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Law Commission considering review of 'notorious' proceeds of crime laws

Out-Law News | 24 Aug 2016 | 12:04 pm | 2 min. read

Laws dealing with confiscation of the proceeds of crime could be subject to review by the Law Commission, which makes recommendations for law reform in England and Wales.

The Commission is explicitly seeking views on the topic as part of its 13th Programme of Law Reform consultation, during which it will establish its priorities for 2017-2020. It has identified confiscation laws as one of the areas that its "experience and discussion with stakeholders" suggests may be in need of reform; although the consultation emphasises that this and its other suggested topics are "only ideas".

In a statement, the Commission described the current proceeds of crime laws as "notorious for being difficult to apply and enforce".

"A confiscation regime should have a simple purpose, namely to strip wrongfully acquired assets from those convicted of crime, and should be capable of being applied and understood in the busy criminal courts by practitioners, judges and indeed self-represented defendants," the Commission said.

"The current law clearly fails in that respect, and also fails in practice in its purpose of stripping those convicted of acquisitive crime of their assets," it said.

The consultation closes at the end of October.

Civil fraud and asset recovery expert Alan Sheeley of Pinsent Masons, the law firm behind Out-Law.com, said that a refresh of the law in this area was "definitely required". Last month, the House of Commons Home Affairs Committee published a critical report on the effectiveness of the proceeds of crime legislation; while a review of fraud laws by the Fraud Advisory Panel (FAP) found that the amount lost to fraud had grown from £52 billion to £193bn over the past decade.

"If positive steps are not put in place now the costs incurred by the Home Affairs Committee will be wasted," said Sheeley, who in submissions to the committee called for earlier intervention and greater private sector involvement in the recovery of assets lost to fraud.

"Too often, cases are investigated and prosecuted without due consideration for how a confiscation order would ultimately be enforced. I really hope FAP does not produce another report in 10 years' time, which again states that a decade on 'official support for fraud victims is still poor and the local police response to the growing fraud threat remains inadequate'," he said.

The Law Commission highlighted two particular problems with the existing proceeds of crime laws: the "complexity and unwieldy nature" of the regime, leading to "protracted litigation" around the making of confiscation orders; and the "inefficiency of enforcement processes" and lack of discretion available to the authorities. It quoted National Audit Office (NAO) analysis dated December 2013, which put the cost of court hearings and appeals at £31.8 million and enforcement at £3.2m.

At the same time, a "disappointingly small" fraction of the total ordered for repayment under confiscation orders has actually been collected, the Commission said. An estimated £1.61bn remained to be collected as of September 2015, according to NAO figures; of which only 17.5% is estimated to be realistically collectable. At the same time, many of those facing confiscation orders do not have the means to pay them, the Commission said.

Earlier this month, City of London Police announced that it would pilot the use of private sector law firms to recover assets stolen by fraudsters in the civil courts, rather than postponing recovery until a criminal charge or conviction as is usually the case at present. It is understood that the new scheme will allow for civil proceedings, including freezing orders, disclosure orders and search and seize orders, to begin before criminal proceedings are finalised; although the money would have to be repaid with interest if the suspect successfully appealed or was cleared in a later criminal case.

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