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.