The Proceeds of Crime Act (POCA) 2002 introduced wide powers for the recovery of assets that have been acquired as the result of criminal activity, including
An offence is committed if a person conceals, disguises, converts, transfers or removes from the jurisdiction property which is, or represents, the proceeds of crime which the person knows or suspects represents the proceeds of crime.
An offence is committed when a person enters into or becomes concerned in an arrangement which he knows or suspects will facilitate another person to acquire, retain, use or control criminal property and the person knows or suspects that the property is criminal property.
An offence is committed when a person acquires, uses or has possession of property which he knows or suspects represents the proceeds of crime.
In addition, Sections 330 and 331 create an obligation on those persons in the regulated sector to report their suspicion or knowledge of another person’s money laundering to the National Crime Agency (NCA). Failure to report is a criminal offence. (http://www.nationalcrimeagency.gov.uk/about-us/what-we-do/economic-crime/ukfiu/legal-basis-for-reporting)
The Home Office are very clear as to the purpose of this legislation
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 (POC0019 in evidence to Proceeds of Crime House of Commons report)
A seizure order can be applied to any offence that results in financial gain. The prosecution can ask the court to seize and dispose of a wide range of assets including property, cars, jewellery etc. Controversially this power of seizure depends on proving that the defendant was living a ‘criminal life style’. If a criminal life style is established, it is assumed that the assets have been acquired through criminal activity. The difficulty arises when an individual is only living a ‘partial criminal life style’ and has a legitimate income stream or no assets in his or her name. The POCA has been a source of constant criticism in parliament and the media and concern as to it’s under performance since its inception. The law in this area has been further refined by the Policing and Crime Act 2009 and the Serious Crime Act 2015, but the recovery of criminally acquired assets remains woefully poor.
The National Audit Office in 2013 investigated the effectiveness and value for money of the regime identifying significant criticisms, and making suggestions to improve the system and confiscation results. It was on the basis of the failure to implement most of these suggested improvements that the latest report is now released,
In July 2016 the Home Affairs Committee of the House of Commons under the chairmanship of Keith Vaz (prior to recent scandals) who commented at the time ‘London lays out the welcome mat for money launders and organised crime’ www.policeproffessional.com/news.aspx?id=26652
Produced a report
raising considerable concerns as to the working of the legislation. It highlighted the fact that Government strategies to crack down on money laundering were failing and amongst other failures at least 100 billion pounds was being laundered through the London property market every year. While 640,000 offenders were convicted in the UK between 2014 and 2015 there were only 5,924 confiscation orders. Worse, the overall enforcement of confiscation orders was only 45% meaning that few orders were made, and less than half were successfully implemented. Of the successful orders 96% of orders of less than 1,000 pounds were enforced while only 22% ware the orders were above one million pounds. This suggests that the more lucrative the crime the less likely a convicted criminal is to forfeit any of their ill-gotten gains. The Home Affairs Committee was also concerned about the increasing amount of outstanding debt that was continuing to accrue, 1.61 billion as of September 2015. There are further concerns about the heavy cost of enforcement and recovery in the 2014 – 2015 period 155 million was collected but the administration of the collection was over a 100 million.
The committee concluded that the present system was simply not working, many convicted criminals preferred to extend their prison sentence rather than pay the court ordered recompense. The committee made wide ranging recommendations including, and most significantly, that non-payment of a confiscation order would become a crime in its self and it should become possible for a court to impose unlimited prison sentences ensuring that individuals remain incarcerated until all debts are paid.
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.
Further recommendations included, early restraint and seizure, as criminals become increasingly sophisticated at concealment, the committee recommends that assets should be frozen at the very beginning of the investigation, because waiting for a conviction is far too late, and gives a criminal the opportunity to develop sophisticated money laundering and concealment structures. There should be increased police training on financial crime and specialist investigators should be used at an early stage in the investigation. There should be specialist confiscation courts and enforcement and collection should take a much higher priority in the criminal justice system.
This canter through the POCA and its recent commentary raises some very significant Human Rights issues. The statistics at the beginning of this post suggest the legislation is not working, but it is also important to protect those caught up in financial crimes that are entirely innocent. While early freezing of assets would be likely to increase the amounts that are available for seizure there will inevitably be casualty’s, and any changes need to be carefully drafted to ensure these are kept to a minimum, without creating another series of loopholes for criminals to retain their criminally acquired assets.
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