Does crime pay in the European Union?

Europol's first analysis of financial & economic crime - 'The other side of the coin'

The “Other side of the coin” is an important document. It is the first ever Europol analysis devoted to financial and economic crime and asset recovery. It offers three main themes. The first is a comprehensive analysis of the current economic crime threats, it is so comprehensive that I was left wondering what any future Europol Serious Organised Crime Threat Analysis (SOCTA) would say that has not been said here. Secondly there are numerous examples of law enforcement action being taken against the identified threats and finally there is a section devoted to asset recovery efforts.

My fear is that the headline statistic offered by Europol, that just 2% of criminal proceeds will be seized in any given year, will define the overall topic and many people would conclude that we should not bother with asset recovery at all. I don’t dispute the statistic itself by the way. It is confirmed and oft-repeated by academics like Ron Pol and the UK National Crime Agency.

It is probably true that only a tiny proportion of the potential take of criminal assets is seized each year. I say probably because the Europol estimate has a huge margin for error about the amount of criminal money being made – somewhere between €92 billion and €188 billion. Furthermore, our agency statistics on asset recovery are often not in the public domain. We could and should know far more about what our agencies are doing for us.

One problem with the headline statistic is that the value of assets seized should not be compared with the value of criminal income, because something happens between generating the proceeds of crime and those proceeds being seized by the authorities. That something is that people get caught by Europol and its agencies. The agencies can only seize from people they catch and it would be ridiculous to think they can catch everyone every year, which is what the statistic assumes.

A second problem is that the income generated by criminal businesses is turnover whereas Europol’s asset seizure is the – all-important -  bottom line, the residual profit available for seizure. The headline statistic is not comparing like with like. Furthermore, asset recovery cases do not happen to every criminal every year, asset recovery normally represents several years of residual profit, the 2% statistic is entirely misleading. Asset recovery is often disastrous for criminals, it can deprive them of years of criminal effort. They may lose everything they have worked for.

Europol and its agencies have the information about the criminals they have caught and the criminal bottom line seized. I think that they should tell us what they know. Here’s how:

The most serious economic criminals appear before our senior courts (the Crown Court as opposed to the Magistrates Court, to put it in English terminology). There is a finite number each year and every country has the data. Asset recovery data is also known by Member States. In any particular case, it should be possible to estimate how many years residual profit is represented by the asset recovery order. If we put these numbers together we would be able to know the RISK faced by criminals in Member States from Europol and its agencies. A risk based statistic would allow us to understand if crime pays. This seems to be much more valuable than a depressing and misleading estimate of seizing 2% of criminal turnover.

Moreover, asset recovery comes in many different forms. If we knew more about asset recovery and criminals then we could focus on which of the many forms of asset recovery work best. Is the best route to reducing crime through newly defined offences like ‘illicit enrichment’ or traditional routes like cash forfeiture or enhanced confiscation?

With better statistics, based on people caught, we could understand if our agencies financially investigate people when they should. We could understand if seizures from people are converted into final confiscations. We could identify the scale of any weaknesses in the system and we could fix them.

Now I do not know the percentage risk of losing their assets faced by criminals in any particular EU member state, because I don’t have the statistics available to every government in the EU, but I do know that the risk factor is a lot higher than 2%. So, come on guys and gals, I know that you are doing a lot of good work, you talk about it in “Other side of the coin”. Put it together in a reassuring way and give us all some good news.