POCA – Asset recovery targets:

Don’t paint the target on your own back

In 2002 the Proceeds of Crime Act fundamentally changed criminal asset recovery law in the UK. For the first time, it became possible to recover the proceeds of crime at scale. The government tried very hard to drive the performance of criminal justice agencies and thereby reduce crime. This included national and agency targets, internal and external inspections, an Incentivisation Fund, a steering committee and a new Assets Recovery Agency. With hindsight, the UK’s first step, to set a national target, was, arguably, the biggest mistake made in the history of the war on dirty money.

This historical series examines what worked in the UK in order to try and help today’s global policy makers. The world’s financial standard–setter, the Financial Action Task Force, has a priority to improve asset recovery. This will affect country Evaluations and Anti-Money Laundering listings. It is particularly relevant to the 80% of countries in the bottom half of the grading table for Operational Effectiveness in confiscation (achieving only Moderate or Low).

For the UK, the level of government activity to implement POCA was unusual; normally institutions are simply left to get on with using new laws. But, for the government of the day, criminal asset recovery was a flagship policy, as signalled by the Prime Minister himself signing the Foreword for the launch document. This was the Prime Minister’s Cabinet Office Report, Recovering the proceeds of crime, June 2000. The political context is important. Crime motivated by money had risen every decade since the Second World War, by the mid-1990s it was seen as a mounting and intractable social crisis. A series of asset recovery laws since 1986 had failed to work. UK policy makers had realised that asset recovery was important, but also very difficult to do.

The first asset recovery target

The UK Home Office (the Ministry of the Interior) set a national asset recovery target to double the monetary value of assets recovered by the end of the second year of the new law’s operation. The target was thus £60 million (with an interim first-year target of £45 million).

At first sight this appears to be a ‘SMART’ (Specific, Measureable Achievable Relevant and Timely) target conforming to standard theories of performance management. It is clearly Specific and Measurable, only time would tell if it was Achievable, but was it Relevant and Timely? A bit of deeper analysis is needed, which I’ll come to later.

Targets, yes or no?

Firstly though, should we have targets at all? Targets are controversial. Some governments like them because it provides evidence of trying to do something and then succeeding. In the debates about POCA the Parliamentary opposition spoke against them:

Mr Dominic Grieve (Member of Parliament for Beaconsfield)

“Does he [the government spokesman] think that there should be a target at all? Is a £60 million target appropriate, or should not we simply ask the agency to do its very best to recover assets?  - Hansard, 30^th October 2001.

Simple numerical targets, in my experience, have a built-in problem of perception. If performance exceeds the target by too much the target is criticised as being too easy. If it is missed then large or small failures are often judged equally, a small miss is often perceived in the same way as a large miss. We even have an ancient English phrase for it: “A miss is as good as a mile”. Thus, in practice, the only acceptable performance is one that just exceeds the target. For this reason, simple numerical targets are a bad thing. They look simple, but in fact they demand precision and effort.  If a numerical target is considered necessary then the perception problem can be mitigated by aiming for a band of acceptable performance.

What makes a ‘good’ target

A good target has a SMART design meaning that it is Specific, Measureable Achievable Relevant and Timely. The target must have all of these attributes, a weakness in any one element undermines the whole target. Initial design is just the beginning; all targets should be actively monitored, intelligently interpreted and amended as necessary to ensure they are not ‘gamed’ in a way that nullifies the overall objective. All targets are gamed, by the way, and this is no bad thing, gaming can often allow target managers to learn from their own colleagues about how to be more operationally effective. The effort of trying to reach a target can be very instructive, normally far more useful than the fact of hitting or missing a target. Culture is therefore important, if the target is just a stick to beat people with, there can be no learning and no improvement, merely better ‘gaming’ or, just cheating and, ultimately, the temptation to lie about the base data at the point of collection.

Targets versus objectives

The UK set a monetary target for asset recovery, an obvious temptation because assets are valued as part of the process and everyone thinks that money is easy to understand. The policy objectives of POCA were set out in the PM’s Foreword, skilfully melding several policy strands together. It is a great piece of text so I have included the whole thing:

Introduction

BY THE PRIME MINISTER

This Government is determined to create a fair and just society in which crime does not pay. That is why I asked the [Cabinet Office] to carry out a study into how we could attack crime through its financial lifeblood. For too long, we paid insufficient attention to the financial aspects of crime. We must remember that many criminals are motivated by money and profit.

Leaving illegal assets in the hands of criminals’ damages society. First, these assets can be used to fund further criminal activity, leading to a cycle of crime that plagues communities. Second, arrest and conviction alone are not enough to clamp down on crime; they leave criminals free to return to their illegal enterprises, or even to continue their ‘businesses’ from prison. And third, it simply is not right in modern Britain that millions of law-abiding people work hard to earn a living, whilst a few live handsomely off the profits of crime. The undeserved trappings of success enjoyed by criminals are an affront to the hard-working majority. And it is, of course, often the underprivileged in society who suffer most from crime.

The criminal justice system is not designed to take away from criminals the gains they have made from crime. Typically, a court order is made to recover assets following under 1 per cent of convictions. And the amounts recovered fall far short of those sought by the courts. Some criminals have grown very wealthy. They use a variety of tactics including intimidation and complex money laundering ploys to protect themselves from the force of the law. Such criminals provide bad role models for young people. The police and Customs are working with professionalism and determination to make an impact on crime. But criminals are becoming more and more adept at concealing their illegal gains. It is vital that we enable law enforcement to be every bit as adept at uncovering them.

The policy objectives set out above are about creating a just and fair society, disabling crime, deterring criminals and demoting bad role models. You will note that ‘monetary value’ is not mentioned, nor is ‘economic’ or ‘financial’ crime.

Was the UK target SMART?

The monetary target was, objectively, not directly relevant to the policy objectives set out by the Prime Minister.  It also failed the tests of ‘Achievable’ and ‘Timely’. The targets were not ‘achievable’ by a specific party that could be held to account. Instead, the target was split between multiple agencies; responsibility was therefore collective and accountability for the target was avoidable. Everyone could blame everyone else in the case of failure; in the case of success they could celebrate together, but the target would be coincidental.

There was a second problem of ‘timeliness’. The average lifespan of a criminal case involving confiscation was known to be around four years, and the target only covered two years. Doubling the receipts in the first two years could not match the known criminal justice timetable. ‘Average’ case timetable does not mean normal, by the way, asset recovery cases of high value take longer, because delaying tactics are deployed by defendants and their lawyers.

I was on the national POCA implementation committee at the time. In a sense, the target was ‘gamed’ – it couldn’t be achieved by just ‘doing more’. As there was insufficient time to complete new casework there was a significant effort to enforce old cases. This was, of course, a good thing, although it highlighted previous systemic neglect. Secondly, a new and completely untested power proved to be much swifter and more valuable than expected -  the power to seize and confiscate cash in non-conviction-based litigation. This was highly operationally effective although it also showed up a systemic weakness. It was previously unknown that cash was frequently found by criminal investigators but left in situ.

Did the UK meet the target?

Yes, the UK agencies met the monetary targets and went on to deliver ten record-breaking years in the first decade of POCA. This success has been forgotten, eclipsed by a negative narrative that still afflicts the global war on dirty money. Policy-makers thinking of setting a monetary target need to take note and understand why.

Why monetary asset recovery targets can never work

The problem was that the target was not relevant. The policy objective was a ‘fair and just’ society, yet the target was monetary. Subsidiary objectives included, disabling further crime, deterrence and public confidence. The monetary target just did not connect with any aspect of these objectives.

Furthermore, having set a monetary target, commentators will inevitably (and justifiably) seek to find monetary comparisons. How does the amount recovered compare to losses from crime? How much was available to be confiscated compared to what was recovered? These comparisons will always be adverse and the starting point of the UK Prime Minister’s Foreword gives us two important clues as to why.

He stated that “a court order is made to recover assets following under 1 per cent of convictions”. In performance terms this sounds dire, but it does give a clue as to where a relevant performance target might be found.

Assets can only be recovered in a court, so any target should be focused on what gets to court. Are the courts doing their best? That is a relevant question. There will be valid reasons why a court order will not be made in a 100% of cases, but once these have been stripped out a valid performance measure could be created.

He further stated that “The criminal justice system is not designed to take away from criminals the gains they have made from crime.” This is rarely considered by policy-makers and normally proves to be a fatal stumbling block in most countries. My job for the last dozen years was to evaluate national justice systems and make recommendations about asset recovery, I can categorically state that the Prime Minister was correct.

After POCA the UK integrated asset recovery into its criminal justice system. It was also blessed with several advantages not available in other countries. I will discuss these in other articles but my point is that global policy makers need to understand that although asset recovery appears to be already part of most criminal justice systems, this is a ‘false positive’. All justice systems are able to recover assets which have a monetary value, provided that they are evidence in the case. This appears to be ‘asset recovery’ and even the FATF confuses ‘instrumentalities of crime’ and ‘proceeds of crime’, often lumping them together. The global effort to recover assets is about the proceeds of crime; this is rarely, if ever, evidence in a criminal court. This disconnect is central to the global failure to recover criminal assets.

Conclusion

The fight to make the UK a ‘fair and just’ society has, in my view, been disadvantaged by monetary measures of asset recovery. Public confidence will not be gained by asset recoveries, no matter how huge. It may, however, be gained by assets being recycled to crime-blighted communities or public deprivation of criminal role models. A monetary measure separates the money from the crime, this is a fatal separation. Crime and confiscation statistics need to be collected and analysed together to address the harm caused by crime.