Confiscating money does not pay

Ian Smith says greater powers to confiscate the proceeds of crime could

go too far.

Is an anti-Al Capone regime the best way to make sure that crime does not pay?

When the Government announced its plans to confiscate the assets of suspected criminals, whether or not they have been convicted, it made current draconian laws seem liberal by comparison.

After reading the myriad press reports on bootleggers and drug traffickers growing rich beyond the reach of the law, it is easy to conjure up images of a corrupt and crime-ridden 1930s Chicago.

Perhaps this is why the recently-published Home Office report, “Recovering the Proceeds of Crime”, seems akin to an anti-Al Capone charter to get at the untouchables.

According to the Government, there is around £440m worth of “booty” out there which it cannot touch but would dearly love to. The latest proposals are an attempt to get hold of these proceeds of alleged crime and, if this is not feasible, at least to tax the ill-gotten profits.

The Government is to create a new body called the National Confiscation Agency. The NCA will be staffed by lawyers and investigators, including Inland Revenue officers. It will have new investigative powers and, in particular, the Government wants to open the “gateway” of information from the Inland Revenue.

The Government proposes enhanced post-conviction confiscation powers in the Crown Court. On first conviction for any offence, all assets, income and gifts received by the convicted person within the previous six years would be assumed to be the proceeds of crime and confiscated if this assumption was not disproved. The court would have the discretion not to apply the powers if it would be “unjust” or “disproportionate” to do so.

The civil forfeiture powers would come into play in parallel with criminal proceedings if the accused person was acquitted, or there was no prosecution due to lack of evidence.

The NCA would bring proceedings in the High Court for forfeiture. It would only have to prove, on the balance of probabilities, that there were reasonable grounds for suspecting that assets to be forfeited represented the proceeds of crime, or were likely to be used for criminal activities. If other case law is followed, suspicion, even where it must be reasonable, would have a very low threshold.

The Government says that if a person has had assets held or confiscated unjustly, they would be liable for compensation payable at the court’s discretion. But no provision has been made for compensation to persons as a matter of course. This compares unfavourably with the cross-undertakings to pay damages, which applicants for private civil freeze-orders currently have to give, and is despite recognition that miscarriages of justice do occur.

The Government wants to ensure that even if evidence of criminal activity is weak or at least inadmissible, for example an informant’s tip-off, then assets do not escape its net.

Through its Inland Revenue officers the NCA would have the power to investigate and raise tax assessments against any income whether or not its origins can be identified. Once the NCA has shown that “income” has been received, the burden would then shift to the recipient of the tax assessment to show why the tax should not be paid.

The current malaise in the confiscation of proceeds of crime is properly identified by the report: “Financial investigation is under-used, undervalued and under-resourced – with a shortage of people with the right skills and little cross-agency cooperation.”

The Government also admits that there is no data available to assess the success of the foreign legal regimes it seeks to emulate (mostly those of the US, Ireland and Australia) in bringing down the overall cost of their criminal justice systems – the estimated figure for the UK is £50bn.

Many of the proposals for further confiscation powers should be called into close scrutiny to see whether the perceived benefits outweigh the loss of freedoms involved. Lawyers will, of course, turn to the Government’s own Human Rights Act to challenge new laws.

A better solution might be to give the NCA the staff and resources it deserves and implement a more effective strategy which would give credibility to the existing legal regime “to give it a fair trial” without inflicting wholesale change on the legal system that could affect the liberty and freedoms of all of us.

Ian Smith is a solicitor in the London office of the business crime group at Irwin Mitchell.