'Too late' to leave asset recovery until after arrest, says expert, as NCA begins new campaign

Alan Sheeley, a civil fraud and asset recovery expert at Pinsent Masons, the law firm behind Out-Law.com, was commenting as the National Crime Agency (NCA) called for "tip-offs" from the public to help it identify assets belonging to 15 criminals subject to confiscation orders to the value of a million pounds or more. Confiscation orders are made by courts after conviction to deprive someone of the benefits they have obtained as a result of their criminal activity.

Sheeley said that the NCA's efforts were "admirable". However, he said that successful asset recovery required "a full investigation of the position of the assets before an arrest happens".

"Once 'Mr Big' is arrested, or informed of the investigation, he will do everything possible to hide his assets even better than he had before," he said. "By their very nature, criminals and fraudsters are risk takers. Once caught, they will take even more risks to ensure that their illicit gains cannot be traced by law enforcement."

"Law enforcement departments focus on prosecutions and putting people in prison, rather than asset recovery. This is clearly evidenced by the NCA's director general, Keith Bristow's, comments earlier this year that only £124 million of the £1.46 billion in confiscation order debts was likely to be recovered. While I appreciate, as a civil fraud solicitor, that the 'rogues' gallery' have received confiscation orders following serious crimes such as money laundering and drug trafficking, there will be a lot rogues who have committed serious frauds that are also subject to confiscation and compensation orders as well that have not paid up," he said.

Sheeley said that fraud victims should be advised to use "every tool available to find the assets" before the fraudster is informed about the investigation.

"This may mean the fraud continues for a longer period of time – however, in any asset tracing case, information is key," he said.

"Civil fraud solicitors are specialists in using disclosure orders with 'gagging' provisions on them. This enables the victims to find out information from banks, accountants, company formation agents etc. without those third parties telling the fraudster. Victims can follow the money through many accounts and corporate vehicles around the world without the fraudster being aware. Once a victim has either located assets or exhausted every avenue available a victim can then consider launching the 'nuclear weapons' of the civil court: freezing orders and search and seize orders," he said.

Civil courts can issue search and seize orders, enabling a victim's solicitor to enter the fraudster's properties to preserve evidence; and freezing orders, enabling the victim's solicitor to freeze the fraudster's bank accounts and prevent the dissipation of stolen monies by the fraudster. Sheeley said that this could all be done "without the involvement of the police or NCA and is a private investigation that focuses solely on asset recovery, not convictions".

"Asset recovery is normally the victims' main driver, and law enforcement departments should be under a duty to tell victims of this alternative route and its advantages," he said. "Similarly, law enforcement should be transparent about the weaknesses of asset recovery under the law enforcement route."

The 15 criminals whose assets have been targeted by the NCA as part of its appeal have all been subject to "significant" investigation by law enforcement, none of which have successfully recovered assets. The NCA believes that in some of the cases, the assets have been hidden while in others they may never have been available to the criminal in the first place.

"By seeking the assistance of the general public, and making details of the orders available to financial institutions, the NCA hopes that further assets may be identified and recovered," it said in a statement.

"There may be a number of reasons that a confiscation order has not been paid in full: the criminal may have hidden their assets beyond law enforcement's reach, the order may have been based on presumed criminal profit which never actually existed, or based on assets that the court has subsequently deemed are not recoverable," said Nigel Kirby, the NCA's deputy director of economic crime.

"Whatever the reason, this pilot is part of our work to ensure every avenue to recover these monies is explored. If this initial pilot proves successful, we will expand the appeal and publicise details of many more unpaid confiscation orders as we continue to tighten up on money laundering and criminal profits," he said.