second, the government should recognise that the scale of the problem will always outstrip public sector resources and take a balanced look at the potential of public-private partnerships in asset confiscation. While not a panacea, as long as transparency and oversight are not sacrificed, harnessing the potential of the private sector may provide additional bandwidth in lower harm cases.
However, as ever, the real shift needed is one of leadership. In his address to the Summit for Democracy, Johnson committed to a range of transparency measures around corporate and property ownership, which will do much in terms of deterring future investment of criminal proceeds in the UK. However, he remained ominously silent on tackling the swathes of wealth already sitting in the UK’s property and financial markets.
The pay-off for doubling down on asset confiscation is considerable. Taking action against criminal proceeds is one of the most visible ways to demonstrate the UK’s determination to get to grips with its role as a global facilitator of money laundering. Not only will this improve our reputation abroad – most notably with our US colleagues – but the positive consequences will be felt at home, both protecting our democratic institutions from undue influence and rebalancing the economy for the benefit of the electorate. In short, the party’s over – it’s time to clear up the mess.
The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.
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Associate Fellow; Head of Public Policy at Cifas