Recovering the proceeds of crime: the Government responds to MPs recommendations

On 15 July 2016, the House of Commons Home Affairs Committee (the “Committee”) published a report entitled Proceeds of crime (HC 25). The report was highly critical of the effectiveness of the regime relating to the proceeds of crime.  (Read Ed Smyth's blog on the report here)

The Committee therefore made a series of recommendations which, in its view, would improve the recovery of assets gained through criminal activity. On 21 November 2016, the Committee published the Government’s response to its report. In summary, the Government has rejected many of the Committee’s more far-reaching recommendations.

The Committee’s report and recommendations

In its July 2016 report, the Committee found that (as at September 2015) there was £1.61 billion outstanding from confiscation orders. This was up from £1.46 billion in September 2013. The Committee also noted that enforcement agencies collected £155 million from confiscation orders in 2014–15, but that the cost to administer this collection process was more than £100 million. Finally, the Committee concluded that at least £100 billion was laundered through the UK every year. The Committee was, in short, critical of the proceeds of crime regime in the UK.

In light of its findings, the Committee made a number of recommendations, including the following:

• Assets should be frozen simultaneously with the criminal becoming aware of the investigation for the first time (this will often be at the time of arrest, although not always). According to the Committee, “waiting for a conviction is far too late”.
• A specialist “confiscation court” should be created to deal with confiscation and restraint proceedings.
• At least 10 per cent of the criminal assets recovered through confiscation proceedings should be returned or donated to the communities which have suffered at the hands of criminals, for example through charities.
• The non-payment of a confiscation order should be made a separate criminal offence. The Committee recommended that “no criminal [should] 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”.
• The Government should confiscate the passport of any criminal subject to a confiscation order.
• The National Crime Agency (the “NCA”) should be made the lead agency for the recovery of criminal assets and the Asset recovery incentivisation scheme (“ARIS”) should be reformed and put under the NCA’s control.
• The several databases and sources of information relating to the various enforcement agencies involved in POCA should be merged into a single “asset recovery database”.

The Government’s response to the Committee’s report and recommendations

As has been set out, on 21 November 2016 the Committee published the Government’s response to its report. Many of the Committee’s recommendations were rejected. The Government is not, for example, minded to create a specialist confiscation court, arguing that restricting “the available venues to a few specialist centres is likely to lead to far greater waiting times because of the limited number of court rooms, judges and staff”. The Government also rejected the Committee’s call that the non-payment of a confiscation order should be made a separate criminal offence. The Government states that it “is not convinced that the possibility of being charged with a new criminal offence would act as an incentive to pay an order to serious and organised criminals”.

The Government has, however, confirmed the following:

• Starting in 2017, the Home Office will publish annual asset recovery statistics. This publication will include collection rates, progress on priority confiscation orders, and the amount that can realistically be collected from the total value of uncollected confiscation orders.
• The Government will continue to explore how the private sector role in the enforcement of outstanding confiscation orders might be expanded.
• In 2017, the Government will publish an “Action Plan” on asset recovery, which will set out how it is tackling the stock of unenforced orders.
• The Government will, over the long-term, be replacing the suspicious activity report electronic notification system.
• The Home Office will introduce further reforms to ARIS to implement a Conservative Party Manifesto commitment to return a greater percentage of recovered assets to policing. This reform will, according to the Government, result in additional incentivisation funds being invested in the multi-agency Regional Asset Recovery teams, which will allow for additional support to be given to prosecutorial activity.

Analysis

As we have noted previously, the confiscation regime is used inconsistently by enforcement bodies. Some of those agencies seeking to use the confiscation regime (such as the Environment Agency) 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.

The Government is hoping that the proceeds of crime regime can be improved through piecemeal, rather than revolutionary, reform. Given the enormousness of the problems facing the law enforcement agencies working in this area, it remains to be seen whether this limited approach will be sufficient. A more thoughtful, better co-ordinated, and properly resourced approach to the confiscation regime in the UK is desperately needed.