Recovering Criminal Assets: Assessing the Home Affairs Committee Report

Since its inception in 2002, the UK’s system for freezing and seizing the proceeds of crime, enshrined in the Proceeds of Crime Act 2002 (POCA), has been under constant and increasing scrutiny both in the media and Parliament. The July 2016 Home Affairs Committee inquiry report on this issue, coming hot on the heels of the recent National Audit Office progress report, provides further pressure on those guiding and operating the process to put in place long-lasting and meaningful reforms to a system which has required frequent legislative tweaking over the years.

The strength of the UK system lies in its ability to capture as wide a pool of criminal assets as possible, based on ‘criminal benefit’ value rather than specific assets: the UK model seeks to make a judgement on a criminal’s benefit from the proceeds of crime, rather than requiring proof of a link between a crime and a specific asset, as opposed to systems operating in, say, the US or Australia, which are asset based. Still, the complexity of the legislation required to allow for this wide definition has led to unforeseen practical difficulties, especially where individuals are no longer in the jurisdiction, or whose proceeds of crime are no longer readily available.

Refreshingly for a policy area dogged by political point-scoring, the Home Affairs Committee’s inquiry findings are to be broadly welcomed, given their ostensible basis in pragmatism and practicality. The inquiry makes a number of wide-ranging recommendations, covering all aspects of the system which, if taken on board, could deliver the fundamental step-change needed to ensure that this agenda is not lost in an era of increasingly conflicting law enforcement priorities, such as the rise in cybercrime.

First, the inquiry rightly highlights the fact that a key failure of the system has been the lack of ‘asset restraint’ at the early investigation stage, meaning that by the time asset enforcement authorities take charge of a case, assets may have dissipated and there is little left in view to realise. Opinions differ as to the reasons for this: some suggest that the reluctance to seek asset restraint is due to legal constraints, while others believe that it is explainable by the Crown Prosecution Service’s risk-aversion. But whatever the cause, this is clearly an issue that requires urgent attention and consideration.

Second, the inquiry illuminates the broad view within law enforcement, from working level up to, in some cases, chief constable level, that POCA is a niche tool to be exercised away from mainstream activities. This is a fundamental mistake and only, as the inquiry points out, by ‘mainstreaming’ the powers throughout all acquisitive crime investigations will the UK achieve the crime-reduction potential of such an all-encompassing system. The inquiry asserts that key to this is increasing the knowledge of frontline police through compulsory training.

Third, the potential for an enhanced role for the private sector in helping authorities to increase the impact of the system is one featuring prominently in the inquiry’s findings. This merits considerable exploration by the Criminal Finances Board, the Home Office-chaired multi-agency charged with guiding the UK’s asset confiscation work. For example, although much comment has been made of the costs involved in appointing enforcement receivers – private sector officials charged with seizing and realising assets that the offender has proved unwilling to hand over – any argument against their greater use ignores the fact that without their appointment often nothing is enforced, both undermining the original policy intention of the legislation that crime shouldn’t pay, as well as leaving outstanding debts on the ‘books’ gathering interest levied on an offender who refused to pay.

This links to perhaps one of the inquiry’s most meaningful recommendations and one which the Criminal Finances Board should consider in earnest: the reporting of confiscation performance statistics. Previously, the system was held hostage by the opaque performance reporting metrics of the unenforced confiscation order debt, which currently stands at a misleading £1.9 billion. What this figure masks, however, is the fact that only around £200 million of this total is deemed to be enforceable in practice. The inquiry suggests separating out the reporting of the debt into ‘collectable’ and ‘non-collectable’ categories, to ensure that the discourse reflects reality. Whilst this author’s 2016 report on the issue proposed some form of ‘writing off’ or ‘parking’ of the uncollectable debt, the alternative suggested by the Home Affairs Committee is a sensible middle ground that minimises the potential political difficulties of being seen to ‘let criminals off’, whilst facilitating a realistic assessment of the system.

However, not all of the inquiry’s recommendations are so constructive, and there are a number of missed opportunities.

The most fundamental mistake is the inquiry’s call for a single body – the National Crime Agency (NCA) – to lead a nationwide effort to improve criminal asset confiscation performance. This recommendation fails to appreciate the sheer breadth of use of the powers granted by the POCA legislative framework. POCA powers are designed to be used in combating anything from street-level criminals to global gangs, and whereas the NCA has experience of the latter, it is currently not best placed nor resourced to lead the former. Furthermore, this recommendation overlooks a key owner of responsibility, the Home Office. As HM Government’s policy lead, their role in guiding and driving performance in this field is key; this could be achieved by increased resourcing of this policy area within the Home Office and by considering the merits of including ‘asset denial’ measures in the March 2015 Strategic Policing Requirement, the policy document which ensures that sufficient capabilities are in place to respond to serious and cross-boundary threats, while balancing local and national priorities.

A further criticism could be levelled at the inquiry’s strong recommendation to make the non-payment of confiscation orders a criminal offence. To what end? The legislation already contains a ‘default sentence’ to be served in the event of non-payment, and questions already exist as to whether this achieves any impact other than increasing the prison population. Whilst one could sympathise with the intention of the recommendation, which is to ensure that payment is not viewed as optional, arguably better value for money could be achieved by focusing on more imaginative means of putting pressure on offenders to pay, such as limiting their access to the formal financial sector through collaboration with the private sector.

Further, while the parliamentary committee recognised that there are four methods within POCA for depriving criminals of their spoils: criminal confiscation; non-conviction-based civil forfeiture; cash seizure; and criminal taxation, the inquiry focused primarily on the criminal sphere. However, there are good examples of the wider proceeds of a crime ‘toolbox’ being put to productive use, albeit by a limited number of players. The inquiry missed an opportunity to both highlight good practice and to push for more widespread and bold use of the full range of powers.

The confiscation system has continually struggled to define its worth. Those operating on the front line of confiscation work know intuitively that denying criminals their illicit gains has by and large a greater impact than locking them up, and arguably offers better ‘value for money’ for the taxpayer. What they have failed to do so far is to find a means of measuring and articulating this impact. Those championing the scheme must use the current spotlight to define it more clearly, and articulate its value. And critics must display a more nuanced and intelligent understanding of what is still an essential law enforcement power.