Civil Fraud Quarterly Round-Up: Q1 2021
The Home Affairs Committee launched an inquiry on 21 January into how effectively the measures introduced in the Proceeds of Crime Act 2002 (POCA), to deprive criminals of any benefit from their crimes, are working. MPs will focus on the operation of confiscation orders, the main mechanism through which this policy is implemented.
In launching the inquiry Chairman Keith Vaz said: "For too long, the authorities have been unable to retrieve the ill-gotten gains of organised crime and criminals, finding themselves hamstrung by loopholes in the system.”
A number of challenges have been identified in the inquiry. Namely: lack of awareness of confiscation orders and enforcement process amongst staff in the relevant agencies; weaknesses in IT systems and data-sharing; lack of transparency in investigation relating to criminal benefit; and ineffective co-ordination across the various agencies. The complexity of the legislation is recognised. The inquiry poses a number of questions on how to address low enforcement rates and improve accountability and performance measurement more meaningfully. Better co-ordination between agencies – or one agency to lead – alongside incentivising agencies to use the confiscation order process are some solutions mooted.
On an operational level, the House of Commons approved several codes of practice relating to the proceeds of crime on 20th January, following a Home Office consultation earlier in the year. Section 38 of the Serious Crime Act 2015 had amended POCA to broaden the definition of a “confiscation investigation” for the purposes of Part 8 of POCA 2002 to include investigations after a confiscation order has been made into the extent and whereabouts of property that might be realised to satisfy the order. The revised Codes of Practice reflect this new power.
Many of the issues under review were raised some years before in the National Audit Office (NAO) report which stated that “The use of confiscation orders to deny criminals the proceeds of their crimes is not proving to be value for money. The government has not specified a target but only about 26p in every £100 of criminal proceeds was actually confiscated in 2012-13…At the moment this activity cannot be seen as value for money nor as a credible deterrent to crime.”
Following these alarming statistics, the Committee of Public Accounts subsequently recommended that the criminal justice system take urgent action to improve its administration and stating its intent to follow-up progress. The NAO is therefore undertaking a study on confiscation orders, due for publication in “early” 2016. This study will review the extent to which the criminal justice system bodies have responded to NAO and PAC recommendations and the impact of these changes. It will also consider whether any blockages to prevent further and faster progress exist and, if so, how these can be overcome.
Lawyers working in this area of criminal law are well aware of the inconsistent operation of the confiscation regime. At its heart the confiscation regime is based on byzantine legislation which is generally poorly understood. Use of pre-charge financial restraint orders (which freezes a suspect's assets to safeguard them in the event that they are subsequently convicted and subject to a confiscation order) varies between different agencies as does the approach to seeking confiscation orders. Some of those agencies seeking to use the confiscation regime (such as the Environment Agency and Trading Standards Departments) are the most poorly resourced to manage the complex legal and evidential burden of these cases. The consequence is that restraint and confiscation cases are frequently the subject of appeal.
It can only be hoped that this review will start a process leading to a more thoughtful, better co-ordinated, and properly resourced approach to the confiscation regime in the UK.
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