Written evidence submitted by the Home Office

Introduction

  1. The Government’s Serious and Organised Crime Strategy, published in October 2013, included a commitment to attack criminal finances by making it harder for criminals to move, hide and use the proceeds of crime. Improving performance on asset recovery was central to the Strategy commitments on criminal finances.

 

  1. More assets were recovered from criminals in 2014/15 than ever before. Between April 2010 and March 2015, £945m has been confiscated from offenders; £116m has been returned to victims; and law enforcement agencies have frozen hundreds of millions more to put it beyond the reach of criminals.

 

  1. But there is undoubtedly further to go, and the amount recovered still only represents a relatively small share of our best estimates of the criminal economy. Further, too many criminals, especially the most serious ones, avoid paying off their orders.

 

  1. In order to address these issues, the Home Office put a multi-agency Criminal Finances Improvement Plan in place in 2014 to push forward process and performance improvements. As part of this, the Home Office legislated through the Serious Crime Act 2015 to strengthen the confiscation order enforcement regime, make it easier to restrain assets, and extend the scope of financial investigation powers. Provisions in the Policing and Crime Act 2009, which have also been recently commenced, give investigators more powers to seize assets in advance of a confiscation order being made. It will take time before the full effect of these changes is felt, but they provide operational partners with a more robust set of powers than ever before.

 

  1. The Proceeds of Crime Act 2002 (“POCA”) sets out the legislative scheme for the recovery of criminal assets. It provides law enforcement agencies with four ‘tools’ for the disruption of crime through asset recovery. It is for operational practitioners to decide which ‘tool’ is the most appropriate in any given case. Criminal confiscation, post a conviction, is the most commonly used power. Other means of recovery which do not require a conviction, are also provided for in the Act, namely civil recovery, cash seizure, and taxation powers. The aim of the asset recovery scheme in POCA is to deny criminals the use of their assets, recover the proceeds of crime, and deter and disrupt criminality.

 

  1. The Act also provides for a number of investigative powers, such as search and seizure powers, and powers to apply for production orders and disclosure orders, and allows for the “restraint” or “freezing” of assets to prevent their dissipation prior to a confiscation order being made.

 

 

Whether additional measures are required to achieve the objectives of ensuring criminals do not benefit from their crimes?

  1. POCA provides a robust set of powers that have recently been strengthened through the Serious Crime Act 2015.  The Act contains a wide range of tools to ensure that criminals do not benefit from their crimes. The Serious Crime Act provisions, which came into force in June 2015, include tougher default sentences for those who fail to pay their confiscation orders, making it easier for courts to take monies from bank accounts, reducing the time that criminals have to pay their orders, and introducing a new compliance order, which allows a court to make any order that it sees fit to ensure a confiscation order is effective. This could include the imposition of restrictions on a defendant’s travel, or obligations on a defendant to take steps to sell a particular piece of their property to satisfy a confiscation order.

 

  1. The Government has put in place a comprehensive multi-agency plan to improve the effectiveness of our asset recovery regime. The Criminal Finances Improvement Plan, which was first introduced in 2014, and has been refreshed for the current year, also includes a wide range of other non-legislative measures which aim to maximise asset recovery. Progress against the Plan is monitored by the Criminal Finances Board, co-chaired by the Security Minister and the Economic Secretary to the Treasury. 2014/15 saw the largest amount ever recovered, with £199 million taken from criminals.

 

  1. The Home Office recognises that the legislation, although sound, will need to be kept under constant review to ensure that it operates at its maximum effectiveness. The judiciary, prosecutors, and financial investigators also have key roles to play in making sure that the asset recovery ‘tools’ provided by POCA are used as Parliament intended. Financial investigation is now used by the National Crime Agency in all investigations into serious and organised crime where it is appropriate to do so.

 

  1. As set out in the Strategic Defence and Security Review, the Home Office will look to potential opportunities for enhanced cooperation with the private sector to improve asset recovery performance. In 2014 the Home Office established the Serious and Organised Crime Financial Sector Forum, an initiative to bring together Government, law enforcement agencies, regulators and the financial sector in a public-private partnership to tackle crime. Under its auspices, the National Crime Agency has trialled sharing data on uncollected confiscation orders with the banks, and leads the Joint Money Laundering Intelligence Taskforce (JMLIT), which brings together banks and law enforcement agencies to share information to tackle money laundering.

The steps needed to improve the performance of the range of agencies involved in the confiscation order process – including how best to incentivise agencies to use them

  1. The Government abolished all national police targets in 2010. Targets skew priorities and prevent police officers from exercising their professional judgment. The previous Administration’s asset recovery targets were also abolished. They had led investigators and prosecutors to seek orders for unrealistic amounts, against assets which never actually existed. Many of those unrealistic orders made in the past remain unpaid. Of the £1.61bn of uncollected confiscation orders, HM Courts and Tribunals Service estimate that only £203m is realistically collectable. 

 

  1. Despite the removel of central targets on asset recovery, Home Office Ministers do expect that performance will continue to increase across all types of asset recovery. 

 

  1. Since the National Audit Office’s December 2013 report ‘Confiscation Orders’, new capabilities have been developed to enhance asset recovery. The Crown Prosecution Service has substantially overhauled its approach by creating a new national Proceeds of Crime Unit, bringing together their enforcement and serious confiscation work into one service. More Regional Asset Recovery Teams, CPS prosecutors and HM Courts and Tribunals staff are co-located to foster multi-agency working. Nine new regional Asset Confiscation Enforcement (ACE) Teams have been created to provide a coordinated response to confiscation enforcement, tackling priority unenforced orders, and providing guidance and assistance from the earliest stage of a confiscation investigation. In order to improve performance on recovering assets hidden overseas, four specialist CPS Asset Recovery Adviser posts have been created, covering the UAE, Spain, the Caribbean and Europe. These changes contributed to a 16% increase in the amount recovered from confiscation between 2013/14 and 2014/15, with ACE Teams having assisted in the enforcement of orders worth over £18 million.

 

  1. The Home Office, following consultation with operational agencies, and approval by the Criminal Finances Board, has reformed the Asset Recovery Incentivisation Scheme for 2014-15. The changes make the use of ARIS funds more transparent and boosts the operational response. A ‘top-slice’ of approximately £5 million has been set aside to fund key national asset recovery capabilities: improvements to the Joint Asset Recovery Database, the regional ACE Teams, new Crown Prosecution Service resources to revisit old orders, and additional intelligence resources for the NCA to bolster the national response to cash-based money laundering.   Over £240m has been returned to front line agencies over the last three years through the ARIS scheme and the new investment of £4.5m through the top-slice has directly contributed to the recovery of £21million. 

 

  1. The Home Office is now working with other government departments to implement the Government’s Manifesto Commitment to return a greater percentage of recovered assets to policing. The Government is on track to introduce the changes in 2016/17.

 

Measures needed to address the lack of awareness of confiscation orders amongst staff in the relevant agencies, and of the associated enforcement processes

  1. The Strategic Policing Requirement places a clear responsibility on chief constables and police and crime commissioners to address the threats posed by serious and organised crime, and refers directly to the Serious and Organised Crime Strategy.  POCA provides a range of essential tools for tackling those threats.

 

  1. The Proceeds of Crime Centre at the National Crime Agency has a statutory function to train and accredit those who use the POCA powers. This is done through a set of compulsory training courses, and mandatory continuous professional development and monitoring. The College of Policing has also incorporated guidance on the use of basic financial investigation tools into their Authorised Professional Practice, which is aimed at increasing the use of basic financial investigation tools by front line officers, thereby helping to free up dedicated financial investigators to undertake more complex investigations. These resources underpin the principle that confiscation and asset recovery are successful by-products of the good use of investigation powers more generally.

 

  1. Home Office officials have worked directly with both investigators and prosecutors to promote the use of the new powers introduced in June 2015. In conjunction with operational agencies, new guidance will be issued on the use of civil recovery powers, and the seizure and forfeiture of cash, ensuring that all of the tools in POCA are used consistently and across all agencies.

 

  1. The judiciary is key to ensuring that the legislation is applied in the intended manner, particularly on the application of proper penalties for the enforcement of unpaid orders.

 

 

How best to address weaknesses in IT systems and data-sharing which are hampering effectiveness

  1. The Home Office has invested £2.3m in the three year improvement plan to improve the Joint Asset Recovery Database (JARD) to ensure that it can provide a more robust IT platform to share data across agencies. Mandatory fields and other mechanisms have been introduced to stop incorrect or incomplete information being submitted. JARD has also been updated to take account of recent legislative changes, and investigators and prosecutors are now able to record the use of the new search and seizure and compliance order provisions. Guidance notes have also been issued to all JARD users to ensure that data is entered consistently.

 

  1. A programme was also undertaken by HM Courts and Tribunals Service to improve existing data, leading to some 5,000 records being cleansed and reducing the outstanding uncollected amount by £13m.

 

  1. Further work to improve data cleansing and the JARD infrastructure will ensure continued improvements in data quality in the longer term.

 

Steps needed to strengthen coordination across the various agencies involved in confiscation orders, including whether one agency should be given lead responsibility

  1. Whilst the Home Office owns the overarching policy and legislation governing asset recovery, improving performance is the responsibility of all operational agencies. The Criminal Finances Board, which is co-chaired by Home Office and HM Treasury ministers, has an overarching role to drive strategy both in asset recovery and money laundering.

 

  1. A coordinated multi-agency effort is essential to tackle the enforcement of confiscation orders in a systematic way. Home Office ministers have noted, however, the history of the Assets Recovery Agency, the now-defunct body created to lead on asset recovery under a previous administration. The Home Office sees no benefit in giving a single agency lead responsibility on all asset recovery matters. The benefits that could be derived, beyond the strategic and operational co-ordination that already exists, are not clear. They are likely to be outweighed by the costs of the administrative restructuring and process changes that would be required if a single agency were to be given lead responsibility.

 

  1. Since 2014 the NCA has chaired a national multi-agency enforcement group (comprised of regional ACE Teams, HMRC, NCA, CPS, SFO and HMCTS) to prioritise the most important unpaid confiscation orders for collection, and coordinate action against them. Orders linked to the most serious criminals, and those of the highest monetary value, are prioritised.  The work of this group has led to a substantial improvement in performance. Since the creation of the multi-agency enforcement group, £92m has been collected on priority orders.

 

How to increase accountability and make performance measurement more meaningful

  1. The Criminal Finances Board oversees the Criminal Finances Improvement Plan, and holds senior decision makers responsible for its delivery. The different operational agencies which use POCA powers have different lines of accountability. For example, while the NCA is accountable to the Home Secretary, chief constables are accountable to their police and crime commissioner, and the Serious Fraud Office is accountable to the Attorney General.

 

  1. In-depth scrutiny of performance also takes place across operational agencies on a quarterly basis, identifying areas of concern or blockages that impact on effective performance. The Home Office has substantially improved the data presented to the Board, enabling a more meaningful understanding of performance.

 

  1. However, the measure of performance should not just be about the value and volume of orders that are made or collected. The asset recovery regime provides a wide range of tools that have a disruptive effect on all levels of criminality, and that disruptive effect should also be one of the ways of measuring effectiveness in this area. Work is continuing with operational partners to establish a meaningful, consistent way of measuring that disruptive effect.

 

  1. The Home Office does not believe that a crude cost benefit analysis, comparing the cost of administering the system with the value of recovered assets, is the right way to measure effective performance.

 

 

Further steps which may be necessary to address low enforcement rates, including toughening sanctions for non-payment

  1. Enforcement agencies are very successful at the enforcement of lower value orders (for example, HM Courts and Tribunals Service successfully collect 90% of their orders under £1000). There is a need to ensure that defendants are properly incentivised to pay-off higher value orders too.

 

  1. The Serious Crime Act 2015 included a number of provisions specifically designed to toughen sanctions for non-payment. These include increasing the maximum default sentence from 10 to 14 years for orders of more than £1 million, and removing the early release provisions for those orders over £10 million. The Act also shortened the time that a defendant has to pay their orders, and introduced a power for a judge to make a compliance order, containing any restriction or requirement on a defendant to ensure that a confiscation order is effective. These changes came into force on 1 June 2015, and their effectiveness is being assessed with the agencies who are using the powers. Some changes will necessarily take longer to show impact than others, but the Home Office will continue to assess if further legislative strengthening is required.

 

  1. The judiciary are key in managing cases in a timely and effective manner, ensuring that opportunities to criminals to dissipate assets during enforcement are minimised and that the time to pay, compliance order and default sentence provisions are enforced as the legislation intends.

 

How investigations related to criminal benefit can be made more transparent

  1. News stories about asset recovery feature regularly in the local and regional media. Confiscation orders are made in open court. Law enforcement agencies have a number of methods of reporting their performance to the public. The NCA, for example, publishes an annual report which includes information on its asset recovery performance.

 

  1. POCA contains a wide range of investigative tools which can be used to investigate the proceeds of crime. These tools are intrusive, so their use is monitored and restricted to those who have been appropriately trained and accredited. The Home Office is able to add and remove bodies who have access to the powers, and care is taken to ensure that those bodies that are granted them will use them in an appropriate way.

 

  1. Law enforcement agencies must have access to this wide range of powers at an early stage in their investigations to ensure that they are able to identify the derivation and whereabouts of assets before the individual under investigation becomes aware and can move those assets of reach.

 

  1. The investigation powers all require some form of judicial scrutiny before they are used, and those who are affected can challenge their use through the appeals procedure or through judicial review.

 

  1. The Home Office is also responsible for issuing a code of practice which governs the use of the investigation powers. The Attorney General’s Office also issues their own code of practice for prosecutors. The codes contain numerous provisions ensuring that the powers are exercised in the appropriate way, and a failure to comply with those codes can be taken into account in any later court action.

 

The implications for effectiveness of the complexity of the relevant legislation, and the benefits which an increased body of case law might bring

  1. POCA is an effective piece of legislation, and has been the model for other countries when they have been looking at introducing their own domestic laws to seize assets. It successfully combines aspects of property law, criminal law and sentencing and offender management provisions with an often uncooperative defendant. The law takes account of the specific requirements of devolution.

 

  1. The Home Office keeps the existing legislative provisions and case law under constant review.