The Missing Billions | Gavin Irwin analyses the Law Commission’s long awaited final report on ‘Confiscation of the proceeds of crime after conviction’

We are all familiar with the headlines,

“More than £20 million in cash and assets has been taken from criminals operating in Kent over the past five years, with close to £8 million taken across 2021”[1],

and with the figures,

“In 2020/21 [the SFO obtained] confiscation orders in the value of £5,629,497.06 and received Confiscation payments in the sum of £5,696,626.93”[2],

but as of 31st March 2021, the outstanding debt of unrecovered confiscation orders in England and Wales amounted to more than £2 billion[3] and, for many years, there has been a strong consensus that the current regime under Part 2 of the Proceeds of Crime Act 2002 is inefficient, complex and ineffective.

In 2018, the Home Office commissioned a Law Commission project with the objective of reforming Part 2 – the post-conviction confiscation regime.  On 17 September 2020, the Law Commission published a consultation paper[4] with provisional proposals for reform and received more than 100 responses.  The final report was published on 9 November 2022[5] (at 600+ pages, a more easily digested summary is also available[6]) and the Commission is now working with the Office of Parliamentary Counsel to produce a draft bill which it aims to publish in 2023.

The recommendations are targeted at:

• Limiting unrealistic orders that can never be paid back.
• Speeding up confiscation proceedings and allowing victims to receive compensation more quickly.
• Bolstering the current system by giving courts more powers to enforce confiscation orders and seize offenders’ assets.

Importantly, if adopted, the new regime will set out a clear statutory objective, that is:

“to deprive defendants of their benefit from criminal conduct, within the limits of their means”.

This is intended to signal a move away from any prior emphasis on punishment and practitioners will note that the provisions seek to address some of the most vexed, generational confiscation conundrums, the Commission having noted that, “[e]ven law enforcement stakeholders recognised that the confiscation regime can be draconian”[7].

The reforms are designed to make the confiscation regime fairer, more efficient and more effective by:

• Strengthening Restraint Orders by placing the “risk of dissipation” test on a statutory footing and clarifying trigger events for deployment.
• Accelerating confiscation proceedings by establishing strict timetables for hearings – to take effect immediately after sentencing.
• Expanding the provisions that engage the “criminal lifestyle” provisions and reducing the number of offences required to trigger the provisions.
• Giving greater consideration to the defendant’s ability to pay, so that enforcement can be more effective.
• Creating powers to impose “contingent enforcement orders” at the time the confiscation order is made so that, if a defendant does not pay the order, funds and assets may be forfeited without further intervention.
• Creating more flexible tools to ensure better enforcement, including giving judges the power to adjust the funds that must be paid back by a defendant, depending on their personal circumstances – to avoid situations where there is no realistic prospect of recovering the full amount of the confiscation order.

Clarity and pragmatism are welcomed and the draft bill is keenly awaited.  In the meantime, other highlights include:

• Reformulating the calculation of the total benefit and more clearly defining “gain” – actual and intended – not least to achieve fair and proper apportionment between defendants.
• Excluding “after-acquired” assets from such orders, thereby encouraging full and frank disclosure at the time of confiscation, increasing finality and supporting rehabilitation and fairness.

Shortening the time frame for confiscation would be welcome if the logistics of obtaining access and providing documents to defendants in custody were improved.  The Commission recognises such difficulties and is encouraged that Rules and guidance for prison staff on how to manage prisoners with confiscation orders were updated on 30 June 2021[8].  It remains to be seen whether such enduring systemic challenges are exacerbated by a second decade of austerity.

Gavin Irwin

11 November 2022

[2] https://www.sfo.gov.uk/about-us/#poc

[3] https://www.lawcom.gov.uk/project/confiscation-under-part-2-of-the-proceeds-of-crime-act-2002/

[4] https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2020/09/6.6837_LC_Confiscation-consultation-paper_FINAL_180920_WEB3.pdf

[5] https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2022/11/Confiscation-of-the-proceeds-of-crime-after-conviction-a-final-report_web.pdf

[6] https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2022/11/Confiscation_of_proceeds_of_crime_LC_Summary.pdf

[7] Paragraph 1.131 at page 58

[8] PSI 16/2010