To what extent is the UK's anti‐money laundering and asset recovery regime used against organised crime?
| DOI | https://doi.org/10.1108/13685200910951901 |
| Pages | 134-150 |
| Published date | 08 May 2009 |
| Date | 08 May 2009 |
| Author | Peter A. Sproat |
| Subject Matter | Accounting & finance |
To what extent is the UK’s
anti-money laundering and asset
recovery regime used against
organised crime?
Peter A. Sproat
University of the West of Scotland, Hamilton, UK
Abstract
Purpose – Politicians justified the introduction of the illiberal and liberal parts of the UK’s
anti-money laundering and asset recovery regime by reference to the extra-ordinary threat posed by
organised crime. This paper attempts to evaluate the extent to which the financial measures contained
in the Proceeds of Crime Act (POCA) 2002 and the Serious and Organised Crime and Policing Act 2005
are actually used against this threat.
Design/methodology/approach – The objective is achieved by reference to four distinct datasets
found on the use of these measures. The first consists of the regular, usually monthly, bulletins on the
Proceeds of Crime produced by the Assets Recovery Agency (ARA). The second – which reveals the
length of sentences given to those convicted of money laundering offences under the POCA – was
gathered from the Financial Action Task Force, the Home Office and Justice Office in Scotland. The
third consists of the value of the cases which had been, and which were being, dealt with by the ARA
at the time the National Audit Office produced it’s report on the institution. The fourth is the number of
financial reporting orders which have been imposed upon criminals, follows the discovery of an earlier
version whilst examining parliamentary records.
Findings – The triangulated results suggest that the POCA powers – originally used by use against
organised crime – were used against this alleged threat only on a small minority and number of
occasions.
Research limitations/implications – This infrequent use raises major questions of either the
ability of the policing agencies including the Serious and Organised Crime Agency to take on
organised crime and/or the credibility of those who exaggerated a threat of organised crime to justify
the (often illiberal) powers.
Originality/value – This paper questions whether the POCA will achieve one of its original aims. It
will interest politicians and practitioners concerned with the combating of organised crime and/or
anti-money laundering and asset recovery as well as criminologists and those interested in civil liberties.
Keywords Money laundering,Crimes, United Kingdom
Paper type Research paper
Introduction
There are around 400 organised crime bosses in the UK with an amassed criminal wealth of
approximately £440 million.
So called “dirty money” – or assets derived from crime – represents around 2 per cent of
the UK’s GDP, or £18 billion (Home Office, 2008)[1].
The exercise of the legal tools provided by SOCPA and the Proceeds of Crime Act 2002 is
expected to have a considerable impact in terms of bringing organised criminals to justice
(Home Office, 2006).
The current issue and full text archive of this journal is available at
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JMLC
12,2
134
Journal of Money Laundering Control
Vol. 12 No. 2, 2009
pp. 134-150
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685200910951901
According to recent official reports on organised crime in Britain: “the most serious
forms of organised crime alone” generate “an illicit turnover of some £15 billion
per year” (HM Treasury et al., 2007; Home Office, 2007, Annex 2, p. 42). Of this total
approximately £10 billion is laundered through the regulated financial sector, i.e. that
regulated by the various money laundering regulations and the recent Proceeds of
Crime Act (POCA) 2002. In all, this illicit financial activity produces: “criminal ‘capital
formation’ – that is, assets invested in a possible seizable form” of about £5 billion per
annum, of which £3 billion is said to be exported overseas (HM Treasury et al., 2007;
Home Office, 2007, Annex 2, p. 42) Such figures do not take account of money
laundering resulting from: “other non-organised acquisitive crime” or where cash is
spent on “consumable goods such as food and business costs”[2]. For the official
discourse these figures reveal that the: “organised criminal networks involved
resemble modern business enterprises in their sophistication and international reac h”.
As a result of such analysis the government has declared that it: “is determined to
safeguard the security and prosperity of the UK from the threat of organised crime”
(HM Treasury et al., 2007, pp. 3, 8) However, despite the fact that HM Treasury claim:
“[o]rganised criminals, driven by profit, use the financial system to move money, and
launder and disguise it in other types of assets” the same report suggests: “the ability
to deny access to the financial system to organised criminals [...] presents a new
opportunity to weaken their networks” (HM Treasury et al., 2007, p. 3). This latter
notion is in line with the official recommendation that the authorities: “make crimin al
enterprises unprofitable in the UK by disrupting and dismantling them by all the
means at our disposal, including adding to their costs and seizing their assets” made
within the Home Office’s strategy on organised crime[3]. The report, One Step Ahead:
A 21st Century Strategy to Defeat Organised Crime, went on to suggest that making
criminal enterprise unprofitable: “means using all the regulatory and other powers at
our disposal, including our tax powers, our financial recovery powers and our powers
to bear down on money laundering” (Home Office, 2004, p. 12). As for the legislative
form these financial measures took, here the author relies upon HM Revenue and
Customs (HMRC, 2007) stated:
Tackling criminal finances is a top priority for the UK Government, reiterated regularly by
the most senior politicians. parliament has strengthened the powers available to enable law
enforcement agencies to recover the proceeds of crime, most recently in the Proceeds of Crime
Moreover, according to the Home Office (2006, p. 24): “[t]he exercise of the legal tools
provided by SOCPA and the Proceeds of Crime Act 2002 is expected to have a
considerable impact in terms of bringing organised criminals to justice”. The former
included new orders to ensure that the finances of serious acquisitive criminals were
kept under close scrutiny after conviction. The latter contained new anti-money
laundering and asset recovery powers, some of which can be de scribed as
extra-ordinary in the context of the traditional liberal approach to criminal justice
developed over centuries of British history. The former legislation also created new law
enforcement agencies such as the Serious and Organised Crime Agency into which the
For those who are still not convinced financial crime measures are at the core of
the government’s anti-organised crime strategy, the author provides the whole of the
Anti-money
laundering and
asset recovery
135
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