1Background and Introduction
Seizure of Criminal Proceeds
1.The Proceeds of Crime Act 2002 (POCA) set out the powers under which the Government could seize the proceeds of a criminal’s activities. It represented the rationalisation of various pieces of legislation which enabled law-enforcement bodies to pursue proceeds of crime.12 The Home Office stated that “the aim of the asset recovery scheme in POCA is to deny criminals the use of their assets, recover the proceeds of crime, and deter and disrupt criminality”.13
2.In its recent report analysing the confiscation elements of POCA, the Royal United Services Institute (RUSI) summarised the four key elements of recovery:
(1)Criminal confiscation: Part 2 of the POCA sets out powers to confiscate the proceeds of crime following a criminal conviction as part of the sentencing process.
(2)Civil recovery: Part 5 (Chapter 2) of the POCA sets out a system for confiscating the proceeds of crime in the absence of a criminal conviction through the civil courts.
(3)Cash forfeiture: Part 5 (Chapter 3) of the POCA sets out powers to seize and forfeit cash, through a civil process, where there are reasonable grounds to suspect that it is the proceeds of crime.
(4)Criminal taxation: Part 6 of the POCA allows the National Crime Agency to access revenue powers to tax income which it has reasonable grounds to suspect are the proceeds of crime.14
Of these, criminal confiscation is the main way through which the Government enforces POCA, with £155 million being collected by enforcement agencies in 2014–15.15 The majority of the evidence that we received tended to concentrate on the criminal confiscation of proceeds of crime and the content of this Report reflects that evidence.
3.Since its adoption, the Government’s performance in seizing criminal proceeds under POCA has come under criticism both within Parliament and from the media.16 The author of the RUSI report, and witness in our inquiry, Helena Wood, set out examples of how government policy was undermined by reported poor performance:
The headlines make for stark reading: £1.6 billion in unenforced confiscation orders with only £203 million deemed to be enforceable; so-called ‘Mr Bigs’ paying £44,000 in private school fees while ignoring the outstanding £4 million confiscation order still owed to the state; and criminals ‘choosing’ to serve ‘default sentences’ instead of paying back the proceeds of their crimes.17
Ineffectiveness of confiscation orders
4.The National Audit Office (NAO) has scrutinised the effectiveness and value-for-money of confiscation orders. It published two Reports, one making comprehensive recommendations in 2013 and a progress review in 2016.
5.In its 2013 Report, the NAO concluded that the amounts actually confiscated were small, finding that of every £100 of criminal proceeds, the amount confiscated was a paltry 26 pence.18 The NAO made a number of recommendations about improving performance. The subsequent Report by the Committee of Public Accounts (PAC), which reported in March 2014, made recommendations in broadly the same six areas:
- better governance and strategy;
- more use and awareness of orders;
- better enforcement operations;
- more effective sanctions;
- better performance and cost information; and
- a more effective incentive scheme.
The Government accepted all of the PAC’s recommendations in June 2014 and stated that they would be implemented by 2015.19 However, in 2016, the NAO published its progress review which expressed disappointment that the Government had not met this commitment:
The criminal justice bodies have not met five of the Committee’s six recommendations, despite agreeing to do so by the end of 2015, and they have not met their ambitious targets for implementing the Criminal Finances Improvement Plan. As a result, many of the fundamental weaknesses in the system identified two years ago remain.20
Background to our inquiry
6.The 2013 NAO report, and the lack of progress since then, contributed to our own increasing concerns about the effectiveness of the way proceeds of crime provisions were being implemented. We announced an inquiry in January 2016. Among the questions that we posed at that stage were:
- Whether additional measures are required to achieve the objectives of ensuring criminals do not benefit from their crimes.
- The steps needed to improve the performance of the range of agencies involved in the confiscation order process—including how best to incentivise agencies to use them.
- Measures needed to address the lack of awareness of confiscation orders amongst staff in the relevant agencies, and of the associated enforcement processes.
- How best to address weaknesses in IT systems and data-sharing which are hampering effectiveness.
- Steps needed to strengthen coordination across the various agencies involved in confiscation orders, including whether one agency should be given lead responsibility.
- How to increase accountability and make performance measurement more meaningful.
- Further steps which may be necessary to address low enforcement rates, including toughening sanctions for non-payment.
- How investigations related to criminal benefit can be made more transparent.
- The implications for effectiveness of the complexity of the relevant legislation, and the benefits which an increased body of case law might bring.21
7.We published 22 written submissions. On 8 March 2016, we took oral evidence from Jonathan Fisher QC, Visiting Professor in Practice, London School of Economics and Barrister, Devereux Chambers, Dr Colin King, Senior Law Lecturer, University of Sussex, and Helena Wood, Associate Fellow, Royal United Services Institute; Richard Fisher QC, Doughty Street Chambers, Tim Owen QC, Matrix Chambers, and Kennedy Talbot QC, 33 Chancery Lane Chambers; and Martin Bentham of the Evening Standard. On 3 May we took oral evidence from Robert Barrington, Executive Director, Transparency International UK; Mark Thompson, Head of Proceeds of Crime Unit, Serious Fraud Office; Bill Browder, Founder and Chief Executive, Hermitage Capital Management; Henry Pryor, Property Buying Agent and Market Commentator; Laurence Sacker, Partner, Corporate Finance and Money Laundering Reporting Officer, UHY Hacker Young LLP. On 24 May we took oral evidence from Detective Chief Superintendent Dave Clark, Head of the Economic Crime Directorate, City of London Police, Nick Price, Head, National Proceeds of Crime, Crown Prosecution Service and Donald Toon, Director of Economic Crime, National Crime Agency.
8.We also visited a Queen’s Warehouse at Heathrow Airport which is one of a number of facilities around the country where Border Force stores seized goods connected with investigations and prosecutions. We are grateful to everyone who contributed to our inquiry. We are also grateful to our specialist adviser for this inquiry, Jane Bewsey QC; her advice and legal expertise have been invaluable.22
12 For example, section 27 of the Misuse of Drugs Act (1971) was the one of the first instances of asset-forfeiture legislation in the UK.
14 Royal United Services Institute, Enforcing Criminal Confiscation Orders (February 2016), p 2
16 For example Evening Standard, Criminal Mr Bigs escape having to pay back illicit profits after prosecutors give up on cases (2 October 2015), Evening Standard, Ex-crime boss Terry Adams may avoid paying back illicit gains because he is too poor (9 October 2015) and York Press, College administrator who stole nearly half-a-million pounds to repay £62,000 (15 June 2016)
17 Royal United Services Institute, Enforcing Criminal Confiscation Orders (February 2016), p 2
21 Home Affairs Committee, ‘Proceeds of crime inquiry launched,’ accessed 15 June 2016
22 Relevant interests of the specialist adviser were made known to the Committee. The Committee formally noted that Jane Bewsey QC principally prosecutes in serious and complex corporate fraud and tax cases. She has been instructed by all the major government prosecution agencies including the Serious Fraud Office, the Crown Prosecution Service (CPS Organised Crime Division, CPS Central Fraud Group—fiscal and non-fiscal, HM Revenue and Customs, and the Department for Business Innovation and Skills), and by defence solicitors acting in the same fields of work. She is currently instructed in cases involving money laundering, tax evasion, corporate fraud, mortgage fraud and fraud against the NHS. The financial nature of these cases means that almost every case leads on to confiscation proceedings.
© Parliamentary copyright 2015
11 July 2016