Why do you need a criminal defence forensic accountant? The nature of the UK’s criminal asset confiscation system is harsh. It should make the costly process of predicate criminal litigation less attractive. However, confiscation is not intended to be punishment, just denying criminals the proceeds of crime they have obtained.
Criminals are denied their assets in a number of ways:
- Restraint orders
- Seizures and freezing orders
- Asset recovery through Criminal Confiscation
- Civil Forfeitures under the Proceed of Crime Act (POCA 2002)
The criminal confiscation process requires a conviction for a qualifying (financial) crime. Then an order can be made, and so this avenue can only follow a prosecution. According to the 2003 GOV.UK Asset Recovery Statistical Bulletin, £179 million was recovered through criminal confiscation during 2022/23. A similar amount was recovered through civil recoveries and forfeiture orders bringing the total for all recoveries to £339 million.
HOW MUCH FRAUD?
Nobody knows the true extent of dirty money flowing around the UK. Estimates of fraud alone measure the figure in £100 billions! Add to this drug revenue, extortion, slavery, duty evasion and UK assets owned by corrupt foreign investors. This ensures the value of UK crime dwarfs the recovered amount many hundred-fold. Only a fraction of a percent of criminal activity is being recovered each year.
The forensic accounting examination of confiscation proceedings is an important area of work for Mark Jenner & Co Limited. We regularly respond to S16 Statements of Information and Forfeiture Applications on behalf of defendants. We also assist the CPS with the preparation of S16 Statements of Information. The aim of our work is to ensure that all legitimate explanations for sources of wealth have been properly considered. We challenge any assumptions made by the Crown to ensure they are appropriate.
Defence Of Criminal Confiscation Proceedings
Following conviction, there is often a sum that represents the Particular Criminal Benefit. This might be the amount stolen. It is considered to be the benefit received – a sum of money obtained.
However, the next step is to apply the assumptions according to the provisions contained within POCA 2002. The Crown’s financial investigator can look back to six years prior to the charging date. He or she can and “assume” that all monies received or assets acquired are from a criminal lifestyle. This Lifestyle Benefit is then added to the Particular Criminal Benefit obtained from the predicated crime. It is the task of the criminal defence forensic accountant to explain the nature of legitimate income assets. These can be excluded from the total criminal benefit figure.
A common problem seen within S16 Statements prepared on behalf of the Crown is the inclusion of monies forming the Particular Criminal Benefit within the Lifestyle Benefit – i.e. double counting. This can easily be identified and excluded during the forensic accounting exercise.
Defence of Forfeiture Applications
The Crown will sometimes seek to confiscate wealth from a person who has not been convicted of any crime. For example, we have been instructed in a number of cases when a client has attempted to transfer inherited funds from Iran to the UK. The US restrictions are generally acknowledged by UK banks – though it is not mandatory for them to do so. Hence, there is no practical way for an Iranian ex-patriate to transfer funds held in Iran to the UK through normal means. The only solution is to transport cash physically or use the services of an unregulated money transfer agent (i.e. Hawala).
If Iranian funds do manage to arrive in a UK bank, they often trigger a suspicious activity report and either the National Crime Agency or HMRC will try to seize the funds. Sometimes the Iranian transfer agent will enlist the services of organised money launderers to settled the UK end of the transaction – unbeknown to the unwitting individual waiting for his or her funds to arrive.
The job of the criminal defence forensic accountant is now two-fold:
- To explain the innocent use of the unregulated transfer system (often referred to as “Hawala“), and
- To provide an audit trail for the legitimate acquisition of the funds in Iran
If the respondent to the Crown’s application presents an expert forensic accounting response, it has every chance of succeeding (and has on a number of occasions in the past).
MONEY LAUNDERING – ITS A GLOBAL PROBLEM
We have seen the Iranian problem replicated in funds received into the UK from all over the globe, including from the African continent, Europe, the Middle and Far East etc. The Courts have dismissed the forfeiture orders on many occasions when it can be shown that the funds were dervied from legitimate sources, even in cases where the UK settlement process has been carried out by suspicious third parties. Just because a transfer process has been hijacked by criminals does not mean that the unwitting customers must lose out.