Proceeds of crime Contents

4Success and accountability

Measures of success: collection or disruption?

63.At the heart of this inquiry has been the question of what is the purpose of POCA. The Home Office has stated that its aim was “to deny criminals the use of their assets, recover the proceeds of crime, and deter and disrupt criminality”.97 This final chapter will consider the Government’s performance and make recommendations against all three elements of that statement.

64.Dr Colin King asked whether POCA was intended to disrupt criminal activity or to raise money.98 It is, of course, likely to include elements of both. However the majority of the ‘factual evidence’ we received focussed on statistics derived from the amount of money collected from criminals (see the Key Facts at the beginning of this report). There can be no doubt that, if one was only to consider the published statistics, collecting 26 pence out of every £100 criminal gain and having £1.61 billion debt outstanding while only collecting £155 million a year is an abysmal performance. The amount of money collected, however, is only half of the picture. There is an intrinsic value simply in pursuing criminal assets, and letting criminals know they will be pursued. This point was summarised by Helena Wood, from RUSI:

We need to have a fundamental shakeup of how we look at performance in this area. For too long, the two areas of focus have been the £1.6 billion unenforced, [ … ], and a balance sheet or revenue-raising model for assessing the value of these tools.99

65.When it comes to holding the Government to account for the performance of POCA, despite the fact that there are no central targets100 and recent scrutiny (for example from the NAO and PAC) focusing on collection rates, it is generally understood by wider stakeholders that collection rates tell only part of the story. For example the Crown Prosecution Service (CPS) told us that:

It is important [ … ] not to view performance simply in terms of the monetary value of assets recovered. Confiscation plays a critical part in the disruption of organised crime, both domestically and internationally.101

The CPS concluded that “more weight ought to be attached to the disruptive effect of confiscation activity”.102 Helena Wood agreed:

Although that is difficult, I think we need to start looking at the effect on crime reduction. We need to look at public perception, for example, and other areas that can help the Criminal Finances Board measure this area and drive it in a more meaningful way, rather than keeping on going back to the same figures that are not an accurate reflection of the system’s worth.103

This was supported by Dr Colin King who agreed that there was “too much emphasis on how much money is raised”.104 This echoed a wealth of evidence received in response to our inquiry.105

66.The benefits from POCA include both the efficient collection of criminal assets and the effective disruption to criminal activities. Although the disruption element is clearly more difficult to quantify, we believe that success should be measured against both. Collection rates are only one element by which the Government should be held to account but they are an important one. We recommend that the Home Office publishes annual statistics on the wider elements of its performance in depriving criminals of their gains. These should include measures against all three of the Home Office’s stated aims:

These publications should encompass a measure of how crime rates have been influenced by denying criminals their assets, as well as complete lists of all assets seized from criminals over the course of the year.

What to do with £1.6 billion debt and those who don’t pay

67.While we acknowledge that the reporting of debt outstanding and collection rates does not tell the whole story, the numbers are very large and undeniable. The NAO reported that, at September 2015, there was £1.61 billion debt outstanding from confiscation orders. Even more shocking to us was the admission that only £203 million of that debt could realistically ever be collected.106 The reasons for this were explained by Helena Wood from RUSI:

The law deliberately draws as broad a definition of criminal benefit as possible, potentially for its deterrent effect against criminals. However, if you look at how that is drawn, [ … ] that money simply does not exist.107

68.Furthermore, we heard that the £1.61 billion figure was likely to be inflated as a result of criminals refusing to engage with the court proceedings. Jonathan Fisher QC wrote that this has left judges with no choice but to issue a confiscation order for the full amount, rather than a considered and negotiated ‘collectable sum’:

In many cases, when quantifying the benefit figure, a court is required to assume that all a defendant’s income and expenditure in the past six years has been criminally obtained. A connection between this money and the commission of a particular criminal offence does not need to be established. Instead, the burden rests with a defendant to show that the assumption is incorrect. Leaving aside moral arguments for and against making this assumption, the practical effect is to increase the benefit figure when quantifying the confiscation order.108

69.Further evidence we received from legal practitioners agreed. Kennedy Talbot QC described the figure as “a complete fiction”.109 Mark Thompson, Head of Proceeds of Crime Unit at the Serious Fraud Office, told us that using the £1.61 billion figure to measure success was “a fundamental thing that skews all discussion of this subject”.110 He explained that:

Those uncollected orders are uncollectable and I think if we do not deal with that and deal with that straightforwardly, we will be back—or my successor will be back—before you in two or three years’ time talking about a debt of £2 billion or so.111

70.We received strong evidence that basing a view of the performance of POCA on the figure of uncollected debt was misleading, not least because approximately one third of the debt is actually made up of interest and penalties for non-payment. The NAO clarified that “the interest on all orders now stands at £471 million, 29 per cent of the total outstanding debt”.112 Given that the vast majority of that debt will never be collected, but still accrues a mandatory 8% interest per annum, it is unlikely that debt will ever be cleared. To solve this, several witnesses suggested that the figure be essentially written off when it comes to measuring performance. To be clear, the evidence that we received did not advocate that criminals be absolved from owing the money, rather it suggested a practical way forward so that the agencies were not to be held back by the historic debt. Helena Wood and the Royal United Services Institute explained how this write-off could work in practice:

The Criminal Finances Board should reconsider the issue of orders which are deemed to be uncollectable. It should further examine whether there is evidence to support wider categories of orders being subject to mechanisms allowing them to be written-off. Alternatives, such as a system for ‘parking’ orders to prevent further accrual of interest, should also be examined. It should examine this issue in the widest sense, giving due consideration to issues of practicality, as well as the policy and political implications of such a decision.113

71.The Metropolitan Police Commissioner, Sir Bernard Hogan-Howe, wrote to our predecessor Committee in July 2013 and stated that “the enforcement of confiscation orders has become increasingly frustrating with many offenders appearing content to serve default sentences rather than pay back the proceeds of crime, rendering law enforcement powerless to enforce payment”.114 To counter this, Sir Bernard recommended that non-payment of a confiscation order should be a separate criminal offence with more serious ramifications. Martin Bentham of the Evening Standard and witness in this inquiry summarised Sir Bernard’s position at the time:

Sir Bernard said [ … ] that non-payment of a confiscation order should become a separate offence and that there “should be no limit on how many times an offender could be charged” so that criminals would remain “at risk” of prosecution until their debts were paid. Such a change would mean that the most serious offenders could be kept behind bars until their illegal profits were handed back.115

72.It appears that some criminals view paying back their proceeds of crime as an option rather than a requirement—essentially a choice between payment and prison. To counter this, the Home Office told us that changes in the law in 2015 had toughened the sentences for non-payment:

The Serious Crime Act 2015 included a number of provisions specifically designed to toughen sanctions for non-payment. These include increasing the maximum default sentence from 10 to 14 years for orders of more than £1 million, and removing the early release provisions for those orders over £10 million.116

Helena Wood from RUSI, was not convinced. She described in her report how “prison is seen as an ‘occupational hazard’ for many criminals” and so was not an incentive to pay their debt.117 Ms Wood then wrote to us to summarise her paper’s recommendations:

Furthermore, the paper points to the lack of understanding of what incentivises individuals to pay on time, particularly whether the default sentence has the intended impact following the recent increase in minimum sentence levels. The paper recommends further work to gather empirical evidence in this field.118

73.Finally, we heard that, due to the global nature of these crimes and the organised networks that many criminals deal in, collection of assets after a criminal has left prison is often hampered by the fact that they leave the country. This severely disrupts the police from enforcing confiscation orders. For example, Grant Thornton LLP’s Proceeds of Crime team explained that “it is a difficult and uncertain process for the Agencies to recover assets from abroad, relying on asset sharing agreements where available”.119 We have previously discussed the discretion of the Home Secretary to issue, withdraw and refuse a passport to criminals representing a flight risk.120 In April 2013, the Home Secretary provided an update on how those powers were exercised. The guidance states that “passport facilities may be refused to or withdrawn from British nationals who may [ … ] engage in terrorism-related activity or other serious or organised criminal activity”.121 Specifically:

74.The NAO reported that, at September 2015, there was £1.61 billion total debt outstanding from confiscation orders. Given the organised nature of many of the criminals subject to large confiscation orders, it is likely that the majority of this money has now been hidden and is beyond the reach of the authorities. We also heard that that figure is so large because often a confiscation order is made for assets that may never have even existed. This is because, when a criminal refuses to engage with the POCA court proceeding, the judge is left with no option but to demand the full amount rather than the prosecution and defence agreeing the actual collectable amount. We therefore recommend that the courts be given a power to compel attendance at a confiscation hearing. Even after a confiscation order has been made, there are very few incentives for criminals to either engage with the courts or to pay the money back, with many choosing to extend their prison sentences and avoid paying.

75.We agree with the Metropolitan Police Commissioner, Sir Bernard Hogan-Howe, that non-payment of a confiscation order should be made a separate criminal offence. To enforce this, we recommend that no criminal be allowed to leave prison without either paying their confiscation order in full, or engaging with the courts to convince a judge that their debt to society is squared.

76.Given the global nature of many of these crimes, we recommend that the Government confiscates the passport of any criminal subject to a confiscation order. With non-payment of a confiscation order a separate criminal offence, the Home Secretary should use her discretion to deny criminals owing the state money under such an order the ability to evade payment by travelling abroad. These criminals will remain wanted for the crime of non-payment and travel restrictions are needed to ensure effective enforcement of the court order.

77.The £1.61 billion figure for uncollected debt is largely artificial as nearly a third of it represents interest and penalties for non-payment. Using a figure largely made up of uncollectable debt and interest to calculate the overall debt owed could therefore be construed as unhelpful. However, judges have determined that this money is owed to the state as a result of criminal activity and we believe that it should not just be written off. To ensure effective scrutiny and to avoid skewing confiscation rates, we recommend that, when collection rates are reported, they are now set in the context of ‘collectable’ and ‘uncollectable’ debts. We are clear that this is in no sense a recommendation to wipe the slate clean. Rather, this would allow the authorities to concentrate their time on debts which can be collected and when somebody with an outstanding debt comes into significant funds the authorities would then be able to collect that debt. Criminals still owe this money, and will accrue interest on their debt to society. There is no expiry date on this debt because crime must never pay.


A lead agency for POCA

78.In March 2016, the National Audit Office reported that there were at least 15 main bodies involved in administering confiscation orders.123 While the Home Office is responsible for policy and legislation surrounding these orders, we were concerned that coherent strategy, responsibility and accountability are lacking as a result of the complicated landscape of—and relationships between—the different agencies tasked with the recovery of criminal assets. This concern was confirmed by the NAO, which found:

[ … ] weaknesses with the accountability framework for confiscation: that there was “insufficient coherence” in the system; and that there were “no clear lines of responsibility or authority through the delivery chain, and interdependencies between bodies were undefined”. The Committee [of Public Accounts] expected the Home Office, in conjunction with the other main bodies involved, to address these issues.124

That was another expectation that was not met. In 2016, the NAO concluded that “this has not changed since 2013” and that there remained a “lack of clarity over responsibilities and interdependencies”.125

79.The lack of clarity over responsibilities, priorities and accountability for the collection of criminal proceeds under POCA is sure to have a negative impact on the effective collection of such assets. This is not least because a fundamental factor in the effective collection of proceeds of crime is the priority such activities are given against other competing activities. A clear and actual example of this occurring was provided by the Crown Prosecution Service, which discussed how POCA was low on the list of the competing priorities police forces face:

Most police forces do not see asset recovery as a priority when compared to issues such as child abuse, modern slavery and cyber-crime. Re-direction of resources by police forces means that there are less trained and experienced financial investigators available to investigate cases, which has reduced the capacity needed to recover criminal funds.126

80.There is a real risk that a culture which views the recovery of criminal proceeds as being ‘someone else’s job’ could emerge among the complex and opaque landscape of stakeholders involved in POCA. All of our recommendations in this Report are aimed at stopping that shift, and must culminate in having one agency accountable against the new performance measures mentioned in the previous section.

81.We have found that the number of agencies involved in the recovery of criminal assets is complicated and, at times, confusing. This is partially a symptom of the different methods necessary to deprive criminals of their gains and the different opportunities for those recoveries. We agree that enforcement of POCA must remain at a local level but the current system lacks a clear line of overall responsibility, strategy and accountability. We therefore recommend that the National Crime Agency be made the lead agency for the recovery of criminal proceeds.

82.Once the NCA is established as the lead agency and is accountable as such, it is only fair that it be given resources and tools to influence performance. We recommend that the NCA be enabled to incentivise other agencies as it sees fit to ensure effective collection regionally. Specifically, we recommend that the Asset Recovery Incentivisation Scheme (ARIS) be put under the control of the NCA to be used as a tool to resource and incentivise effective collection of criminal assets.

Coordination and data-sharing

83.Finally, we received evidence that the multitude of agencies were not able to work effectively together because of difficulties in communicating and coordinating data. Donald Toon from the NCA used the example of linking the Suspicious Activity Reports dataset with others (such as the National Fraud Intelligence Bureau dataset). He explained that the current system was manual and ineffective:

We can do data matches against the different datasets, but we cannot do so automatically, routinely and straightforwardly; we have to do it manually. Essentially, we have to do a process by which we download one dataset and then set it against the other.127

84.Given the potential information in these datasets, this is unacceptable. There is little surprise that collection rates are so low if those charged with collecting do not have real-time access to all of the information needed. We agreed with Mr Toon when he concluded that there needed to be “an effective upgrade to the system and we were able to have the kind of online connectivity” of all the information linked to criminals and their assets to gain as full a picture as possible to enable effective recovery.128

85.There are several databases and sources of information relating to the various enforcement agencies involved in POCA. Indeed, each agency involved in POCA is likely to have its own database. We recommend that, once the NCA has been established as the lead agency, it takes steps to merge all of the sources of information and data used to pursue criminal assets (including the replacement to ELMER) into one ‘asset recovery database’. This database should be under the control of the NCA, but capable of being openly accessed and updated by all of the relevant agencies, with the necessary security systems in place.

86.When we visited a Queen’s Warehouse, where confiscated assets are stored, Border Force staff informed us of a problem with their IT systems which did not allow them to trace confiscated assets from the point of their confiscation to their arrival at individual warehouses, and told us that this inhibited aspects of their work.

87.We were surprised to learn that confiscated assets, taken for use in court and other proceedings, cannot be traced from the point of seizure to their being deposited in a Queen’s Warehouse. Amazon and the Royal Mail have offered “track and trace” services for many years. We fail to understand why the Home Office has not kept pace in the same way, given the value of the assets concerned and their importance in the evidence chain. We recommend that, in its review of all proceeds of crime databases, the Government overhaul and modernise the ageing systems currently used to track millions of pounds worth of confiscated assets. We expect this to have been completed by the time we revisit this issue in spring 2017.

97 Home Office (POC0019) para 5

98 Dr Colin King (POC0007) para 14

99 Q13

100 Home Office (POC0019) para 12

101 Crown Prosecution Service (POC0018) para 16

102 Crown Prosecution Service (POC0018) para 16

103 Q3

104 Q14

105 For example Pinsent Masons LLP (POC0012), Ministry of Justice and HM Courts and Tribunals Service (POC0014) and National Crime Agency (POC0017)

106 National Audit Office, Confiscation Orders: progress review, HC 886, March 2016, p 4

107 Q3

109 Q45

110 Q90

111 Q90

112 National Audit Office, Confiscation Orders: progress review, HC 886, March 2016, p 22

113 Royal United Services Institute (POC0004) para 19

116 Home Office (POC0019) para 31

117 Royal United Services Institute, Enforcing Criminal Confiscation Orders (February 2016), p 1

118 Royal United Services Institute (POC0004) para 11

119 Grant Thornton LLP (POC0010) para E(v)

120 Home Affairs Committee, Seventeenth Report of Session 2013–14, Counter-terrorism, HC 231, p 35

121 HC Deb 25 April 2013 c68–70WS

122 HC Deb 25 April 2013 c68–70WS

123 National Audit Office, Confiscation Orders: progress review, HC 886, March 2016, p 7

124 National Audit Office, Confiscation Orders: progress review, HC 886, March 2016, p34

125 National Audit Office, Confiscation Orders: progress review, HC 886, March 2016, p 34

126 Crown Prosecution Service (POC0018) para 17

127 Q337

128 Q339

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11 July 2016