Proceeds of Crime: new Asset Recovery Action Plan seeks to leave “no safe space” for dirty money

5 August 2019

On 12 July, the Home Office published its new Asset Recovery Action Plan (“the Plan”) to complement the National Economic Crime Plan 2019 to 2022. In it, the government expresses its clear intention to attack criminal finances still more robustly and to hit hard at the “common thread that runs through almost all offending” – money. The Plan continues:
 

The vast majority of criminality is driven by money, so it is vital that we are relentless in our pursuit of the illicit finances that criminals acquire to fund their criminal lifestyle and commit further crime…”

The Plan emphasises that the last decade has seen a steep change in the targeting of criminal finances: £1.6 billion was recovered between April 2010 and March 2018 and “many hundreds of millions more have been frozen” using powers under the Proceeds of Crime Act 2002 (POCA). Additional measures created by the Criminal Finances Act 2017 are increasingly being exercised by the National Crime Agency (NCA) and other law enforcement bodies: Unexplained Wealth Orders (UWOs), despite being used sparsely to date, have received considerable publicity and are now an established tool. Account Freezing Orders (AFOs) have been far more enthusiastically embraced, being used more than 650 times in 2018/19 to quarantine over £110m of suspected illicit funds.

While lauding the advances made in asset recovery, the Plan underlines that the government does not underestimate the scale of the challenge posed by the constant and innovative evolution of serious organised crime and wider criminality. Particular focus is trained on the significant scale of “hidden” assets: either located overseas or held in crypto-assets, both pose real challenges to the effectiveness of some elements of POCA.

The four objectives that the government has set out for asset recovery are to:

• disrupt criminal activity and the further funding of crime;
• deprive people of their proceeds of crime;
• discredit negative role models in society, and
• deter people from becoming involved or continuing in crime.

For the purposes of the Plan, the definition of asset recovery captures all activities to investigate (that is, to search, trace and identify) illicit finance that enables the process for the timely and successful recovery (freezing and seizure) of assets.

The report confirms that the scale and complexity of the asset recovery task must not be underestimated. Though the UK has a “comprehensive toolkit of powers our operational response and legislative framework” there is a recognition that it must keep pace with emerging criminal behaviours, giving investigating agencies and the courts proportionate powers to tackle the threat of crime. It seems clear, therefore, that there continues to be an appetite for reform to further expand the toolkit.

Confiscation

The government recognises that more must be done to deprive criminals of their ill-gotten gains. It considers that too many criminals succeed in hiding and retaining their criminal proceeds even after they have been convicted. There are “unresolved questions” about the efficacy of the legal POCA regime and opportunities where the current law might be improved. The Law Commission is currently reviewing the confiscation framework, and is due to report to the Home Office in March 2020 with the government response scheduled six months later in September of that year.

The Plan also echoes a core theme of the Economic Crime plan as a whole – effective public-private partnership – and urges the Ministry of Justice to examine the existing legal parameters and to propose legislative changes to encourage a fresh approach to enforcement through a public-private sector response. Key to any such systemic change will be effective means to incentivise compliance; without this, it is hard to see the private sector embracing asset recovery as a profit generating exercise.

The Plan also considers the significant role suspicious activity reporting plays in tackling illicit finance (another core part of the Economic Crime Plan). The stated aim is to build on work communicating the success of SARs in bringing to the attention of the authorities criminal assets which are then subject to recovery, and to improve awareness in the regulated sector of the myriad ways in which criminals hide and hold assets.

Working across-borders

As of July 2017, it was estimated that over £654 million in criminal assets with a UK connection was hidden overseas. The analysis of “uncollected orders” reveals that the whereabouts some £320m of assets is unknown. Those jurisdictions giving most concern will be identified and there will be a push to engage overseas partners – multi- and bilaterally – in recognising civil recovery orders overseas.

No place to hide

Asset recovery is a critical part of the National Economic Crime plan and key to tackling illicit finance. The government is making it clear that there should be no safe space for those seeking to move, hide or use the proceeds of crime and corruption or to evade sanctions. We can expect to see further weapons introduced to the asset recovery armoury.

Further information

The asset recovery landscape is complex and multi-faceted. Our team is highly experienced in providing strategic and tactical advice to individuals and corporations in respect of proceeds of crime matters, either where there is a concern that an investigation may be imminent or underway, or where assets have been seized, restrained or frozen by the civil or criminal courts. We also advise in relation to SARS, confiscation orders and third party applications in respect of property caught by a confiscation order.

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