Interesting post with which I generally agree. But:
a) Rule 0 should be: "don't allow anonymously owned/beneficial ownership of legal entities". Many more dirty assets are tied up in, for example, South Dakota trusts and New York private investment schemes than in cash.
b) Rule 1 on cash should be extended to automobiles, planes, and boats, all of which are worthwhile assets for collection.
c) There is nothing here on real estate, which seems a big omission. it will be interesting to see if the recent UK reforms on property seizures generate any actual progress, vs. the previous failed regime.
d) "Don't allow seized assets to be used for legal defence" comes too close to "guilty until proven innocent". Which by the way, is the U.S. standard on cash seizure, not the civil standard of proof. There are well-documented instances of U.S. lawmen acting as de facto highway robbers, particularly against non-white suspects. Maybe "only allow judge-approved expenditures from seized funds" or something similar, in order to allow a defence to be effectively mounted. Remember that these rules are used most avidly by dictators, not democracies.
e) Don't confuse the FATF Effectiveness regime with true effectiveness. My own research indicates that 80 per cent of the FATF score can be predicted by whether or not the jurisdiction under consideration is black majority, a small island state, or a white majority ex-British colony. Put simply: the FATF effectiveness ratings are racist and blatantly rigged, so the less attention we pay them, the better. By the way, the technical compliance regime is considerably better.
f) Regarding SARS, there is generally a legal requirement for reporting entities to file them at a central collection point. It's not the filing entity fault that SARS are slow in getting to who needs them. While on this topic: what is stopping us from creating a "fire alarm SAR" that entities can file when their normal processes identify a probable crime? These super-SARS should get urgent attention from the authorities, not be mixed in with millions of low value reports.
Thanks very much for engaging with this post. I don't disagree with any of your points, but I will reply to them if I may. a) I agree, asset recovery would be a whole lot easier if we could dismantle the global financial secrecy regime. b) cash, bullion and similar anonymous assets require a special regime in my view. Other assets should be seizable either as instruments used in a crime or as proceeds connected with the suspect. c) I am not sure of the point you are making, can you provide an example, please? d) Well, I recognise the potential justice issue, but the change I refer to was introduced in the UK by POCA two decades ago. It corrected some terrible abuses - a fair trial can be achieved without using the victims' money. I am not aware of cash seizure abuses in Ireland, the UK or other countries, so maybe its a US problem? e) OK I do disagree with this one! I am a fan of the FATF, but mostly because there is no-one else doing evaluations, so we should try and encourage them to do it better. There is a lot wrong with their effectiveness regime (the lack of asset recovery expertise among evaluators, for example) but the technical compliance regime is actually meaningless, in my view. The allegation of racial bias has been made by others and I am not here to defend the FATF. f) I agree, it is not the failure of the filing entity, I blame the FIUs. If there is a probable crime then it should be reported as such. There used to be a thing called a 'consent' SAR, now called Defence Against ML report. This is, in effect a 'fire alarm' SAR. Unfortunately it mostly shows up that there is no effective resourcing of the fire brigade and, for me it raises an image of the Emperor Nero playing a fiddle in the Roman FIU!
Tristram, do you have an email? I can send you a few hopefully interesting papers on some of the points above. I am charles.littrell@gmail.com. Regards, CWL
A lack of will that goes beyond politicians to pollute the minds of PCCs, senior police management and SIOs.
If only financial investigation could be given the value, I believe, it deserves. I often found it viewed with suspicion by SIOs and have personally been told a dismissive "go and do your...thing".
One aspect that has a negative impact is that the FI world is not a route to police promotion. In fact, the opposite. Tristram, you were one of the few senior officers in the UK who had an appreciation of the value of FI work, maybe a handful of others, but they remain rare. Even in the City of London Police we see senior positions in strategic Economic Crime roles being filled by people with no background as FIs.
I am pleased to see in Rule 7 that you consider career options. Some of the best financial investigators I worked with were not police officers but had a background in Customs, accountancy or local authority finance. An framework that allows FIs to move across agencies and progress would be invaluable. Otherwise, they will be enticed into the private sector.
Whilst in the police, I tried my best to impress on everyone the value of FI work and I know some found me tiresome. I have sat in intelligence briefings at Level 1 and 2 suggesting that we look at a drug dealer through the financial lens. That drug dealer is dishonest, something many officers refuse to acknowledge. If they have a house with a mortgage then they lied on their application, fraud (or false accounting in the old pre-2006 days) - a crime for you on a plate along with asset recovery of their house. If they put forward false income details in response then get the HMRC criminal team involved. Check if they ever made an insurance claim, at least 90% chance that will be dishonest. Let the criminal community learn that person has lost everything. Influence the thoughts of the 16 year old who looks to aspire to be that person. But no, the decision maker was too often influenced by officers who wanted to conduct expensive surveillance and speculative searches in the vain hope they might catch that person in a drugs deal, even knowing they were never 'hands-on'.
I recall Merseyside Police set up a team to target drug dealers and other disruptive criminals in a similar way. Possibly called Operation Oak? Pioneering a proactive use of FI - when I visited them they were riding high on success, but it did not last and I heard the team was disbanded.
Until asset recovery becomes a form of mainstream policing and forces, along with PCCs, have their performance measured by it then I fear it will never be taken seriously.
Interesting post with which I generally agree. But:
a) Rule 0 should be: "don't allow anonymously owned/beneficial ownership of legal entities". Many more dirty assets are tied up in, for example, South Dakota trusts and New York private investment schemes than in cash.
b) Rule 1 on cash should be extended to automobiles, planes, and boats, all of which are worthwhile assets for collection.
c) There is nothing here on real estate, which seems a big omission. it will be interesting to see if the recent UK reforms on property seizures generate any actual progress, vs. the previous failed regime.
d) "Don't allow seized assets to be used for legal defence" comes too close to "guilty until proven innocent". Which by the way, is the U.S. standard on cash seizure, not the civil standard of proof. There are well-documented instances of U.S. lawmen acting as de facto highway robbers, particularly against non-white suspects. Maybe "only allow judge-approved expenditures from seized funds" or something similar, in order to allow a defence to be effectively mounted. Remember that these rules are used most avidly by dictators, not democracies.
e) Don't confuse the FATF Effectiveness regime with true effectiveness. My own research indicates that 80 per cent of the FATF score can be predicted by whether or not the jurisdiction under consideration is black majority, a small island state, or a white majority ex-British colony. Put simply: the FATF effectiveness ratings are racist and blatantly rigged, so the less attention we pay them, the better. By the way, the technical compliance regime is considerably better.
f) Regarding SARS, there is generally a legal requirement for reporting entities to file them at a central collection point. It's not the filing entity fault that SARS are slow in getting to who needs them. While on this topic: what is stopping us from creating a "fire alarm SAR" that entities can file when their normal processes identify a probable crime? These super-SARS should get urgent attention from the authorities, not be mixed in with millions of low value reports.
Thanks very much for engaging with this post. I don't disagree with any of your points, but I will reply to them if I may. a) I agree, asset recovery would be a whole lot easier if we could dismantle the global financial secrecy regime. b) cash, bullion and similar anonymous assets require a special regime in my view. Other assets should be seizable either as instruments used in a crime or as proceeds connected with the suspect. c) I am not sure of the point you are making, can you provide an example, please? d) Well, I recognise the potential justice issue, but the change I refer to was introduced in the UK by POCA two decades ago. It corrected some terrible abuses - a fair trial can be achieved without using the victims' money. I am not aware of cash seizure abuses in Ireland, the UK or other countries, so maybe its a US problem? e) OK I do disagree with this one! I am a fan of the FATF, but mostly because there is no-one else doing evaluations, so we should try and encourage them to do it better. There is a lot wrong with their effectiveness regime (the lack of asset recovery expertise among evaluators, for example) but the technical compliance regime is actually meaningless, in my view. The allegation of racial bias has been made by others and I am not here to defend the FATF. f) I agree, it is not the failure of the filing entity, I blame the FIUs. If there is a probable crime then it should be reported as such. There used to be a thing called a 'consent' SAR, now called Defence Against ML report. This is, in effect a 'fire alarm' SAR. Unfortunately it mostly shows up that there is no effective resourcing of the fire brigade and, for me it raises an image of the Emperor Nero playing a fiddle in the Roman FIU!
Tristram, do you have an email? I can send you a few hopefully interesting papers on some of the points above. I am charles.littrell@gmail.com. Regards, CWL
A lack of will that goes beyond politicians to pollute the minds of PCCs, senior police management and SIOs.
If only financial investigation could be given the value, I believe, it deserves. I often found it viewed with suspicion by SIOs and have personally been told a dismissive "go and do your...thing".
One aspect that has a negative impact is that the FI world is not a route to police promotion. In fact, the opposite. Tristram, you were one of the few senior officers in the UK who had an appreciation of the value of FI work, maybe a handful of others, but they remain rare. Even in the City of London Police we see senior positions in strategic Economic Crime roles being filled by people with no background as FIs.
I am pleased to see in Rule 7 that you consider career options. Some of the best financial investigators I worked with were not police officers but had a background in Customs, accountancy or local authority finance. An framework that allows FIs to move across agencies and progress would be invaluable. Otherwise, they will be enticed into the private sector.
Whilst in the police, I tried my best to impress on everyone the value of FI work and I know some found me tiresome. I have sat in intelligence briefings at Level 1 and 2 suggesting that we look at a drug dealer through the financial lens. That drug dealer is dishonest, something many officers refuse to acknowledge. If they have a house with a mortgage then they lied on their application, fraud (or false accounting in the old pre-2006 days) - a crime for you on a plate along with asset recovery of their house. If they put forward false income details in response then get the HMRC criminal team involved. Check if they ever made an insurance claim, at least 90% chance that will be dishonest. Let the criminal community learn that person has lost everything. Influence the thoughts of the 16 year old who looks to aspire to be that person. But no, the decision maker was too often influenced by officers who wanted to conduct expensive surveillance and speculative searches in the vain hope they might catch that person in a drugs deal, even knowing they were never 'hands-on'.
I recall Merseyside Police set up a team to target drug dealers and other disruptive criminals in a similar way. Possibly called Operation Oak? Pioneering a proactive use of FI - when I visited them they were riding high on success, but it did not last and I heard the team was disbanded.
Until asset recovery becomes a form of mainstream policing and forces, along with PCCs, have their performance measured by it then I fear it will never be taken seriously.