Joint thematic report on the Proceeds of Crime Act 2002

261. As outlined earlier in this report, we share the view encountered throughout this inspection that first and foremost the principal aim of financial investigation techniques and the powers contained within POCA should be to disrupt criminals and to reduce the harm they inflict on Scottish communities. We have also articulated our belief that this objective should be central to the recommended Scottish Proceeds of Crime Strategy.

262. In making these comments we are aware that there are currently no performance indicators relating to harm reduction. We also accept that deriving the kinds of qualitative indicator needed poses a significant challenge for the police service and COPFS. A possible solution may be found in the ongoing work of the Serious Organised Crime Agency which is looking at ways of measuring and quantifying the impact of harm reduction interventions. We would encourage criminal justice partners in Scotland to liaise with SOCA with a view to considering the introduction of similar performance indicators in due course.

263. The difficulty for those working with POCA in Scotland is that the systems for recording performance from the start of the process through to whatever monies are seized being paid into the Scottish Consolidated fund are poor. This is acknowledged by all with whom we consulted.

264. The current system shared among partners records data under the following headings:

• the value of assets identified and restrained;
• the value of assets confiscated at both force level and nationally;
• the value of assets recovered by civil means; and
• the value of cash forfeitures.

265. There are a number of significant gaps in the current system. For example, whilst the value of confiscation orders is recorded, the number of orders and the range of crimes to which they relate is not. Therefore no comparative analysis has been carried out between patterns of offending in particular crimes and the confiscation opportunities identified. At the end of the process, confiscation orders are treated as a monetary penalty in the same way as a fine. Only since 2007 have confiscation orders been recorded separately. Even now, although the Scottish Court Service reports annually to the Scottish Government a figure which represents confiscation orders paid that year, there is no recording system linking the paid amounts with individual orders.

266. As we noted earlier the Scottish Asset Recovery Group is currently working to develop a more comprehensive performance management framework than the current unsatisfactory system. The subgroup of SARG has brought forward proposals to the Group that it should make representation to change current arrangements in order to make provision for Scottish figures to be included in the UKJARD database. Much work is required to assess the feasibility of this proposal and identify what other implications this may have, not least cost to the Scottish partner agencies. Such work is vital to supporting and guiding activity in this field. This again underpins our recommendation that the SOCT take a co-ordinating role in relation to proceeds of crime.

267. We were interested to note the findings of a recent Home Office survey ²⁶ (into the causes of attrition in confiscating the proceeds of crime) which highlighted the perceived lack of overview across the whole process and the lack of strategic planning. This survey relates to the position in England, Wales and Northern Ireland but is informative from a Scottish context.

268. In the absence of qualitative data on harm reduction in Scotland, we turn our attention to the performance data that is available. In doing so we accept that this is at best a measure of activity and output rather than of outcomes achieved. We have reproduced below the data provided to us under the current recording arrangements. The following commentary is based on our analysis of these data.

Assets identified and restrained

269. We examined the value of assets identified for restraint by the eight Scottish forces and the SCDEA, reported to COPFS annually since 2003 and ultimately restrained. We have already commented on the widespread concern amongst police officers regarding the difference between the restraint figures and the value of assets ultimately confiscated. However, as we have suggested previously, we believe that a lack of effective communication and feedback between COPFS and the police forces on the 'benefit of criminality' and 'available amount' figures has led to an unrealistic expectation about potential confiscation outcomes in certain quarters of policing. Similar concerns were expressed by law enforcement officers in the Home Office survey referred to above. The conclusions of that survey mirror our own conclusions about this topic.

270. As discussed earlier in this report ²⁷ the initial identification of assets figure is often eventually amended in light of a number of factors such as legitimate third party interests, legitimate sources of income, depreciation, accuracy of property valuations, pensions and business interests. In addition it should be borne in mind that assets restrained in one year may not lead to confiscation in that same year, so the respective figures for the same year should not be compared. We accept that the difference between these two sets of values in those cases brought to our attention is entirely explicable. We are also confident that renewed efforts to improve communication and feedback will remove unhelpful misunderstandings.

Confiscation orders

271. The two tables below show the value of confiscation orders achieved since 2003 at force level and also nationally, as collated and published by COPFS in June 2009. As can be seen, the total value of confiscation orders granted in Scotland since the inception of the Act is £17,091,601. When the force figures are examined, a predictable difference in the level of confiscation orders achieved between the bigger and smaller forces can be observed.

272. The difficulty with assessing performance simply by reference to the sums ordered to be confiscated is that this does not necessarily reflect the number of cases investigated and processed by each financial investigation unit nor the work involved in each one. One high value confiscation order can make for impressive monetary results and conversely comparing this with lower value confiscation orders can devalue what are nevertheless good outcomes for individual cases.

Confiscation orders in Scotland, shown on a force by force basis

Focus on drugs

273. In the table below we have broken down the value of confiscation order data further in order to illustrate the overwhelming focus on drug offences since the inception of the Act.

274. This focus on drug crime is further illustrated in the chart below, which illustrates all drug and non drug cases resulting in confiscation orders. We accept that it is vitally important that the powers contained within the Act are used in tackling the supply of controlled drugs. Such crimes undoubtedly cause a great deal of harm to individuals, families and whole communities. That said, we believe that these powers should also be used against criminal profiting from the wide variety of offending which the Act allows. Only then will the Act fulfil its potential to disrupt criminality at all levels across Scotland. We asked Crown Office to provide a breakdown of the non drugs cases which resulted in confiscation orders and the table below shows the information in a pie chart.

ANALYSIS OF CRIMINAL CONVICTIONS IN WHICH CONFISCATION ORDERS HAVE BEEN MADE - 2003 TO 2009

275. Analysis of this information shows the overwhelming emphasis on drugs offending attracting the confiscation provisions of the Act. Our experience of the criminal justice system leads us to believe that there is further scope to explore crimes of dishonesty such as robbery, theft, fraud and embezzlement. In addition, because of the variation in contact between local authority trading standards departments and FIUs around the country, we have concluded that there is greater scope for POCA to be applied to copyright and trademarks offences.

Civil Recovery

276. The value of assets recovered through civil means and the value of cash forfeited on a national level are shown on a year-by-year basis in the table below. Not surprisingly given both the current processes for referring cases to the CRU and the relative size of the CRU compared to NCD, the value of assets recovered and cash forfeited through civil means (£10,284,489) is significantly lower than the value of confiscation orders granted (£17,091,601). As we have stated, we believe that there is an opportunity to increase the contribution made by civil recovery, and we expect to see larger amounts of assets being recovered by civil means in Scotland in the future.

277. Looking at the value of cash seizures it is clear that the reduction of the threshold for seizure from £10,000 to £5,000 and then to £1,000 in 2006 has contributed to greater year-on-year returns. In addition during our interviews and focus groups, cash seizure was the feature of the Act with which most practitioners in both the police and Procurator Fiscal Service were most familiar. We believe that this mainstreaming has contributed to the increase in referrals, as the following table shows.

NUMBER OF CASH SEIZURE CASES

278. Looking at performance at a force level, even allowing for the relative size of Strathclyde Police compared with the other forces it is apparent that Strathclyde has performed particularly well. We believe that the presence of a financial investigator in each of the force's division has been a significant contributory factor. We also acknowledge the value of cash forfeitures consistently reported by Dumfries and Galloway Constabulary, Scotland's smallest force.

CASH SEIZURES

Analysis of results

279. Given the relatively small number of police officers, members of police staff and prosecutors working in financial investigation in Scotland we acknowledge the considerable effort and hard work that has gone into achieving the results shown above. Equally we believe that much more could be achieved with the increased resources by implementing the recommendations we have made in this report.

280. As our inspection was nearing its end the Cabinet Secretary for Justice announced additional funding of £4 million for fund 80 new posts in SCDEA, some of which will be financial investigators. We welcome this move to tackle serious organised crime. However, as have argued there is a need to increase financial investigation capacity not just in SCDEA but throughout Scotland. We also believe that it is important that the results of POCA activity are communicated as effectively as possible in order to convey the message to the public that crime does not pay. In this regard we would encourage those involved in the creation of the Scottish Proceeds of Crime Strategy to give due consideration to this matter when developing the strategy.

Comparison of performance with England and Wales

281. We have already acknowledged our view that the values of confiscation orders and civil recoveries represents a significant achievement, particularly given the small number of police officers and prosecutors working in this field in Scotland. Given that POCA applies both north and south of the border, it was inevitable that comparisons with results achieved in England, Wales and Northern Ireland would be made. For example, in 2003/04 £54.5 million was secured ²⁸ in England, Wales and Northern Ireland under POCA (compared to £2.2 million in Scotland). This rose to £135.7 million in 2008 (compared to £6.3 million in Scotland). Over the years from 2003 to 2008 a total of £496.86 million ²⁹ was secured in England under POCA compared with a sum in the region of £27.3 million in Scotland).

282. However, it must be stressed that direct comparisons are not straightforward as there are a number of factors that must be taken into account. These include differences in population, demography, crime trends and legal processes. Furthermore, we are also aware of the different approach to calculating the criminal benefit figure for confiscation in England and Wales. Such an approach can lead to a significantly higher figure being recorded but not necessarily recovered. The causes of this attrition are more fully examined in the RDS survey.(op cit)

283. In the main, though, we reiterate our conclusion that in general terms financial investigation has been resourced to a much greater extent south of the border than it has in Scotland. The incentivisation scheme operating in England and Wales has also undoubtedly raised the profile of financial investigation there. As a result policing and prosecution arrangements for POCA in England, Wales and Northern Ireland are much more mainstreamed already compared with the specialised and peripheral position they occupy in Scotland. Therefore despite some misgivings about making direct comparisons, we suggest that the relative figures indicate that there is significant room for improvement in Scotland.

284. Notwithstanding the above, we stress again our belief that financial returns achieved must not be viewed as the ultimate indicator of success or failure of financial investigation. On the contrary, the primary objective of financial investigation must remain to disrupt criminality at all levels. Consequently, efforts must be made to develop more appropriate indicators for assessing this aspect of performance.

Cash-back for Communities

285. The Cash-back for Communities project was established in January 2008. Since then it has provided funding for a range of youth projects such as skate parks and youth cafes, as well as for sports such as rugby, football, and basket-ball. The Arts too have received funding for 'creative identities' workshops for children and young carers. In all £13 million has been committed to such activities.

286. We have already outlined our belief that this scheme represents a virtuous circle in which the proceeds of crime are returned to communities. Furthermore, we have also noted a number of positive media reports during this inspection which have outlined the positive aspects of this approach. Consequently we believe that with the exception of a finite stream of reinvestment to fund an increase in resource levels in partner agencies, thereby increasing the effectiveness of the overall process, the recovered proceeds of crime should continue to be returned to communities through this scheme in the years ahead.

Conclusions

287. In this section we have discussed data relating to POCA activity. We would reiterate the caveat that these data are incomplete. Furthermore, measures of the monetary value of recovered assets alone are in particular an inadequate measure of success in relation to POCA. This further illustrates the need for adequate measures to articulate harm reduction the current absence of which represents a significant barrier to improving effectiveness.

288. Despite the shortcomings of the measures available we conclude that the case for investing in additional resources to support mainstreaming is still strong. As we have asserted throughout this report we believe that additional capability and capacity in law enforcement and prosecution services will result in criminality being disrupted to a much greater degree than is currently the case. Furthermore we believe that the Serious Organised Crime Taskforce assisted by the Scottish Proceeds of Crime Strategy and the respective ACPOS and COPFS- POCA champions will be well placed to ensure that any additional funding in this area is both proportionate and necessary.