Dirty Assets

Emerging Issues in the Regulation of Criminal and Terrorist Assets

Colin King, Clive Walker

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317150459
• Edition: 1
• Topic: Law
• Subtopic: Criminal Law
• Index: Law

Adopting a multi-disciplinary and comparative approach, this book focuses on the emerging and innovative aspects of attempts to target the accumulated assets of those engaged in criminal and terrorist activity, organized crime and corruption. It examines the 'follow-the-money' approach and explores the nature of criminal, civil and regulatory responses used to attack the financial assets of those engaged in financial crime in order to deter and disrupt future criminal activity as well as terrorism networks. With contributions from leading international academics and practitioners in the fields of law, economics, financial management, criminology, sociology and political science, the book explores law and practice in countries with significant problems and experiences, revealing new insights into these dilemmas. It also discusses the impact of the 'follow-the-money' approach on human rights while also assessing effectiveness. The book will appeal to academics and researchers of financial crime, organized crime and terrorism as well as practitioners in the police, prosecution, financial and taxation agencies, policy-makers and lawyers.

PART I:

Introductory Matters

Chapter 1

Emerging Issues in the Regulation of Criminal and Terrorist Assets

Colin King and Clive Walker

Background

Increasing apprehensions surrounding organized crime, terrorism and corruption have given rise to a realization that conventional policing methods are insufficient on their own to deter, or at least disrupt, those engaged in criminal activities. It is thought that a more proactive approach is needed, since a ‘criminal law’ approach will not, alone, suffice.¹ One consequence has been a focus on the financial assets of those engaged in criminal activities. In the United Kingdom, the Proceeds of Crime Act 2002 (‘POCA’) enacted a sweeping array of powers that allow the authorities to target such illicit assets. This legislation provides a number of avenues through which criminals can be targeted by a focus on the money trail, namely: anti-money laundering provisions,² post-conviction confiscation,³ civil recovery in the absence of a criminal conviction,⁴ and taxation of assets.⁵ The 2002 Act also established the short-lived Assets Recovery Agency, though most of its functions have since been transferred to the Serious Organised Crime Agency (‘SOCA’).⁶ SOCA has since been supplanted by the National Crime Agency.⁷

The ever-evolving framework to deal with organized crime, corruption and other threats reflects the difficulties faced by conventional policing stratagems.⁸ The focus on financial assets now forms a central aspect of policing strategies, supplementing perceived inadequacies of traditional criminal procedure and punishment. The same line of thinking has been applied to the financial assets of terrorist organizations, with greater emphasis and attention since 9/11. There are significant differences between the phenomena of crime and terrorism, but this distinction has not prevented cross-fertilization between the codes.⁹

‘Follow the money’ strategies also reflect a move away from the ‘national’ to the ‘transnational’ – as befits a late modern society in which transnational crime is perceived as a growing threat.¹⁰ At the international level, key instruments include, inter alia, the Warsaw Convention from the Council of Europe,¹¹ the revised Financial Action Task Force Recommendations,¹² the EU’s Third Money Laundering Directive,¹³ and UN interest especially in the field of terrorism,¹⁴ but also in relation to transnational crime¹⁵ and corruption.¹⁶ International actors, such as the Financial Action Task Force (‘FATF’),¹⁷ the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (‘MONEYVAL’),¹⁸ the Group of States Against Corruption (‘GRECO’),¹⁹ the European Criminal Assets Bureau and the Camden Asset Recovery Inter-Agency Network (‘CARIN’),²⁰ also play an important role here. Movement in the international arena reflects the need for a transnational response cutting across not only the boundaries of states and institutions within them but also conventional legal boundaries (such as civil, criminal and regulatory). As criminal gangs become increasingly flexible and international, so too have State and international responses adapted likewise.

A number of these new and sophisticated state dispositions around ‘follow the money’ approaches have given cause for concern. Points of doubt and contention include: effectiveness and measurement of impact; impact on the rule of law and due process rights; the imposition of costs on the legitimate economy; and the limited accountability of specialist teams and bodies. Therefore, this book examines the nature of criminal, civil and regulatory responses to illicit assets, with hybridity and innovative approaches and institutions as key recurrent themes, as are questions as to the legitimacy, purposes and impacts of key mechanisms.

Over the course of the past two decades, much has been written about ‘follow the money’ approaches, especially anti-money laundering legislation, principally measures enacted to tackle the process by which the origins of ill-gotten gains are disguised and cleansed so as to appear legitimate.²¹ As other elements in the ‘follow the money’ strategy are afforded increased prominence, there is a need to focus on emerging and innovative aspects of attempts to target the accumulated assets of those engaged in criminal and terrorist activity. This book, then, focuses on some of these emerging issues. The book adopts a multi-disciplinary and comparative approach, with contributions from law, economics, financial management, criminology, sociology and political science. The authors and issues were deliberately selected to focus on emerging and cutting-edge issues. The comparative nature of the book is enhanced by the exploration of law and practice in countries with deep problems and experiences, about which little has yet been revealed to English-speaking audiences.

Some of the issues covered in this book were explored at a symposium, ‘The Confiscation of Assets: Policy, Practice and Research’, hosted by the School of Law, University of Leeds in April 2011 and funded by the Modern Law Review. This funding allowed the editors to explore an original agenda, and so some of the more familiar names in this field were not asked to submit a contribution to this book. The symposium attracted an audience from a mixture of academic and practitioner backgrounds and ensuing discussion has also fed into the chapters in this book. The book, then, will be of interest to a wide audience, not only academics and researchers who specialize in areas such as financial crimes, organized crime and terrorism, but also practitioners in the police, prosecution and specialized financial and taxation agencies, policymakers and lawyers. The book also brings a fresh approach to human rights issues (including powers and constraints affecting the State in its responses to crime and terrorism) and political science (including the working and worth of new forms of hybrid institutional formations and governance within criminal justice).

Rationale

In 2000, the then Prime Minister Tony Blair stated ‘For too long, we paid insufficient attention to the financial aspects of crime. We must remember that many criminals are motivated by money and profit.’²² This reflects the greater emphasis that would subsequently be placed on targeting illicit assets as a central tenet of modern crime control strategies.

‘Follow the money’ techniques have developed significantly in recent decades. Money laundering offences remain a key aspect of this approach, though there is now a greater realization that other innovative techniques offer their own benefits. For example, while post-conviction confiscation and civil forfeiture techniques both have long histories these have now been adapted in the fight against organized crime, in particular. There is often a degree of confusion regarding such terminology though, not helped by the diverse approaches in different jurisdictions and at the international level. According to Golobinek:²³

There are differences in the fundamental nature of legislation on confiscation with regard to criminal law, civil or administrative law. Confiscation regimes can be part of the sentencing procedure of the defendant. In that case, conviction is usually required. In some States, proceeds can be confiscated in civil forfeiture proceedings (mostly in common law based countries) independently or in parallel to related criminal proceedings.

For example, in some jurisdictions (e.g. Bulgaria – see Chapter 5) the term ‘civil forfeiture’ refers to the use of civil processes to confiscate assets subsequent to a criminal conviction, whereas in other jurisdictions (e.g. Ireland – see Chapter 7) the term is used to describe forfeiture of assets in the absence of criminal conviction (a non-conviction based approach). Not only are there differences in terminology, so too are there differences in, for example, evidential rules (such as the burden and standard of proof), the requirement of a direct link between ‘crime’ and seizure of assets, the calculation of profits (gross or net) and the function of confiscation (preventive or punitive).²⁴ This book, then, is enriched by a comparative approach to methods adopted and experiences learned in other jurisdictions in their applications both to criminals and terrorists.

Targeting illicit assets is often claimed to have multiple benefits: demonstrating that crime does not pay; underpinning confidence in the criminal justice system; removing negative role models from society; disrupting criminal networks and markets; acting as a deterrent through reduced returns; improving crime detection rates; and assisting in the fight against money laundering and its associated harms.²⁵ It has been said that: ‘Asset recovery is not an end in itself but a mechanism for achieving headline objectives such as crime reduction and, potentially, lowering the fear of crime.’²⁶ In addition, it is often thought that asset recovery²⁷ is cost-effective in that the costs associated with operating such a regime or running a dedicated asset-recovery organization would be covered by the monetary sums recovered.²⁸ In 2000, the use of asset-recovery techniques in the UK was described as:

an underused avenue of attack on crime, with an accompanying early and significant impact. In failing to take full account of the profit motive, the UK criminal justice system is at present overlooking a powerful lever in the fight against crime.²⁹

That situation, though, is now changing with the money trail a key element in contemporary policing. A decade on from the enactment of the UK’s Proceeds of Crime Act 2002 (and a decade or more on from 9/11) provides an ideal point at which to engage with emerging issues in the regulation of criminal and terrorist assets, from a multi-disciplinary and comparative perspective.

An early review of the Proceeds of Crime Act identified several shortcomings: poor awareness on the part of police forces about the new asset recovery powers and relevance to reducing volume crime; inconsistent take-up of those powers; inconsistent monitoring of performance; no consolidated collection of appropriate statistics; and significant attrition rates.³⁰ A decade on, while there have been some improvements (such as increased awareness and uptake of confiscation powers – though, arguably, still relatively low), many of these concerns remain valid. Contributions to this book demonstrate, for example, that statistical inconsistencies remain, thereby hampering detailed scrutiny of the asset recovery regime. This point is confirmed by a recent Impact Assessment carried out for the European Commission, which states:

Statistics on confiscation and asset recovery activities are scarce. … Reliable data sources on the number of ongoing freezing and confiscation procedures (especially those to be executed in other Member States), the turnover of criminal organisations, the costs of judicial procedures or the administrative costs related to asset management or data collection activities are even scarcer. Therefore, the economic impacts of the foreseen actions are often difficult to quantify.³¹

In addition, the assumptions underpinning the increased focus on the money trail are open to criticism.³² Further, while the policy discourse suggests that ‘the confiscation system is at least partially effective, insofar as it delivers large sums of cash from the hands of convicted defendants into the public purse, in a manner which is just to defendants, according to the POCA regime’,³³ there equally persists an ongoing debate both as to whether current approaches and operations are in fact effective and whether they are fair. While official discourse tends to emphasize the potential for expanding and improving the system,³⁴ a recurrent theme throughout this book is the need for restraint, that there is a need for considered reflection upon current techniques and how they are implemented in practice.

In summary, the contributions in this book challenge the asset recovery policy discourse. Equally, measures of ‘success’ and ‘impact’ are questioned. Practical implementation is also considered. This book thus offers a critique of emerging and contentious issues that permeate debate: within different fields, primarily the civil, criminal and regulatory realms; across different boundaries, namely ‘criminal’ and ‘terrorism’; at the national and transnational level; in both civil and common law jurisdictions; and between policy...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• Notes on Contributors
• PART I: INTRODUCTORY MATTERS
• PART II: CRIMINAL AND CIVIL RESPONSES TO ILLICIT ASSETS
• PART III: RESPONSES TO THE FINANCING OF TERRORIST ACTIVITY
• Select Bibliography
• Index