The UK Law Commission has acknowledged that the system for recovering the proceeds of criminal activities from individuals and companies is ineffective and requires reform.
The legislation currently governing confiscation orders (and restraint orders, the mechanism commonly used to preserve assets during the course of investigations and proceedings) is complex and inflexible. It does not reflect the intricacies of the commercial or financial positions of the defendants upon which they are imposed. These themes have been frequently and thoroughly explored in cases up to and including the UK Supreme Court.
In its consultation paper (which itself runs to over 700 pages), the Law Commission suggests ways in which the processes by which confiscation orders are made may be improved, fairness to defendants and victims is maintained and the amounts recovered are increased. In essence, it proposes:
- clarifying that the purpose of confiscation is restorative rather than punitive;
- streamlining timetables for the making of orders after individuals or companies are convicted of offences;
- more clearly delineating confiscation from other financial orders which follow conviction.
Any reforms flowing from the consultation process will not make a difference to the calculation of financial elements of deferred prosecution agreements (DPAs) concluded with co-operating corporate organisations (since confiscation orders may only be made after conviction, which does not occur in cases involving DPAs).
However, they may make important changes to amounts ordered to be paid by corporate organisations in cases where court-approved negotiated settlements have not been possible and for individuals (who may not enter into DPAs). A feature of the confiscation regime that commonly surprises individuals and corporate organisations unfamiliar with the UK criminal justice system is the methodology used to calculate their “benefit” from criminal conduct, which is expansive and can encompass large proportions (and sometimes all) of defendants’ assets.
Although it is not strictly part of the Law Commission’s remit, the consultation paper also mentions the Asset Recovery Incentivisation Scheme (ARIS), under which investigative, prosecuting and enforcement agencies may receive a share of sums recovered under confiscation orders.
The paper notes the criticism directed at ARIS since it was instituted in 2006, and in particular observations that decisions to pursue confiscation orders may give rise to the perception of conflicts of interest. The ARIS scheme is currently being separately reviewed as part of the UK Government’s Economic Crime Plan, but no formal announcements have yet been made about how (if at all) it may be reformed.
The consultation is ongoing. The Law Commission has invited responses to its proposals by 18 December 2020.
Currently, the confiscation regime is failing both victims and the public…Reform is clearly needed