HERTFORDSHIRE COUNTY COUNCIL
COMMUNITY SAFETY CABINET PANEL
TUESDAY 7OCTOBER 2008 at 10.00 A.M.
PROCEEDS OF CRIME ACT
Report of the Head of Trading Standards
Author: Guy PrattTel: 01727 813825
Executive Member: Richard Smith (Community Safety)
- Purpose of report
To update the Panel on the Proceeds of Crime Act which the County Council’s Trading Standards Service is required to consider whenever investigations are undertaken. To highlight the use of the powers under the Act which are a deterrent to crime, and enable HCC to retain a proportion any criminal assets recovered.
- Summary
Asset recovery is a crime-fighting tactic and essential to the role of a modern local authority Trading Standards Service.Asset Recovery is designed to:
- Ensure that crime doesn’t pay and is seen not to pay;
- Tackle ‘lifestyle criminals’ e.g. counterfeiters, rogue traders
- Meet the expectations of legitimate businesses and consumers
2.1The additional resource of 1.0 officer would enable HCC to undertake its own asset recovery proceedings and access the Home Office Incentivisation Scheme. Potentially up to 1/3 of all assets recoveredcould come to HCC.
3.Recommendations
3.1The Panel is invited to note the asset recovery powers withinProceeds of Crime Act and the ability of HCC to access criminal monies recovered through the Home Office Incentivisation Scheme.
3.2.The Panel is further invited to endorse the Trading Standard Service’s request (through the budget process) for additional funding of £45K to employ an Accredited Financial Investigator.
4.Background
4.1The Proceeds of Crime Act 2002 was a revolutionary piece of legislation that for the first time gave the Police and Asset Recovery Agency the power to seize and recover monies and other assets gained by people undertaking criminal activities. The act was seen as real step forward in ensuring that ‘crime doesn’t pay’. It is a real deterrent to criminals who previously were able to serve prison sentences but still benefit from their illicitly gained monies when their sentence was over.
4.2Hertfordshire Trading Standards since the Proceeds of Crime Act have
worked in partnership with both the Police and the Asset Recovery Agency to ensure that wherever appropriate and possible asset recovery is considered as part of an investigation.
4.3Where criminal assets are recovered, the Home Office Incentivisation
Scheme determines the split between the relevant parties. The scheme is specific to specific circumstances, but generally the following applies:
- 50% of recovered assets go to the Home Office
- The remaining 50% of assets are split 3 ways between the prosecutor, the Courts and the financial investigator.
4.4Since 1 April 2006 The Proceeds of Crime Act has given local authorities the power to undertake financial investigations (asset recovery) in their own right. This enables local authorities to become involved in the confiscation of criminal assets and access the incentivisation scheme. The employment of an Accredited Financial Investigator (AFI) would make this possible for HCC.
4.5 The Incentivisation Scheme means that if HCC were to employ its own
AFI then a greater proportion of any monies recovered would come back to the authority. In HCC Trading Standards cases, HCC is the prosecutor. With an AFI employed within Trading Standards, HCC would be the ‘financial investigator’ aswell – effectively doubling the amount of monies able to be recovered by the authority.
4.6Currently Trading Standards (through other agency’s AFIs) have potential
criminal assets to be realized of ~£5,000,000.Of this £3,000,000 is the subject of an appeal, but if successful HCC should receive ~£500,000. If we had used our own AFI our cut would be ~£1,000,000.A further £250,000 has been identified in another case (also subject to appeal) and HCC could receive ~£90,000. This is recovery against a limited company whose assets are overt.Both of these cases have passed through the Courts, with the actual assets identified in property, bank accounts etc, so the probability of recovery is high.
4.7Additional current cases have the potential for ~£2,000,000 – at varying
degrees of probability of success. A Court award of £90,000 has been made (HCC’s share ~£15,000) howeverthe defendant has currently disappeared. Further cases yet to appear before a Court have the potential of ~£1,900,000 in criminal assets – although the Courts may decide differently.
4.8 Whilst partnership working in asset recovery is still possible with the
Police, it is no longer possible with the Asset Recovery Agency (which has become part of SOCA) where financial investigations for trading standards work are not on their priority list. Additionally, whilst Hertfordshire Police have a successful financial asset recovery resource, working with them,however successfully, means that HCC is dependent on another organisation's capacity and priorities.
4.9 A number of authorities within the East of England Trading Standards
Association (EETSA) partnership now employ AFIs and a regional protocol allows access to these. This means again that we have to fit in with someone else's availability and priorities. Employing an AFI within HCC would provide greater flexibilityand efficiency.
4.10 The Proceeds of Crime Act gives the Courts powers to require local
authorities to undertake asset recovery work. A person may be committed to the Crown Court for confiscation proceedings following a conviction of any offence, indictable or summary, in the magistrates’ court. Confiscation procedures are mandatory, and therefore place additional burdens and legislative responsibilities on local authorities. The Crown Court must also consider confiscation proceedings when asked to do so by the prosecutor.
4.11Sections 107A and 198A of the Copyright, Designs and Patents Act
which were enacted in 2008 have seen additional counterfeiting and piracy enforcement duties placed upon local authority Trading Standards Services as part of the wider fight against terrorist activities. Crimes within this legislation are specified as attracting a ‘criminal lifestyle’, and as such asset recovery and confiscation proceedings automatically occur upon either the Court’s or the local authority’s request. If the offender has a criminal lifestyle the Court must assume all the offenders assets acquired over the previous six years have been derived from crime and are eligible for confiscation - unless the offender can prove otherwise or this assumption would cause serious injustice.
4.12 The Home Office monitor the spend of incentivisation funds and expect information on objectives and outcomes of projects/initiatives. There are no plans to change the current 2006/07 scheme and in fact the CPS and Courts have already committed to expansion plans based upon their expected element. However, concerns have been raised about the use of incentivisation monies, and whether these were actually bringing additionality or whether they were merely supporting base budgets. There are proposals that the scheme should, in the future, demand more accountability from those agencies who receive the funding. In particular, it is proposed that agencies would be asked towards the end of the year to provide information on how they had made use of incentivisation monies within the following categories:
· Additional financial investigators (including numbers)
· Training
· Specialist team budgets
· Internal incentive schemes
· Community projects
· Other (specify)
The intention is that, under the new incentive scheme, a large proportion of incentive payments should be used to further drive up asset recovery performance, and where appropriate to fund local crime fighting priorities for the benefit of the community.
4.12It therefore should be highlighted that financial investigations are
primarily about taking money off criminals for crime reduction purposes, but they do generate income for local authorities. Trading standards need to consider asset recovery in every case, and experience amongst local authorities who currently employ AFIs so far shows that new cases come in quicker than ongoing ones are disposed of.
4.13 With an HCC employed AFI a larger proportion of recovered assets
would come to HCC, and it is anticipated that any funding put towards this would be self-recovering, with the potential to repay such funding many times over.
4.14The additional resource of 1.0 officer (at an on-cost of £45K) would
enable HCC to undertake its own asset recovery proceedings and access the incentivisation scheme, potentially ‘earning’ up to 1/3 of all assets recovered.
081007 Proceeds of Crime Report 1