Proceeds Of Crime Act – Is There A Better Way?

We undertake a significant number of confiscation assignments each year for criminal defence lawyers. I have just been writing an updated article for my firm’s web site on the confiscation process generally and the tasks that forensic accountants are able to address, and it made me consider how the Crown’s approach may have changed over the years since the implementation of the Proceeds of Crime Act 2002 back in 2003.

In the early days we had been working on forensic accountancy assignments involving confiscation under the Criminal Justice Act 1988. POCA 2002 didn’t change the way we worked, but the numbers of confiscation cases seemed to increase dramatically as the Crown got their teeth into this new tool that they could apply to all manner of cases, small and large.

Each case undertaken used to raise the same issues such as double counting or inclusion of benefit strands dating back to before the Relevant Date. These issues became regular fodder for the forensic accountants, along with arithmetic errors or misapplication of the lifestyle assumptions. However, I recall the real challenge was to ensure that common sense prevailed and that the Court was steered towards a benefit order that was proportional to the crime committed and fair to the lifestyle of the defendant.

For years my reports had presented benefits resulting from any properties in a measured way, that took accounts of acquisition date, source of purchase funds including mortgage borrowing and any rental income generated. It was interesting to see that it took the full appeal process before the Supreme Court ruled in what is considered to be legal precedent in R – v – Waya allowing benefit to be fixed at the amount of equity obtained as the result of obtaining a fraudulent mortgage. Not only this, the mortgage itself was deemed not to provide any benefit to the defendant – common sense really as a mortgage advance is always matched by an equivalent debt to the lender.

However, even now I see S16 Statements that include the full value of properties as benefit, ignoring any legitimate acquisitions (perhaps even before the Relevant Date) or mortgage funding. Having said this, I do believe that in the main the quality of the investigators preparing the Crown’s S16 Statements is much better now than in the early days. They are mostly thorough, accurate and take account of double counting properly. This does not mean that the services of forensic accountants has become redundant – there is always the need for an independent viewpoint in what is a very contentious and aggressive battlefield. A well prepared case summary by the Crown, supported by clear evidence trails, can reduce the amount of work needed by a forensic accountant substantially with the obvious knock on benefit to the public purse.

This is why it always surprises me when police officers tell me how little they are able to utilise forensic accountants. I understand that even the Metropolitan Police only have a couple of accountants spread over their substantial cases and who are understandably “bogged down” with routine analysis. In my view, expert business and accounting skills are needed at all levels of a complex fraud investigation. At the start of any matter they are used to assess the case and give an opinion on whether or not the case merits the criminal route or whether or not money laundering is even occurring. It is accepted that during an investigation an experienced and qualified forensic accountant would be an expensive luxury to involve in the data gathering and analysis, but it is a different matter for the case preparation and summation of the salient financial evidence. At this stage, a strong case may lead to early pleas, whereas a badly presented one will only lead to  the defence team’s own forensic accountant pulling the case apart (again at extra costs to the public purse).

The Proceeds of Crime Act 2002 is a comprehensive platform for money laundering offences and confiscation proceedings, and I am not sure I can suggest a better way of approaching these problems. I do feel, and have written endlessly on the subject over the years, that if the Crown utilised qualified forensic accountants early on, costs overall would reduce throughout a case. The trouble is that this means costs would be weighted towards the police budgets, and taken from the criminal defence budget. While many senior police officers have understood the merits of this approach over the years, with the ongoing public spending constraints nothing is likely to change soon.

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