Proceeds of Crime

Why we need the Proceeds of Crime

"Let us not forget the harm that big money in organised crime, especially the drug trade, does to our society"

The sums involved in crime are huge. So called dirty money, assets derived from crime, probably represents around 2% of the United Kingdom's GDP, or £18 billion, up to half of which is the value of illegal drug transactions in the UK. Estimated losses through fraud range from £5 million a year upwards.

• Case Study 1
• Case Study 2
• Crime bosses go to enormous trouble to place themselves beyond the reach of the law
• Organised crime effects us all. The people whose homes are burgled, those who lose their savings to fraudsters and the victims of drug-addicted muggers
• Current legislation is inadequate. We need to remove criminals' assets if we are to dismantle and disrupt their organisations

Individual examples

Case Study 1

Mr A is a property dealer in the Manchester area who has distanced himself from his criminal activities. He has associates involved in the stealing and distribution of Class A drugs on his behalf, allowing him to remain "untouchable". Mr A has amassed large amounts of property for which he has no explanation. This property is used by drug dealers and prostitutes.

• He owns over 100 homes;
• He owns a trans-Atlantic yacht;
• He lives in a 10-bedroom mansion;
• Mr A lets his homes out to drug dealers on the proviso that they will sell drugs for him;
• Prostitutes also use Mr A's properties;
• He organises, from a distance, a network of Class A drug dealers, many of who have got recent convictions;
• He has legitimised his business by laundering money;
• 15 months ago Mr A had assets believed to be worth £5 million. This has now risen to an estimated £20 million. There is no recorded manner in which he could have generated this money.

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Case Study 2

• Mr B lives in a 28-bedroomed house in Southeast England.
• His property is in the name of an associate;
• To avoid the seizure of his assets he has signed them all over to his friends and family members whilst he maintains control of them;
• He has set up false parent and ghost companies;
• He has purchased property such as warehouses abroad in false names;
• His income generated, mostly through drugs sales in the UK, has been sent abroad either physically or by the use of offshore accounts.

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"Crime bosses go to enormous trouble to place themselves beyond the reach of the law."

• There are around 400 major crime bosses in the UK with an amassed criminal wealth of approximately £440 million. Around £220 million is in the hands of just 39 individuals.
• The Association of Chief Police Officers has identified 60-70 individuals in the Metropolitan, West Midlands, Merseyside and West Yorkshire police areas alone who have assets of over £100,000 that are strongly suspected of being derived from criminality.
• In 18 rural force areas there are over 300 major criminals above the £100,000 level. Many are involved in organised criminality in major urban or metropolitan centres, while the suspects themselves reside in expensive "stockbroker belt" areas.
• Currently forces estimate there are at least 370 local crime barons with assets that could be subject to recovery, but investigations are not being taken forward because of lack of powers, expertise and resources.

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"Organised crime effects us all. The people whose homes are burgled, those who lose their savings to fraudsters and the victims of drug-addicted muggers."

Crime barons are often indirectly responsible for volume crime. On the basis of research from National Criminal Intelligence Service and the National Crime Squad, £1 million confiscated from a drug dealer would prevent him from buying 50 kilos of heroin at wholesale prices. Just 1 kilo of heroin distributed at street level could result in:

• £220,000 worth of stolen property
• 220 victims of burglary
• 220 recorded crimes at a cost of £100 for each initial police response
• £650 - £10,000 cost to prosecute each burglar
• 1,078 addict crimes per month
• £75,000 for treatment for 1 HIV positive addict

The UK law enforcement authorities removed some 3,400 kilos of heroin from the supply chain in 2001/2002. Confiscation orders and drug cash seizures in 2000/2001 resulted in £23.5 million being removed from circulation, potentially preventing the importation of up to a further 1,175 kilos of heroin.

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"Current legislation is inadequate. We need to remove criminals' assets if we are to dismantle and disrupt their organisations."

• The £23.5 million recovered through existing confiscation and forfeiture powers in 2000/2001 represents only a small proportion of criminal assets.
• In the last 5 years confiscation orders have been raised in an average of only 20% of drugs cases and a smaller proportion of other crime cases.
• The collection rate of confiscation orders is running at an average of 40% or less of the amounts ordered by the courts to be seized.
• Sums of drugs cash recovered at borders are very small, at around £4.6 million in 2001/2002, whereas the sum estimated to have left the country to pay for illegal drugs supply in 1994 was £970 million.
• Police currently use financial investigators in only a small proportion of investigations. There is scope to increase this level dramatically if sufficient trained investigators were available. This is why we have made funds available to police forces in England and Wales to enable them to take on an additional 88 financial investigators.
• The majority of proceeds from criminal organisations go untaxed. Organisations involved in drugs, prostitution, selling of stolen goods and gambling are estimated to have generated between £6.5 billion and £11.1 billion in 1996.

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