Passing the buck!

Passing the buck!

Article Type: Editorial From: Journal of Money Laundering Control, Volume 11, Issue 2.

Asset recovery and harm reduction are high on the Government's agenda, as evidenced by the creation of the Assets Recovery Agency (ARA) in 2003 and the Serious Organised Crime Agency (SOCA) in 2006. A consultation document on Asset Recovery Action Plan has also been published in May 2007.

The theory behind the creation of ARA is fairly simple; by taking the profit away from the criminals, there will be less incentive and less investment for further criminality. The UK Cabinet Office report on “Recovering the proceeds of crime” published in 2000, made it clear that simply recovering criminal assets by confiscation after a successful criminal prosecution would not be enough. A new way of tackling crooks by recovering criminal assets through civil courts was therefore created, and ARA was granted this new and unique civil recovery powers under the Proceeds of Crime Act 2002 that allowed the proceeds of crime to be seized from the owner without a conviction. The principles of the asset recovery strategy seem straightforward, however, in practice, the implementation appears to be more complex. There are divergent views of how successful ARA has been.

A common criticism is the failure of ARA in achieving its targets for the recovery of criminal assets, which of course, is what ARA was set up to do. ARA has also missed its target in becoming financially independent by 2005-2006. According to the report published by the National Audit Office on 21 February 2007, ARA has spent £65 million in recovering assets worth £23 million. It is obvious that these figures do not necessary portray a successful story. Further criticisms include poor management information systems and ineffective resource allocation. About half of all cases adopted by ARA in 2003-2004 were still ongoing in August 2006 and assets have been recovered in only 52 cases. The lack of cases from referral partners has been identified as another problem. The report also claimed that there was insufficient preparatory work prior to the creation of ARA, and in fact, no feasibility study had ever been carried out.

On the other hand, more positive views on ARA focus on its successes in disrupting criminality and in training more than 2,000 financial investigators across the UK. However, the report by the National Audit Office has raised concerns that 30 per cent of financial investigators either retire or change jobs after finishing their training.

Whether success or failure, it no longer matters since ARA is going to be merged with the SOCA in April 2008 as announced by the Government on 11 January 2007. The rationale behind the merger, according to the Government, is to streamline the work carried out by law and order agencies so as to widen the skills and expertise as well as achieving better economies of scale in the fight against serious organised crime. However, whether the underperformance of ARA is a contributing factor to its abolishment is debatable. Indeed, the report by the National Audit Office has indicated the risk that, based on current performance, ARA might not be able to achieve self-financing by 2009-2010.

On 31 October 2007, the Serious Crime Bill received Royal Assent. This new Act will merge the operational elements of ARA with SOCA, and the training and accreditation functions of the Financial Investigation Centre for Excellence with the National Policing Improvement Agency. Additional powers for prosecutors to seize money and to initial civil recovery actions are also introduced under this new piece of legislation.

Although ARA may initially stay as a discrete entity within SOCA and all staff has been promised transfers to SOCA, there are some concerns at both the organisational and operational levels. The different components of SOCA are still adjusting through the difficult process of integrating various practices and cultures. The incorporation of ARA, yet another different set of procedures, practices and cultures, is going to create further tensions at SOCA. In addition, staff morale is always an issue which needs to be addressed carefully in any mergers. Since SOCA concentrates on level 3 criminality, that is organised crime operating nationally and across borders, there is the worry that the merger could mean a narrowing of the focus; nevertheless, some argue that the intelligence-led UK-wide SOCA could be a perfect outfit for asset recovery. Furthermore, by extending the power to launch civil recovery action under the Proceeds of Crime Act 2002 to criminal prosecutors might lead to potential legal challenges since civil recovery proceedings currently classified as civil in nature will no longer be initiated by a non-prosecuting authority.

Almost two years on since the establishment of SOCA in 2006, though numerous operational successes have been highlighted in the SOCA Annual Report 2006/2007, the fundamental parameters for measuring harm reduction are yet to be defined. Therefore, without a clear and measurable success criterion it is not possible to establish whether the merger between SOCA and ARA is going to be successful.

Angela V.M. Leong