Money Laundering, Criminal Assets and the 1998 Proposed Reforms
| Date | 01 February 1999 |
| DOI | https://doi.org/10.1108/eb025902 |
| Published date | 01 February 1999 |
| Pages | 325-332 |
| Author | Michelle Gallant |
| Subject Matter | Accounting & finance |
Journal
of
Financial Crime
—
Vol.
6
No.
4 —
Analysis
Money Laundering, Criminal Assets
and the 1998
Proposed Reforms
Michelle Gallant
In November
1998, the
Home Office Working
Group
on
Confiscation,
a
group convened
in 1990
to monitor
the
operation
of
confiscation
and
money-laundering legislation, released
its
third
report,
a
comprehensive examination
of the
con-
fiscation
and
money-laundering control regimes
in
England
and
Wales.1
The
report recommends
numerous changes, some of which fill gaps
in the
pre-
sent framework
and
others that radically alter
the
methods deployed
to
ensure that criminal profits
do
not
lie
secure
in the
hands
of
their owners. Previous
reports heavily influenced subsequent legislative
developments
so it is
anticipated that this document
foreshadows
the
legislative course
to be
pursued
by
the Labour Government
in the
near future.2
The recommendations contained
in the
Working
Group's report divide into
two
camps.
The
first,
Chapters
2 and 3,
comprises
a
series
of
amendments
to
the
existing criminal legislative schemes.
The
second, Chapter
4,
goes
far
beyond amending
the
existing schemes.
The
Working Group advocates
reaching into
the
civil
law to
facilitate
the
divestiture
of property linked
to
criminal conduct. If the measures
found
in the
second camp
are
given legislative voice,
they will inaugurate
a new era in
crime control.
Following
a
brief introduction
and
survey
of the
key aspects
of
the first camp, particularly those related
to money laundering,
the
bulk of consideration
in
this
paper will
be
devoted
to the
civil
law
devices contem-
plated
by the
Working Group. Bearing
in
mind that
the proposals express
the
broad contours
of a new
approach,
any
analysis
is
necessarily tentative, with
greater scrutiny reserved
for the
predicted arrival
of
a full-fledged civil
law
scheme.
THE
AGE OF
PROCEEDS
Over
the
course of the past decade, criminal revenues,
the proceeds derived from
any
number
of
different
criminal activities, have caught
the
attention
of
governments. Initially,
the
principal antagonists
were
the
vast revenues associated with drug traffick-
ing. Latterly, while
the
interest
in
drug revenues
remained
it
yielded
to a
wider concern with
the
proceeds
of
various forms
of
criminal behaviour
—
fraud,
the
pornography industry,
the
illegal arms
trade
— and how the
financial rewards
of
each con-
tribute
to the
incidence
of
crime.
Vast criminal revenues brought
a
number
of
con-
nected concerns
on to the
political agenda. First,
the
revenues suggested that existing crime-control strate-
gies were failing
to
adequately deter lucrative crim-
inal activities.
The
deterrence component embodied
in traditional crime-control strategies, consisting
chiefly
of
imprisonment
and
criminal fines,
was
per-
ceived
as
ineffective when confronted
by
criminal
behaviours whose central ethos
lay in the
production
of exorbitant revenues. Secondly,
the
management
and control
of
criminal revenues
was
thought
to
constitute
a
potent corruptive tool, employed
to
purchase influence, pollute political systems
and
fragment
and
diffuse governments' efforts
to
bring
counter-strategies into operation. Thirdly,
and
mixed into
the
first
and
second, just
as
high profits
foster
the
growth
of any
legitimate industry,
so
they
are
thought
to
foster
the
growth of illegal enter-
prises.
Being unchecked
by
controls
and fed by
their
own revenues augured favourably
for the
continu-
ance
and
expansion
of
richly profitable crime.
Awareness
of the
enormous revenues linked
to
criminal conduct prompted
a
reconsideration
of
crime-control strategies.
At the
international
and
domestic levels,
a
consensus emerged that if profitable
criminal activities were
to be
controlled,
it was
essential
to
devise legislative schemes
to
undermine
the activities' adeptness
at
producing financial
rewards.3 'Taking
the
profit
out of
crime' quickly
became
the
motto
of
strategies striving
to
bring
lucrative criminal conduct
to
heel, with anti
money-laundering
and
confiscation schemes
the
hall-
marks
of
this modem approach
to
crime control.
CHANGES
TO THE
CRIMINAL
FRAMEWORK
—
CONFISCATION
AND
MONEY LAUNDERING
In
the UK,
mechanisms enabling confiscation
of the
proceeds
of
crime have been
in
place
for
over
a
Page
323
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