City fraudbusters will recruit solicitor firms to seize criminal assets under plans that seek to exploit the lower standard of proof required for civil recovery.
Solicitors will be tasked with recouping the assets using civil litigation - potentially raising the prospect of a panel of firms pursuing cases on a no win, no fee basis or through third-party funders. However, concerns are already being expressed about ‘arbitrarily’ taking money from suspects and potential civil liberties implications.
The two-year pilot scheme has been launched by the City of London Police, with the aim of recovering ill-gotten gains from fraud and cybercrime more quickly. It will be deployed in tandem with asset recovery under the Proceeds of Crime Act (POCA), adding another weapon to the armoury of law enforcers.
’In certain complex cases, it is not always possible for law enforcement to bring a case to a level where it would be possible to restrain assets under POCA,’ City of London Police said. ’With a lower standard of proof required for the civil recovery of assets, officers hope that it will make the process much faster and will mean assets are more likely to be seized before criminals have a chance to move or dissipate them.’
Detective Superintendent Maria Woodall, operational lead for the pilot said: ’This innovative new scheme will hopefully allow us to be more flexible and creative in how we identify and seize criminal assets in certain cases to get those funds back to the victims of crime and out of the hands of criminals.’
The pilot working group includes representatives from the National Crime Agency and the Metropolitan Police, as well as representatives from solicitor and private investigation firms.
The first year of the project will be part-funded through the Home Office’s Police Innovation Fund.
In July the Commons Home Affairs Select Committee produced a highly critical report on proceeds of crime, saying the regime is not fit for purpose and calling for radical reform. Its recommendations included more collaboration between public bodies involved in POCA and the private sector, and the creation of a market for private enforcement.
One firm that submitted evidence to the committee calling for such a market was Pinsent Masons. Alan Sheeley, head of civil fraud and asset recovery at the firm, described the pilot as a ‘vital step forward’. He told the Gazette: ’Police need to be more honest with victims and admit their main driver is securing convictions and not recovery of funds. The likelihood they will receive their money back is very low and they should be directed to alternative routes.’
Sheeley envisages a panel of perhaps five to 10 specialist firms who may be in a position to pursue cases on a no win, no fee basis or through third-party funding.
He added: ’This is a really exciting and long overdue step for law enforcement agencies in the UK. However, we don’t want it to impact the budgets of police forces and nor do we want negative headlines about law firms profiteering, so it is vital that the billing by law firms is kept under control.
’Law firms, rather than the police, are best placed to pursue the assets of fraudsters through the civil courts. The skills and experience of undertaking civil recoveries and injunctions lie in the law firms and not in police forces. Law firms are also used to undertaking these cases at a moment’s notice and seizing the assets of fraudsters before they are spirited around the world through a network of international bank accounts.’
William Christopher, a partner at Kingsley Napley specialising in civil fraud litigation and asset recovery, also welcomed the initiative.
He said: 'There has always been an overlap between criminal and civil law in relation to fraud. Often the problem for victims of what are now endemic levels of fraud, is that individually the losses are too small to justify the expense of locating, freezing and recovering assets.
'This initiative will, with the victims’ consent, combine intelligence from the enormous amount of data that [national fraud and cybercrime reporting centre] Action Fraud has accumulated on frauds being perpetrated, the investigation powers of the police to locate assets, and the highly effective remedies in the civil courts to freeze and recover assets lost through fraud.
'If there are a large number of victims identified, the collective losses and the fact that assets will already have been identified by the police, will justify the expense of bringing proceedings, and mean the victims do receive a large proportion of their assets back, which would not otherwise be the case, even if the police did bring a prosecution.’
He added: 'There are a number of misconceptions about this initiative. First, there appears to be a concern that this will be the state arbitrarily taking money from suspected fraudsters. In fact it will be lawyers acting for groups of victims to recover the victims’ losses.
'Second, there is concern about civil liberties. This misses the point that in order to succeed in a civil case, liability and loss will have to be proved at a trial in front of a civil judge, even though this is on the balance of probabilities rather than beyond reasonable doubt. Third there is a concern about data protection.
'This is also misconceived in that the victims’ data will have been passed on by consent and the exceptions to the Data Protection Act to investigate crime will apply in relation to the suspected fraudster’s data.’