Conclusions and recommendations
1. Confiscation orders
are the main way through which the government carries out its
policy to deprive criminals of the proceeds of their crimes. The
intention is to deny criminals the use of their assets and to
disrupt and deter further criminality, as well as recovering criminals'
proceeds. The Home Office leads on confiscation policy, but many
other bodies are involved including the police, the Crown Prosecution
Service and HM Courts and Tribunal Service. The overall system
for confiscation orders is governed by the multi-agency Criminal
Finances Board. The annual cost of administering confiscation
orders is some £100 million. In 2012-13 the amount confiscated
was £133 million.
2. Poor implementation of the confiscation
order scheme has severely hampered its effectiveness.
Confiscation orders can be a powerful mechanism for recovering
criminal proceeds and combating and deterring criminal activity.
The Proceeds of Crime Act 2002 provided powers for enforcement
agencies to use confiscation orders, but over 10 years later the
government only collects 26 pence out of every £100 generated
by criminal activity. Many bodies are involved with confiscation
and there is a lack of clarity over who is responsible, with no
clear direction, failure to act promptly, weak accountability
and no understanding of what makes good performance and delivers
value for money. For example, there is limited understanding of
the extent to which confiscation orders have disrupted crime.
The Criminal Finances Board has failed to address these issues
since its creation in 2011, but we welcome the fact that it is
now chaired by a Minister and is drawing up a new improvement
plan.
Recommendation: The
Criminal Finances Board should develop and implement its improvement
plan urgently. This plan should include well-defined objectives
and success measures so that practitioners can prioritise criminal
cases and orders and be able to understand and measure success
beyond amounts collected. The plan should also include project
milestones that the Board can use to assess progress.
3. Not enough confiscation orders are imposed.
Law enforcement and prosecution agencies
are missing opportunities to impose confiscation orders with only
6,392 imposed in 2012-13 when 673,000 offenders were convicted
of a crime, many of which had a financial element. Each
agency uses different criteria to determine when to use confiscation
orders and there is a widespread lack of awareness among staff
within these agencies of the relevant legislation, and seeking
orders is too often given a low profile. To increase the numbers
of confiscation orders and provide better guidance, the Crown
Prosecution Service is developing common criteria to assess whether
pursuing a confiscation order is appropriate and cost-effective.
Recommendation: Law
enforcement and prosecution agencies need to agree and apply a
common set of criteria to ensure that they consider consistently
and properly all crimes with a financial gain for confiscation
orders.
4. Not enough is being done to enforce confiscation
orders once they have been made, especially in higher value cases.
Enforcement bodies are much more successful
in collecting proceeds from low-value orders than high-value ones,
with an enforcement rate of nearly 90% for orders under £1,000
compared to 18% for orders over £1 million. In high-value
cases, the specialist financial investigators required are often
brought in too late; bodies do not collaborate or share information
effectively and quick action to 'restrain' (freeze) assets is
often not undertaken. Only 1,368 restraint orders to freeze assets
were imposed in 2012-13, down 27% from 2010-11. Only recently
have the National Crime Agency, Crown Prosecution Service, Serious
Fraud Office and HM Courts & Tribunals Service jointly identified
124 high priority cases for additional enforcement activity.
Recommendation: Law
enforcement agencies should work together to ensure that financial
investigators are brought in early in high value cases and use
restraint orders quickly to prevent criminals hiding their illegal
assets. The Crown Prosecution Service and National Crime Agency
should also report to the Criminal Finances Board on the enforcement
progress of its priority cases.
5. The incentive scheme to encourage the many
bodies involved to confiscate proceeds of crime is opaque and
ineffective. The existing scheme simply
rewards bodies for the amount of money they collect, ignoring
the other key policy objectives of asset denial and crime disruption.
The scheme also fails to reflect the relative contribution and
effort each body makes, with the Home Office receiving 50% of
confiscated assets despite its having no operational role. It
is not clear how monies received under the incentive scheme are
used with only 62% of the organisations involved producing returns
in 2012-13 We therefore welcome the Home Office's decision to
review the scheme.
Recommendation: The
current incentive scheme for bodies involved in confiscation orders
should be revised to ensure it is aligned with the success measures
and objectives set out in the new Criminal Finances improvement
plan and to link effort and reward. The Home Office should also
ensure that there is proper reporting on the use made of scheme
funds.
6. The bodies involved with confiscation orders
do not have the information they need to manage the system effectively.
The focus of the management information
available to enforcement and collection agencies on confiscation
orders is on how much has been imposed and how much has been collected.
They lack detailed information on how much different enforcement
activities cost, how successful different activities are and how
much is realistically collectable in different cases. Without
such information enforcement agencies cannot tell which orders
they should prioritise for most impact on criminal activity and
which approach to enforcing them will be most successful or cost-effective.
Enforcement teams also have to rely on dated ICT systems that
are not interoperable, leading to errors and time wasted re-keying
information between systems. For example, an estimated 45 hours
a week is wasted on HM Courts and Tribunals Service's Confiscation
Order Tracking System (COTS) alone. Data quality is further compromised
as financial investigators and Crown Court staff provide incomplete
and inaccurate data to enforcement units.
Recommendation: All
the bodies involved in confiscation need to develop a better range
of cost and performance information to enable them to prioritise
effort and resources to best effect. They also need to improve
their existing ICT systems and their interoperability, as well
as cleanse the data they hold.
7. The sanctions imposed on offenders for
failing to pay confiscation orders do not work. Offenders
who do not pay their confiscation orders face a default prison
sentence of up to ten years, which follows their imprisonment
for the original offence. They must also pay more as the amount
outstanding accrues 8% interest. But many criminals, particularly
those with high-value orders, are willing to serve a prison sentence
rather than pay up and around £490 million is outstanding
for offenders who have served or are currently serving default
sentences. The government plans to strengthen the prison sentences
for non-payment, but it is not yet clear how this will be implemented
in practice.
Recommendation: The
Home Office, in conjunction with the Ministry of Justice, must
set out how, and by when, it will strengthen the confiscation
order sanctions regime. The Joint Committee on the draft Modern
Slavery Bill might include this in their deliberations.
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