Partner David Corker panelled a session exploring the 2017 Criminal Finances Act (CFA), arguably one of the most significant financial criminal laws implemented since the United Kingdom’s Bribery Act. Under discussion was the new legislative landscape introduced by the CFA, with debate focused on unexplained wealth orders, disclosure and civil recovery.
Comparing UWOs to civil recovery orders, which were “ultimately a failure”, Corker added that UWOs were “an example of a symbolic gesture rather than the prelude to an orgy of litigation”.
Asserting that “so much of criminal law is concerned with symbolism rather than actual enforcement”, Corker was critical of UWOs, noting the historical parallels above, and outlined the risks associated with High Court litigation.
Corker was critical of what he called “a radical new approach that takes money off people in a much easier to use and cheap way”, as typified by the CFA, saying its importance ultimately lay in symbolism, but also in changing behaviour without resort to litigation.
Drawing on the Proceeds of Crime Act as a historical analogy, he noted there had not been a single prosecution on the negligence-based offence of failure to report money laundering. For Corker, a significant provision of the CFA was Section 16 on the ‘forfeiture of money held in bank and building society accounts’, which he said was the most important section of the Act. Albeit the undergrowth of it is “tangled and complex”.
Corker explained: “This section enables the freezing of any credit balance in any UK bank account,” and gave the legal background to the use of freezing orders such as this, and the advantages that flowed from the new section.
Simply through recourse to the Magistrates Court, an application to the relevant justices could be made by written application, disclosing reasonable grounds to suspect that income in a given bank account is somehow the proceeds of crime, seeking an Asset Freezing Order for a year, one that could be applied for a further year, giving prosecutors and the police a two-year moratorium period, obtained ex parte.
Corker noted: “Just think how attractive and easy to use this will be for the police.” The comparative ease with which suspicious activity reports could be monetised as a result, through their use as supporting evidence.
That meant, said Corker that “the potential for the state to raise money has just been absolutely tripled”, noting that the civil nature of the order, on the balance of probabilities, made recovery of the asset, via an Asset Forfeiture Order, much easier.
When looking at defending proceedings under s16, he explained: “A credit balance in a bank account is a bundle of rights,” it is far harder to forfeit than, say, cash, because even an account in credit can be tied directly to other accounts with overdraft facilities; that opened the possibility of High Court proceedings, and the chance for substantive challenges.
Read the full article in Commercial Dispute Resolution (CDR) here.