Strategic framework for tackling criminal finances

Executive summary

Background

The criminal finance strategic framework seeks to reinforce the recovery of proceeds of crime as a central tenet of HMRC’s enforcement work and, in accordance with the Government’s drive to improve performance in the field of asset recovery, to make the recovery of criminal finances a priority for HMRC.

This strategy acts as a key lever to promote criminal finance and asset recovery action within other Departmental strategies, within which we expect to see increased prominence given to the use of confiscation and cash forfeiture activity and other responses available under the Proceeds of Crime Act (POCA) and other legislation. The publication of this framework document provides a context for operational activity and is a major part of our efforts to improve our performance in deterring criminality and the consequent harm caused. The framework takes account of wider Government objectives and priorities, including the review of asset recovery by the Prime Minister’s Delivery Unit which requires all agencies to raise their game in this area of work. Tackling criminal finances is clearly identified as a priority work area for Enforcement and Compliance areas of HMRC.

The strategy has been drafted in consultation with the Home Office and the Treasury. The Prime Minister’s Delivery Unit’s review of asset recovery found that asset recovery is only making a small dent in the criminal economy and concludes that more needs to be done by all law enforcement agencies to increase the recovery of criminal assets. The criminal finance strategic framework aims to make financial investigation an important aspect of every criminal case and this will assist the Government in achieving tangible results.

HMRC’s strategic framework will ensure that the use of the new powers provided by SOCAP2005 are maximised as emphasised by the Home Secretary, to ensure that criminals are denied the financial gain that motivates criminal activity. HMRC is committed to utilising POCA powers on confiscation, money laundering, cash seizure and investigative techniques wherever appropriate and to ensuring that the principle of financial investigation alongside the investigation of predicate offences applies across all regimes. This framework will ensure this is achieved.

The Framework

In line with the wider Government agenda and other law enforcement agencies, recovering the proceeds of crime is a priority for HMRC’s enforcement and compliance areas. While the framework outlines ways to improve our work in asset recovery in line with other agencies such as ARA, SOCA, Treasury and the Home Office, it does not seek to prescribe how operational business areas should operate. However, it provides a high level framework within which operational areas can design plans and set targets in order to deliver tangible results in line with the objectives of the department.

The objectives of this framework are set out below.

Maximising seizures of cash and other negotiable instruments which result in forfeiture by:

  1. Developing intelligence assessments of cash movements, improving communication and intelligence flows and fully exploiting financial opportunities through the establishment of a National Financial Intelligence Branch.
  2. Quality interceptions at the frontier and inland by a workforce equipped with appropriate skills and equipment including detector dogs.
  3. Maximising retention of seized cash by ensuring appropriate professional standards are maintained.
  4. Debriefing and evaluating cases.
  5. Focusing on innovation and sharing of best practise and management information to maximise opportunities for detection and seizure.
  6. Developing a performance framework which clearly expresses the effectiveness of asset recovery and the contribution to overall delivery of the individual work areas.

Maximising the value of criminal proceeds recovered through confiscation by:

  1. Ensuring that financial investigation with a view to confiscation is a feature of all criminal investigations.
  2. Seeking restraint orders at the earliest appropriate stage during investigation.

Using tax laws to tax criminal profits, and civil proceedings to recover criminal assets by:

  1. The HMRC Criminal Taxes Unit working in partnership with other agencies to identify pursue or refer cases which offer tax intervention opportunities.
  2. Referring cases to the Assets Recovery Agency for civil actions.
  3. Recycling funds from the Asset Recovery Incentivisation Scheme (ARIS) into new and innovative measures to enhance our attack on criminal activity and related profits.

Identifying opportunities to further undermine criminal financial gains by pursuing money-laundering offences in addition (or as an alternative) to other offences by:

  1. Maximising intelligence flows through our financial intelligence officers located within the Serious Organised Crime Agency.
  2. Further developing close relationships with key players in order to drive investigation efforts against targeted money launderers.
  3. Taking criminal action against money laundering offences, especially in cases of serious fraud and for those in positions of responsibility.

The Strategic Framework also includes a chapter outlining HMRC’s approach to gaining compliance of Money Service Businesses.

Tackling Criminal Finance work will assist the Department in meeting its public service agreement targets particularly PSA objectives 1 and 3 which require HMRC to improve the extent to which individuals and businesses pay the amount of tax due and receive the credits and payments to which they are entitled as well as strengthening frontier protection against threats to the security, social and economic integrity and environment of the United Kingdom.

The Strategic Framework will facilitate the reduction of the tax gap under PSA objective 1 by mainstreaming and prioritising the recovery of the proceeds of crime. It will also contribute to PSA objective 3 by restricting the extent to which criminal finance is able to enter the UK economy and by restricting the amount of criminal money leaving the UK.

In summary HMRC is committed to supporting and furthering the wider Government agenda of stripping the financial incentive from crime so as to reduce the harm caused by such activity. The criminal finance strategic framework will drive other departmental strategies and provide a structure within which operational plans may be constructed in order to deliver HMRC’s objectives.