Criminal assets confiscation

EU leaders call for tougher rules on criminal assets confiscation.

EU leaders have proposed new legislation to tackle the issue of lack of effectiveness in proceeds of crime recovery. Cecilia Malmström, the current European Commissioner for Home Affairs, stated that serious organised crime members freely invest profits from their criminal enterprises into luxury goods, properties and precious metals. The illicit assets can be easily transferred within the EU due to major differences between the Member States’ local anti-money laundering laws.

The UK anti-money laundering and illicit assets recovery legal framework is based on the Proceeds of Crime Act 2002. The Act not only allows for cash seizures by the police forces, but also operates a Suspicious Activity Reports System. Under the SARs system, all transaction that can reasonably be deemed suspicious have to be logged and referred to the UK Financial Intelligence Unit, for further intelligence and analysis. Cecilia Malmström claimed that she had seen figures showing UK recovery levels of £150-£200 million per year. In fact, according to SOCA’s 2008 report, only in the investigations started under the SARs system, the confiscation orders had a value of £110 million and further cash seizures of £26 million.

She states that it is important to ensure that organised crime is not profitable. The official figures for 2006, estimated that organised crime generated £15 billion. In view of the official data it is difficult to argue that the current confiscation procedures are effective. The EU Commission believes that this is due to the fact that national laws are not fully harmonised and significant difference hinder the processes.

Proposed Changes

The newly proposed changes to the current confiscation regime include:

  • Simplification of confiscation processes for assets that can be clearly traced to convicted criminals;
  • Improvement of recovery processes for assets transferred to third parties who ought to have been aware of the criminal origin of the assets;
  • Implementation of procedures for asset recovery from criminals who are on the run, terminally ill or dead;
  • Introduction of less bureaucratic and more time-efficient procedures allowing for temporary asset freezes even before formal conviction or court order;
  • Effective management and utilisation of recovered funds.

The abovementioned changes are of particular importance to innocent tax payers who have to face effects of economic downturn including raising taxes and unemployment. The confiscated money could be used to improve public services and lower the current tax bands for individuals and businesses, stimulating the economy.

At the same time, the Crown Prosecution Service has just published a list of 191 convicted criminals who were ordered to return £1 million or more in criminal profits. 49 of the above-mentioned are classified as millionaires. Unfortunately, according to another source criminals reportedly ignore the legal system and refuse to repay the money. Illicit funds are often transferred overseas to trusted third parties or locally to family members or friends. With the introduction of the proposed changes, it will not only be easier to reverse any transactions and confiscated the property from families, friends and third parties but also place temporary freezes, before a judicial order is made, on assets that can easily be identified.

The proposed changes along with the newly created National Crime Agency bring hope to aid the system and ensure effectiveness of the confiscation processes. The National Crime Agency will replace the Serious Organised Crime Agency and become fully operational in 2013.

Criminal legal aid – being exploited ?

Criminals Receiving Legal Aid

The purpose of legal aid is to provide financial assistance to members of society who cannot afford to pay for certain types of legal advice. Most people will agree that millionaire criminals, where their wealth is believed to have come from criminal activities and may have been hidden away should not be entitled to legal aid where they have sufficient illegal funds to cover the cost of their criminal defence. Others would argue that the “innocent until proven guilty” presumption means that these individuals should still be entitled to criminal legal aid.

However, shocking figures under the Freedom of Information Act has revealed that in the last three years almost 50 wealthy criminals received an average of nearly £300,000 each in legal aid despite them having over £1million of suspected illegal money.

The final figure is expected to be even higher as all the defence bills have not been paid as yet. The figures are controversial and come at a time when Justice Secretary Ken Clark is trying to reform legal aid by cutting £350 million from the legal aid budget by reducing the service to poorer people in cases of clinical negligence, welfare, personal injury and divorce.

Most of the criminals applied for legal aid to fight the Crown’s attempts to have their wealth seized. This wealth cannot be used to pay for their legal defence fees under the Proceeds of Crime Act 2002 (POCA). Under POCA the Crown can apply for a Restraint Order prohibiting anyone from dealing with their assets in order to prevent the accused from dissipating with the same. The rules used to allow for reasonable living expenses and reasonable legal costs to be paid from the restrained funds but the rules were later changed so that legal expenses cannot now be paid. Therefore, a person subject to a Restraint Order may be able to get legal aid and many so-called sophisticated criminals have also moved any assets abroad or otherwise hidden them, thereby pleading poverty.

Ministers argue that the law is justified as these criminals may ultimately be ordered by the courts to pay back their legal fees and those that fail to do so will get extra time. Whether this is true in practice is perhaps a different matter However, Lord Macdonald, The Bar Council and the Criminal Bar Association amongst others would like the law changed so that the tax payer is not subsidising wealthy criminals anymore. Accordingly, there are proposals before the House of Lords to amend the Legal Aid Sentencing and Punishment Bill.

It is worth noting that the rules as they stand do not only have financial implications on the public purse but they could also be a breach under the Human Rights Act as it restricts an individual from choosing their own lawyers.

What do you think about this issue ?