Knowledge and approval - When is a will suspicious?
On 15 July the Home Affairs Committee published the report of its enquiry into the seizure of criminal proceeds. It highlights a number of on-going failings of the regime and calls for sweeping reforms, for example the establishment of specialist confiscation courts, the power to impose travel restrictions on those who fail to pay and the continued detention of prisoners until their orders are satisfied in full. Sadly the committee did not consider the cash forfeiture scheme, which many defence practitioners consider to be iniquitous.
The committee also reflects that the broader sweep of government policy, particularly in relation to money laundering, has a direct effect on the operation of the POCA regime and that confiscation cannot be viewed in isolation. Specific reference is made to the London property market, characterized by inadequate supervision, being an attractive forum for laundered money. Given the serious problems that the report identifies and the history of previous attempts at reform, it is hard to be optimistic that the POCA regime will ever be truly fit for purpose.
The inquiry was inspired by the 2013 National Audit Office report into the ineffectiveness of the regime, which found that of every £100 of criminal proceeds, the amount confiscated was only 26 pence. The Public Accounts Committee, in its report of March 2014, mirrored the NAO’s conclusions and made recommendations to improve performance in six areas. The government undertook to implement these recommendations by 2015. But by the time of the NAO’s progress review in 2016 only one of the six recommendations had been met and “many of the fundamental weaknesses in the system” remained.
The committee’s recommendations fall into several, sometime overlapping, themes (some of which will be familiar to observers of public sector travails in many areas over many years):
A lack of professional engagement in the confiscation process exists at each stage, from police investigation through to judicial disposal, with the result that opportunities to restrain assets early are missed and court proceedings are conducted inconsistently and often inefficiently. The committee recommends financial investigative training for all newly-recruited police officers, advanced training for all detectives and action to recruit and retain more accredited financial investigators. The most radical recommendation is the establishment of confiscation courts with specialist judges to deal with the most serious and complex POCA matters. Such a development would encourage specialisation and so create a cadre of expert practitioners and judges. The committee makes clear that such a system “must…be properly resourced”.
A common source of frustration in the criminal justice system, and more widely across the public sector, is ineffective IT. The committee heard evidence that the ELMER system built to receive suspicious activity reports (SARs) was designed to deal with 20,000 but currently processes just under 400,000. Of that huge number it is estimated that only 15,000 are considered in any detail by the NCA, meaning there is little confidence in the financial services industry that the anti-money laundering regime is operating effectively. Beyond ELMER there is also concern that an inability to coordinate data between the various agencies involved in POCA matters lead to confusion, inefficiency and missed opportunities for recovery of assets.
In 2015 the figure for uncollected debts arising from confiscation orders was £1.61 billion, with only a "shocking" £203 million deemed actually recoverable and an "abysmal" £155 million currently being recovered annually. The headline debt figure is to an extent artificial; it is driven by factors within the legislation such as the “lifestyle provisions” and a large proportion of it represents interest and penalties for non-payment. Nevertheless, it is a sum of such magnitude that it seriously harms the credibility of the entire confiscation regime. To address this, greater involvement of private sector enterprises in the collection of criminal assets is urged, alongside the reform of the distribution of confiscated funds. At present HMCTS bears the responsibility for enforcing confiscation orders but there is no efficient mechanism by which the police are informed that an individual is subject to an outstanding order (see IT problems, above). Even if this is remedied, the strain on resources within state agencies is a serious obstacle to more effective enforcement. As in other areas, therefore, the private sector’s flexibility and access to greater resources are identified as attributes to be exploited and the committee recommends the creation of a market for private enforcement.
Another area identified for reform is the regime of incentives (“ARIS”, the Asset Recovery Incentivisation Scheme) under which confiscated funds are apportioned to the various agencies involved. This was deemed opaque and flawed by the NAO in 2013 but remains in place. 50% of recovered funds are retained by the Home Office, despite this failing to reflect the relative contributions of other parties involved. A new scheme is suggested, which would include allocation of funds to the community through charities, in the hope that affected agencies will be encouraged to step up their enforcement efforts.
That there is no lead agency driving a coherent strategy around POCA feeds into the various problems outlined above. The committee found that there were 15 or more bodies involved, leading to a culture of buck-passing and lack of accountability. It is unsurprising that such a confused landscape - which undoubtedly discourages specialist and is complemented by the myriad incompatible IT systems - prevents the system working effectively. The committee calls for the NCA to take the lead, and to be given extra resources accordingly.
In broad terms, the most likely driver of change is greater expertise supported by proper resources. That this should be the case is unsurprising; the requirements are certainly not unique to the POCA regime. Nor, of course, can either be realised on the cheap. Sadly, experience suggests that governments prefer headline-grabbing initiatives (in criminal justice more often than not draconian and illiberal) over more prosaic or far-reaching ones that require additional spending, notwithstanding their greater prospects of measurable success.
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