UK's Proceeds Of Crime Bill Will Create National Confiscation Agency

Mandy Robinson, Tax-news.com, London

06 March 2001

Launching a new Proceeds of Crime Bill on Monday, Jack Straw, UK home secretary (justice minister), said that major criminals often went unpunished because it was hard to bring successful prosecutions.

The legislation, which toughens existing money laundering legislation, includes plans for the creation of a new agency to seize criminal assets. The National Confiscation Agency will have powers to investigate and seize wealth accumulated through criminal activity.

Financial investigators, such as police and customs officers, will have new powers to require banks and other financial institutions to provide details of accounts held by a person under investigation. Banks could also be required to provide transaction information on specified accounts.

The new bill is partly in response to the revelation that London banks were involved in providing a conduit for nearly a quarter of the $4bn that General Sani Abacha stole from Nigeria. The legislation will simplify money laundering offences and close loopholes in the existing law. At present it is already an offence for someone to fail to report evidence of laundering of drug money or terrorist funds, but the new rules will require a prosecution to prove only that someone had reasonable grounds for suspecting a person was engaged in money laundering, and would impose a penalty of up to five years in prison and/or an unlimited fine.

The new offence will apply only to people working in the regulated financial sector, in banks, building societies (mutual home loan groups), accountants and law firms.

Many British citizens thought that the country already had a National Confiscation Agency, going by the name of the Inland Revenue, but it turns out that the ultra-respectable Inland Revenue has been an unwitting partner in crime with organised crime bosses who launder millions of pounds every year.

According to the Sunday Telegraph, the Inland Revenue has been taken for a ride by criminals who create or take over legitimate companies and forecast excessive profits for the coming tax year. The companies then pay large tax bills known as 'provisional income tax' based on their profits, which are in fact 'dirty' money made from their criminal activities.

After this the companies' accountants inform the Inland Revenue that their profits had been lower than expected and the department then refunds the overpaid tax by cheque including the accrued interest. And, of course, an Inland Revenue cheque can be cashed anywhere in the world with no questions asked.

In a statement an Inland Revenue spokesman refused to comment on how much money the scams were costing taxpayers but confirmed that steps were being introduced to tackle the problem: 'The Inland Revenue has seconded three officers from its special compliance office to the economic crime unit of the National Criminal Intelligence service. Their role is to consider intelligence received by the NCIS under the money-laundering regulations and identify instances of tax evasion for the Revenue to pursue.' Currently there are at least 39 suspects with assets of over £220 million under investigation.

Officers from the Inland Revenue and the NCIS, along with Customs personnel will form part of the new Confiscation Agency, to confiscate the assets of crime bosses regardless of whether or not they have been convicted. The unit will have legal powers to examine the records of companies that have been set up to disguise money-laundering rackets.

Last year the NCIS uncovered around 15,000 suspicious financial transactions in the UK and 938 organised crime gangs whose collective profit from drug trafficking alone was £8.5 billion. Director General of NCIS, John Abbott, said: 'We already play a vital role in the fight against these criminal "Mr Bigs". We, as a multi-agency organisation, fully support the idea of law enforcement agencies pooling their collective expertise to hit criminals where it hurts - in the pocket.'

But not all welcome the creation of the new agency. John Wadham, director of civil rights group, Liberty, says: 'These proposals undermine the presumption of innocence. They will create a system in which accusations by the police will be enough to force people to disclose all their financial affairs.'

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