POCA Cash seizure
The (unclaimed) cash prize, the catalyst for success
Today, somewhere in the world the police will search a drug-dealer’s home for illegal drugs. If they find what they are looking for, they will secure the drugs for evidence so they can present them to the court. If they find a large amount of cash they will leave it where it is. They won’t seize it, they won’t count it, or even mention it in their notes of the search. Globally, a huge amount of money is simply left in the hands of organised criminals every day.
This article is specifically aimed at readers outside the USA and British Isles, especially if they are police officers, prosecutors, policy-makers in criminal justice, international development donors and, of course, everyone in the Financial Action Task Force, and its FATF-style Regional Bodies. I will explain why cash is left in the hands of criminals, why it matters and what we can do about it.
When the FATF is considering global improvements to asset recovery, they should understand what happens when police find cash. Globally, 80% of countries so far evaluated by the FATF for ‘confiscation of criminal assets’ are “in the bottom half of the evaluation scale (that is, moderate or low effectiveness) indicating that ‘major’ or fundamental’ improvements need to be made to law and practice.”[1] In my view, not seizing the cash is a critical failure factor in the law and practice of asset recovery. To turn that sentence around, seizing cash in the UK was a critical success factor in the law and practice of asset recovery. This is because it was a catalyst for further action that led to more effective asset recovery. By not seizing cash, criminal justice systems around the world are losing far more than the value of the cash itself.
Most people are surprised when I mention that police find large amounts of cash and do not seize it, especially when I say that the officers think that the cash is probably the proceeds of crime. My experience of this is based on twenty years in UK law enforcement before and after the introduction of the Proceeds of Crime Act, 2002 and another fifteen years visiting Europe, Africa, the Caribbean and Asia asking prosecutors, police and customs officers what they do with criminal cash. I have concluded that it is established global practice to not seize criminal cash unless there is a specific legal power to do so.
The specific legal power to seize cash does exist, but there are large gaps across the world. The power is used by customs officers at most national frontiers and by police officers in the USA, UK, Ireland, Jamaica and certain other Anglophone countries. To make a seizure officers have to suspect either a breach of currency regulations (at the frontier) or that the cash is probably the proceeds of crime (or about to be used for crime). The standard of proof is the balance of probability.
Customs officers are empowered to seize and forfeit undeclared cash. In my experience, it is usual that after the cash seizure no arrests or further enquiries are made, the case begins and ends with the cash being forfeited. Some countries send notification of such administrative forfeitures to the national Financial Intelligence Unit. In my experience, they are filed by the FIU and no further action is taken. It is my hope that my advice over the years – to treat a cash seizure as a vital clue and to initiate further enquiries – has changed this position in a number of counties, where I have been engaged. The way most countries deal with cash declarations is a substantial missed opportunity in the war on dirty money and the FATF would do well to commission research into the topic.
In a handful of countries, the power to seize cash exists not only at the frontier but also inland. The best-known example is some US States, where it has been the subject of ongoing controversy for decades. Much of the controversy surrounds the accusation that law enforcement agencies may condone some criminality until it is worth their while to intervene. This is based on the recycling of forfeited assets, including cash, back to agencies. The power to seize cash inland was introduced in Ireland in 1997 and the United Kingdom in 2003 – by and large - without controversy. Additionally, the power exists in some Caribbean islands (Trinidad & Tobago, 2000; Jamaica, 2007; St Vincent & the Grenadines, 2013; The Caymans, 2020). The Caribbean success has been constrained by long court timescales, small jurisdictions (limiting the opportunity to practice using the power) and in my view, a lack of recycling. The clear utility of using the cash seizure power against a recognised lotto crime problem has been specifically relevant to the Jamaican Constabulary’s seizures.
My view is that the UK managed well the obvious risk that recycling assets might distort operational agency decisions. Conversely the lack of recycling in the Caribbean has perhaps reduced senior management engagement in the opportunity offered. The FATF would do well to commission research on how the risk and opportunity have been managed in different jurisdictions.
The power to seize and forfeit cash inland in the UK was introduced by the Proceeds of Crime Act, 2002. In the six years after POCA the asset recovery take in the UK doubled every 18 months. The income to the UK Treasury increased hugely, from £0.1 billion in the decade before POCA to over £1.2 billion in the decade after. The annual asset recovery total increased exponentially, every year was a record-breaking year. The number of people “POCAed”[2] went up from a few dozen per year to thousands. Tens of thousands if you include the whole decade.
Much of this increase can be traced back to the cash seizure power, so it is important to understand this power better. Policy-makers need to consider why cash seizure is so important, so this article seeks to explain why.
Firstly, the circumstances of the cash seizure are important. The cash seizure power in the UK was a simple extension of an existing power (in place since 1990) to seize cash at the frontier. The POCA extended this power so that a police officer could also seize cash inland. The power is the same but the circumstances in which it is used are fundamentally different. This is because a person approaching a frontier with a large amount of criminal cash has made active preparations to get across the frontier with the cash intact. They are equipped with a plan, this may include supporting documents, a credible story, a well-prepared hiding place. Conversely, when the cash power was used inland, it was in the course of a police plan, the execution of a warrant (or similar powers) based on previous intelligence, by trained and briefed officers against someone who was unprepared. The balance of power was fundamentally different and in particular the competent authorities were acting with knowledge or suspicion of a crime, to which the cash was probably related. The use of the word ‘probable’ is crucial.
The power to seize and forfeit cash in the UK, USA and Ireland is based on the balance of probabilities. The power to seize cash and forfeit cash at frontiers around the world is administrative, meaning that an official simply asserts that a regulation exists and the existence of the undeclared cash is in breach of the regulation.
In countries without a specific power to seize cash (including the UK prior to POCA) the power to seize cash was based on it being evidence in a criminal case, meaning that the prosecutor had to show that the cash was, beyond all reasonable doubt, the proceeds of a specific crime. In practice, this is an almost impossible task. As a result, police officers (like me) in the 1990s hardly ever seized cash. The few that did seize cash, failed to make the link at court and then, eventually, had to give it back. The absolute shame that this would have induced served to ensure that no-one with knowledge of that case would ever make that mistake again.
Then POCA was enabled in the UK and suddenly cash seizure become the ‘bread and butter’ of our new financial investigators and the basis of many of our biggest cases (it would be interesting to discover if any of the big value cases in the first ten years after POCA did not have a cash seizure involved). Cash forfeitures still – twenty years on - amount to around a quarter of asset recovery cases by value[3]. To give you an idea of scale, since 2003 the number of cash forfeitures annually was between three and five thousand and the average annual value was between £30 and £40 million in paper currency, in a supposedly cashless society. Since 2017 the power has been extended to suspect bank accounts, more than doubling the amount being deprived from criminality.
The FATF could usefully consider the scale of the missed opportunity by asking jurisdictions what proportion of their confiscation value is in paper currency. It could also research the evolution of the UK power to the seizure of ‘orphan’ bank accounts.
For years, cash in large amounts had been found in the course of criminal enquiries, and left where it was found. Cash was found in house searches, in cars that had been stopped, and bags and brief cases carried by people in the street. Until POCA came along it was routinely left in situ. To seize it the police officer had to consider what evidence existed to connect that cash to the crime in hand. In a criminal case, specific linking evidence is required – a confession, a fingerprint, DNA, eye witness recollection – but none of these tools were available. So the cash was just left where it was. Drug dealers, deprived of their drugs and paraphernalia by a police search, simply took the cash that they had been left with, by the departing officers, and bought some more drugs and paraphernalia. What I have described above is still true across the world today. It’s difficult to accept, when you examine the issue closely, but no-one is doing that. That indeed is why I am writing this ‘lesson from history’, and, stand by, but there is a major confession coming up.
As a serving detective inspector in the 1990s routinely tackling serious organised crime I never gave it a thought. Why would I? I had no power to do something, so I didn’t do it, I didn’t think about, I never thought of lobbying for a change in the law. I do not recall it being specifically lobbied for by the national all-agency working party that developed the Proceeds of Crime Bill (of which I became a member just before the Bill became an Act). The power was probably just added because it was thought to be a helpful legal tool to have, it was easy to extend an existing power in use at the frontier and, perhaps, the British wanted it because the Irish already had it (since 1997). It certainly was not a power that was yearned for by the police, just nice to have.
That’s not the confession by the way. Here is it comes. As Head of Intelligence at the Economic Crime Unit I was responsible for designing the POCA police training for the Met. The cash seizure power was very, very nearly missed off the POCA training altogether; at the last minute, the new power was spotted because it had no equivalent previous police power. Literally, it was an extra piece of paper, with no matching lesson plan in the old training course. I despatched an officer to go and see experts in Customs, find out what they did and bring their good practice to the police.
The cash seizure power provided by POCA changed everything. Seizure of a large amount of cash matters; in a way that other seizures do not. For the criminal, the loss is of working capital, the immediate loss of months of work, perhaps a lifetime of criminal effort. That is obvious. Less obvious is the effect on police and prosecutors. A large amount of cash requires management. Police managers need to take action to secure it, count it and litigate it. It demands attention and activity from managers because of the risk of losing it, or worse, giving it back. Somehow it is far worse to give money back to criminals than to fail to seize it in the first place. We know this because tens of millions of pounds must have been left with criminals pre-POCA and no one had the slightest concern about it. Indeed, it is hard to imagine that more cash is being found now just because the police have a power to seize it. The police in the UK did not go out looking for cash by the way; we know this because POCA has a power to go and search for cash but the power was almost never used.
The seizures all came as a side effect of normal police operations, these resulted in court cases centred around a large amount of seized cash. The effect on prosecutors was that the cash had to be litigated and the solution was to charge offenders with both the most relevant offence and money laundering. This gave the prosecutor two opportunities for success and for the court to hear evidence of wider criminality, more than the mere predicate offence. The result was hundreds of money laundering convictions, extra sentences and confiscation orders. This created a virtuous circle, whereby the cash seizure triggered wider financial investigation that identified further offences, other offenders and more assets to confiscate. This was found by Rick Brown (and others) in the seminal piece: The contribution of financial investigation to organised crime, published in 2012.
There is a particular piece of good practice that I want to mention. In London, the Met Police policy was to post financial investigators to ordinary police stations. This was because their task was to tackle local economic crimes: burglaries, robberies, car theft, drug dealing and so on. The proceeds of these offences were typically traded by drug dealers, so drug dealers who also traded in stolen goods were especially targeted by the police. The damaging effect of police cash seizures on profit margins may have encouraged dealers to avoid stolen goods and just stick to the relatively easy and profitable trade in drugs. This topic really deserves more research to see if large scale police cash seizure influences illegal trading of all kinds.
Initially, there were insufficient financial investigators to go around the whole city so a decision was made that part of the city would go without local coverage (but retain the coverage from HQ). After eighteen months we had enough financial investigators to increase the local coverage across the city. What we discovered was this. Once local financial investigators were available to take over and deal with cash seizures, the parts of the city which had not previously had any cash seizures (although the officers had the legal power to do so) started to make them. The London experience showed that the presence of local financial investigators available to attend the scene of a seizure and take over the litigation was a crucial success factor.
I want to make clear that I am not implying that policy makers outside of the USA, the British Isles and the Caribbean are any way inadequate. Indeed, my contention is that policy-makers everywhere are simply unaware of the significance of cash seizure. This is understandable; there is an absence of documentary evidence that cash is being left in situ by operational officers. This is a Catch 22, of course, there’s no cash seizure so there is no documentary evidence that it was not seized. I should also make clear that although 3,000 to 5,000 cash seizures a year sounds like a lot, the police in the UK deal with millions of incidents each year. The number of police dedicated investigators divided by the number of seizures works out at roughly one seizure per investigator every four years. Individual police investigators do not ignore cash all the time, just occasionally, but nationwide and globally, it adds up.
In order to see the wider policy picture, one has to be at the centre of delivering the policy. The number of people in that position at the time of the change created by POCA was just a few dozen. I just happened to be in the right place at the right time. Many years later, I happened to spend a lot of time abroad, in countries that were trying to implement new powers to do asset recovery and failing. They were making the same mistakes that we had made in the 1990s and had not yet worked out how to apply their legal and practical expertise to this new aspect of law enforcement.
In the UK and elsewhere there was a concern that the cash seizure/forfeiture power might be a breach of human or constitutional rights, might be misused by the police or lead to an increase in complaints. After 20 years in the UK and 25 years in Ireland we can be confident that such concerns are misplaced. The cash power is not dissimilar to other non-conviction based confiscations, so if countries have surpassed the constitutional hurdle (and many European countries have done so) then they can apply the same legal test to this power. In Ireland, I recall that a defence of a ‘cultural right’ to keep wealth in cash was raised as a defence to cash forfeiture, but this was dismissed by the court. The police still have to provide evidence to the court that their contention that the cash is the proceeds of crime or is about to be used for crime, it is not just a matter of opinion.
I was concerned that police might misuse the power through misunderstanding, and so I created a 24-hour national helpline which provided immediate legal and practical advice to resolve teething issues with the new power. I was also concerned that complaints against police would rise, so I actively monitored this. My concerns proved groundless. In the event, at the start, about 10% of cash seizures were reversed as the enquiries did not produce the evidence needed or the owner of the cash gave a good account or supporting documents. This was normally within a day or two. The vast majority of the remaining cases that went forward for forfeiture were uncontested, the owner of the cash simply offered no explanation. In my view, the willingness of people to give up £50,000 (the average value of seizures), rather than face the scrutiny of a court into their financial affairs is indicative of a correct use of the power.
My hope is that policy-makers will read and think about this article and raise it with the FATF, the global standard setter. My contention is that the vast majority of competent authorities worldwide are missing out on a game-changing policy option and that thousands of criminals are keeping tens of millions of dollars (in all currencies) for want of a slight change in the law.
The proposal is simple. Extend the existing power to seize cash at frontiers and give it to all law enforcement agencies in a country. Adapt the existing litigation process used by customs services to litigate the cash. Use the existing customs practices in cash handling.
Whilst the legal powers were easy to introduce, the operational implementation required a lot of direction. For example, the sheer scale of the cash seizures was difficult to cope with. The UK police was overwhelmed by the amount of cash that was being seized and forfeited. We had to buy cash counting machines, larger safes and buy extra security; most of all the police lawyers had to litigate the cases and this required money. It made obvious sense to recycle some of the cash to pay for the management change and this was allowed by the creation of an Asset Recovery Incentive Scheme to recycle the money. As the millions turned into tens of millions this helped fund hundreds of new financial investigators.
Is there a downside to this policy proposal? The recycling of criminal assets to agencies carries some risks of distorting operational decisions. The temptation to let some criminals carry on their business until it is ‘worth’ taking them down has to be actively managed. The temptation to follow the money rather than the harm caused may also exist, but I did not witness this at the time.
Apart from increasing Government receipts, is there an upside to this policy proposal? The seizure of criminal assets is very good for police and prosecutor morale. It probably reduces criminal morale and may even dissuade some criminals altogether. Crimes motivated by money did, in fact, fall substantially in the UK in the years after POCA. Was this because of POCA? That was the intention, certainly. We cannot be sure, however, in the absence of empirical research.
The Performance and Innovation Unit Report[4], which launched POCA, was considered such a centre-piece of UK government policy that the foreword was written by the Prime Minister, himself. The Proceeds of Crime Act was intended to fundamentally discourage crime from taking place. Perhaps it worked.
I would encourage the FATF and other policy makers to research the issues raised above to see if there is merit in extending the British experiment to other parts of the world.
Tristram Hicks, First published on LinkedIn, 13th June 2023.
[1] N.Gilmour, T. Hicks (2023) The war on dirty money (Bristol University Press)
[2] ‘POCAed’ is a short cut expression used in UK law enforcement to describe the many different powers created by the Act.
[3] Home Office (since 2015) Asset recovery statistical bulletin https://www.gov.uk/government/statistics/asset-recovery-statistical-bulletin-financial-years-ending-2017-to-2022/asset-recovery-statistical-bulletin-financial-years-ending-2017-to-2022
[4] Cabinet Office (2000) Recovering the proceeds of crime Performance and Innovation Unit