Proceeds of Crime
Over the last 15 years the government has sought not just to prosecute, convict and punish criminals but to recover their, to coin a phrase, ill-gotten earnings. Asset recovery principally takes place using the Proceeds of Crime Act (2002) which provides a range of asset recovery powers:
Criminal proceedings which require a conviction
- Criminal confiscation: The confiscation of the proceeds of crime following a criminal conviction. It takes place following conviction but will be started prior to sentencing.
Civil proceedings which do not require a conviction:
- Cash forfeiture: This refers to the powers to seize and forfeit cash from criminals which is either the proceeds of crime or is intended to fund criminal activities. This is done through a civil process, which requires that there be reasonable grounds to suspect that the cash is the proceeds of crime.
- Civil recovery: This is a system for confiscating the proceeds of crime, where a criminal conviction through the civil courts is not possible. It requires that on a balance of probabilities that the asset in question is the result of criminal activity.
- Taxation: This power resides with the National Crime Agency, and allows them to access revenue powers to tax income which it has reasonable grounds to suspect are the proceeds of crime.
This legislation has been particularly important in tackling successful large scale drug dealers where it has been very difficulty to secure evidence for conviction since it is the younger, more junior (and frequently exploited) gang members who carry the drugs and money and run the risk of arrest.
Yesterday (12 September 2017), the Home Office published a statistical bulletin setting out the amounts of assets recovered in the five year period from 2012 – 2017, although it only covers asset recovery under the two main approaches of criminal confiscation and cash forfeiture with information on the other powers (civil recovery and taxation) published by the National Crime Agency in their annual report and accounts.
The graphic below outlines the total value of proceeds of crime collected each financial year since 2011 using confiscation and cash forfeiture powers. The trends show a steady increase each year in the amount collected from confiscation receipts, with a large increase in 2015/16 (most likely to be due to several unusually large confiscation orders being paid and settled within the same reporting year, as well as large residual payments from previous years).
In 2016/17, £201m of the proceeds of crime were collected, representing a 19% increase compared to 2011 (£170m). This increase in the total amount of money collected between 2011/12 and 2016/17 is driven by a rise in the amount collected from confiscation receipts.
Assets collected from confiscation orders in 2016/17 accounted for the majority (81%) of the total value collected, a higher proportion compared with 2011/12 (74%). By comparison, the amount collected from cash forfeitures remained relatively stable during this 5 year period, averaging around £40m.
What happens to recovered assets?
Assets recovered under the mechanisms in the Proceeds of Crime Act 2002 are distributed to operational agencies, (such as the local police force, HM Court Service, and the Crown Prosecution Service) under the Asset Recovery Incentivisation Scheme (ARIS). Broadly, ARIS divides recovered assets between operational agencies and the Home Office on a 50/50 basis. While the Home Office portion of ARIS is earmarked as part of its core budget, operational partners may use these funds as they see fit.
The table below shows that the vast majority (88% in 2015/16) of ARIS funds are reinvested in future asset recovery work.
In addition to making a confiscation order, a court may also order the offender to pay compensation to the victim of the crime. Victims always take priority if both a compensation order and confiscation order are in place against the subject and they are unable to pay both, any monies collected will be directed to the victims in the first instance. The graphic below shows the total compensation paid to victims from confiscation orders over the last five years:
It may be that asset recovery is the “punishment” most feared by career criminals and it certainly appeals in terms of natural justice. However, there is no information in this report about the offenders who are targeted for asset recovery. My early experience of the scheme was that police often targeted high level drug dealers, however several commentators have been in touch to say that the majority of offenders subject to asset recovery are now low level offenders.
I hope to share more information on this issue as it becomes available.
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