Lobbying by North West Fraud Forum

NWFF has been actively lobbying to draw the attention of MPs and others to the corrosive effect of fraud on business. Fraud is not a victimless crime and we all pay for the cost of fraud by way of higher insurance premiums, higher bank charges, and higher prices in the shops. Those businesses which suffer losses through fraud will attempt to recover their losses by charges to law abiding customers.

So fraud is a real issue, even for those of us who do not suffer direct losses from fraud and we are keen to hear members' views on our lobbying activity by email.

Assest Recovery Consultation

In November 2007, we submitted the NWFF response to the Home Office Consultation Paper on its asset recovery action plan.

The North West Fraud Forum reposne to the consulatation paper was as folows:

Introduction

The North West Fraud Forum, NWFF, is a not-for-profit association that promotes fraud awareness in organisations within the North West of England and delivers a programme of activity focused on detecting, reducing and preventing fraud. To further its aims, NWFF delivers seminars, training and risk reduction advice to stakeholders within the region, and encourages public and private sector collaboration to fight fraud and financial crime and to protect the North West economy. It currently has 175 members who represent a diverse range of organisations including regional police forces; firms of solicitors and accountants; banks, building societies and insurance companies; many private businesses; and local councils.

The NWFF welcomes the publication of the Home Office’s consultation document on asset recovery. The answers below represent the views of a majority of members but inevitably, with 175 members from a diverse range of organisations, members are not unanimous, and we have encouraged members with different views to respond directly to the Home Office.

Actions under existing legislation

The consultation paper outlines a number of actions already being taken to improve the identification, handling and yield from asset recovery cases. We welcome these actions and the recognition that the intelligence contained in Suspicious Activity Reports is currently a hugely under-utilised resource. We believe that it is currently more important to direct efforts toward the best use of the existing legislation, rather than the addition of yet more legislation. In particular, we believe that recent innovations, such as Financial Reporting Orders, should be given time to prove their worth before further legislation is introduced and that further training on the existing legislation should be given to judges and legal representatives, to ensure that all have a good understanding of this legislation.

Detailed comments

Consultation question 1: Do you agree with proposals to increase routine data sharing of information about defendants’ finances?

We agree that, if a defendant argues that his assets are the result of legitimate earnings, the information he supplies in his Section 17 statement may routinely be passed to the tax and benefits authorities. However, where a defendant is made subject to a confiscation order based on his ‘available amount’, it would appear that no public interest would be served by those authorities seeking to make any recovery from, or take other action against, the defendant.

We would also like to make the point here that police officers are often obliged to obtain court orders when they need benefit figure information from the Department for Work and Pensions. We think this administrative hurdle should be removed.

Consultation question 2: Do you agree with the idea of enabling automatic transfer of title in goods under restraint or in the possession of law enforcement once time to pay has expired?

There is a small but significant difference between the wording in the paragraphs leading up to question 2 and that in question 2 – the paragraphs refer to ‘assets’, whereas question 2 refers to ‘goods’. To us, ‘goods’ implies movable, readily saleable objects such as cars, whereas ‘assets’ implies businesses and other, less readily saleable items. We are restricting our answer to ‘goods’.

We agree that, if the defendant has title to the goods, title should pass to the Crown once time to pay has expired. However, it is essential that prior checks are carried out to ascertain whether the defendant does have title. For example, the goods might in fact be owned by finance or insurance companies, and responsibility should not be placed on them to pursue their interest in the property.

Consultation question 3: Do you agree with the idea of a power to seize goods pending a confiscation process once an individual has been charged with an acquisitive crime?

We agree but with some qualifications. In addition to powers to seize under the ‘living a lifestyle of crime’ provisions in the Proceeds of Crime Act, POCA, the freezing of assets is already possible under civil powers where it is thought likely that the assets concerned will eventually be taken on judgement. Quite high standards of proof are required in the civil process before a judge. It is our view that something similar would be needed if this type of seizure/freezing were to be widened within the criminal justice system. An issue is the nature of assets. For example, we think it is appropriate to freeze the property in which a suspect and family live so that it cannot be sold or otherwise disposed of prior to trial and conviction. However, confiscation of that property in a way that makes the suspect and family homeless ahead of conviction is inhuman and possibly in contravention of Article 8 of the European Convention on Human Rights. Whilst the restrictions on the Article 8 right are acknowledged, any successful challenge might prove damaging to a new piece of legislation. We feel this matter needs to be looked at in terms of the nature of the asset and the likelihood for the asset to be disposed of prior to completion of the administration of justice.

Consultation question 4: Do you agree with the proposal to introduce a process for administrative forfeiture of cash seizures?

We agree with the proposal.

Consultation question 5: What are your views on extending cash seizure powers to cover precious metals and other payment mechanisms?

In our view, it is logical to extend cash seizure powers to cover precious metals and other payment mechanisms in order to avoid a migration to less conventional banking systems and commodity trading practices. However, we would also like to make the point here that police forces (certainly those in our region) currently lack the resources to investigate all cash seizures, and there seems little point in extending cash seizure powers without additional investigative resource.

Consultation question 6: Do you agree with widening the category of assets liable to civil recovery?

If allowing civil recovery action against “assets obtained by or in connection with unlawful conduct” has proved to be effective in Ireland, Australia and other countries, we agree with adopting the same policy. It would then be for the courts to determine how this legislation would operate in practice.

Consultation question 7: What do you think of extending the time limit within which civil asset recovery actions can be launched?

We think that the 12-year time limit should remain in place. It may prevent successful action against some criminals, but they must surely be few in number, and we feel that focusing asset recovery action on more recent cases is likely to be a more effective use of resources.

Consultation question 8: Do you agree with creating a new principle of sentencing that all criminal gains should be removed?

We agree with this proposal. We would like to add that such wholesale action would require growth in the public sector as goods are recovered and sold. We believe that any such growth should be self-financing.

Consultation question 9: Do you think current POCA provisions can be adapted to deal with simple low value orders, or do you believe there is a case for a separate Criminal Benefits Order in these cases?

It is difficult for us to assess which option would be the more effective.

Consultation question 10: Do you agree with creating a new power to seize on the civil standard high value goods which have been the instrumentalities of crime?

We agree with the proposal, provided (as stated in our answer to question 2) that checks are carried out to ascertain who has title to the goods.

Consultation question 11: What do you think of extending the new power further to cover all high value goods thought to be the proceeds of crime?

We think that this proposal should be put to one side until the other proposals outlined in this consultation document have been implemented and their effectiveness tested.

Consultation question 12: What do you think of proposals to extend the basis on which tax can be levied on criminals, taking in both no source and ‘miscellaneous’ income?

We think this question should be considered as part of the tax review. If the proposals were to be implemented, we think that a specialist unit would be needed within Her Majesty’s Revenue & Customs, HMRC, to deal with these cases – we do not think local tax offices should be expected to deal with them.

Consultation question 13: What are your views on the applicability to England and Wales of provisions along the lines of Qui Tam in the US False Claims Act?

We think this should be the subject of a separate consultation exercise, though we do consider Qui Tam to be a very powerful tool.