Seizing the initiative
Have local authorities been granted “Al Capone” powers under the Proceeds of Crime Act 2002, as some have suggested? Nicholas Dean QC and Jennifer Carter-Manning look at the reality behind the hype.
Recent publicity concerning the coming into force of an obscure Statutory Instrument – the Proceeds of Crime Act 2002 (References to Financial Investigators) Order 2009/2707 – has given the distinct impression that a range of public and semi-public bodies, including local authorities, have suddenly acquired a range of sweeping and draconian powers in relation to the seizure of the proceeds of crime.
The true picture is more complex and more mundane and it seems unlikely that officers of local authorities are soon to be tasked with carrying out dawn-raids to seize the assets of major criminals. More worrying in fact than the actual extension of powers enacted by SI 2009/2707 is the gradual but seemingly inexorable growth of a culture that offers rewards for aggressive prosecuting policies.
Since the late 1980s and particularly after the enactment of the Proceeds of Crime Act 2002, powers to deprive criminals of their ill-gotten gains have become more sophisticated and more complex. Most large-scale prosecutions for acquisitive crime will involve parallel confiscation proceedings targeted initially at identifying and preserving assets and, after conviction, at the recovery – the confiscation – of the benefit of criminal conduct. Increasing emphasis is placed on the option of civil recovery of tainted funds, outside the reach of the criminal courts.
In response to a Parliamentary question in January this year an Under-Secretary for the Home Office indicated that in the year 2007-08 the net value of the recovered proceeds of crime in England, Wales and Northern Ireland exceeded £135m. The figures for 2008-09 and 2009-10 are likely to be significantly greater and the government has suggested a target of £250m for recovery next year, rising quite quickly to a target of £1bn.
The Proceeds of Crime Act 2002 gave significant powers to “Accredited Financial Investigators” (AFIs) in the carrying out of investigations required to obtain confiscation orders and permitted such investigators to apply for restraint orders. Initially, in effect, only employees of the major investigative and prosecuting authorities could become AFIs but a series of Statutory Instruments has gradually expanded those who are eligible and since 1 April 2005 members of staff of local authorities have been able to train and become AFIs.
Extra powers for AFIs
The Serious Crime Act 2007 extended the powers of AFIs – particularly their search and seizure powers. The extended powers were initially restricted in terms of the groups who could exercise them but those groups were expanded first in May this year and then again by SI 2009/2707 which came into force on 2 November. SI 2009/2707 gave the extended powers set out in the Serious Crime Act 2007 to AFIs employed by a wide and varied range of public and semi-public bodies but including “a local authority”.
The effect is that local authority AFIs can now exercise all the powers available to AFIs under the Proceeds of Crime Act. They can seek to restrain assets, make applications for production orders and search warrants, and for disclosure orders. They can seize property that is subject to a restraint order, and can seize cash believed to be criminal property or intended for use in unlawful conduct. The theoretical potential of these complex powers is wide indeed.
The government has stated in an “Explanatory Memorandum”, that the extension to the wider pool of AFIs will “enable the organisations of which they are members to operate more flexibly and independently of the police in pursuit of the proceeds of crime”. The potential rewards are also set out: “Investigation bodies will also receive a share of money recovered as additional funding to incentivise further work in recovering the proceeds of crime.” What share though is not entirely clear and seems to be a matter for negotiation with the Home Office.
Local authorities should exercise caution
The extension of powers has itself raised some public concern; potentially even less attractive is the concept of a local authority diverting resources into investigating alleged criminality, in the hope of winning further funding in the future. Sections of the press are quick to label speed cameras and parking fines as financially motivated infringements of a citizen’s liberty; we imagine they may be quick to place the recovery of criminal assets in a similar category and will seize upon chosen examples as demonstrating “Big Brother” persecuting trivial offenders.
There are undoubtedly valid and useful ways in which local authorities can and will use these powers. The government is surely right to identify that a trained group of financial investigators will be better equipped to identify and pursue criminality within their own organisations as well as outside.
We would however sound two notes of caution to any local authority considering their new powers; firstly, pick your cases carefully. Their investigation can be time-consuming and resource-intensive and recognising a case in which confiscation may be worthwhile can be far from straightforward. The failure of the government’s Asset Recovery Agency to achieve its stated goals – itself part of the rationale of embedding recovery of criminally acquired funds more widely into the criminal justice system – should give pause for thought.
Secondly, remember that many of these proceedings under the Proceeds of Crime Act 2002 are civil in nature and subject, broadly, to the normal rules of civil litigation. Proving that particular cash is intended for use in unlawful conduct, or was itself the proceeds of crime, is not always a straightforward task. A local authority choosing to take such a case through the courts in the hope of recovering the proceeds of crime may lose. With the loss may come a hefty liability for the costs of the winning side.
Whilst any local Al Capones should probably be left to the police to deal with, there seems no doubt that a trained AFI working across a range of local authority departments could prove effective in deterring local crime and anti-social behaviour and, whilst unlikely to rake in millions, could well prove at least to be cost-effective.
Nicholas Dean QC and Jennifer Carter-Manning are barristers at 7 Bedford Row in London
