Philip Johnston, writing in the Daily Telegraph of 5th January, asks ‘Why is Labour so keen to imprison us?’
Amazingly, it has been officially established that since taking office in 1997, the Labour Government has introduced more than 3,600 new offences, of which 1,036 are punishable with imprisonment.
Having set this important hare running, Johnston them proceeds to completely lose the plot by retreating to the safe haven of some impossible contemporary vision of a society which does not suffer from ‘…an erosion of trust and with it the very scaffolding of a free society…’, and ends his piece imploring politicians of all persuasions to stop the ‘criminal justice arms race’.
Nevertheless, he should be congratulated for bringing this important question into the public debate, because it is a topic which informed criminologists have been debating for a long time, but without the benefit of a wider audience. The problem is that the financial sector is traditionally unwilling to address the criminological interpretation of the consequences of their own behavior, and does not want to spare the time to try and understand the implications of laws which are being secretively inserted by a dishonest government, and which have significant impacts for us all.
Why is this so important?
Because it holds some very serious lessons for us all, and it has a very dangerous interpretation which bodes badly for the future of our society. Put at its most simple, I assert that the intention of this Government is to find ever new ways of taxing us in order to meet the inevitable shortfall in public sector finances, and criminalizing us more and more provides a significant opportunity for ‘taxing’ us through the process of asset forfeiture.
The Proceeds of Crime Act, 2003 is where we must begin to try and unravel the new developments in legal thinking. The UK Government had been looking for a long time at the opportunities which presented themselves for amending the existing anti-money laundering legislation. There were very strong reasons why government wanted to beef up the existing legislation, most important of which was the new ambition to introduce a new agency which could be used in future to assist in the recovery of ‘criminal assets’. We should remind ourselves of the way in which government first prepared the way for this very dangerous and draconian legislation to be introduced.
It seemed to be ubiquitous inside the Blair administration that whenever the government wanted to introduce legislation which was intended to unravel hundreds of years of established civil liberties, it first commissioned a research study which began by asserting the desirability of the reforms to be achieved, usually by playing up the twin demonologies of ‘organised crime and terrorism’ and then, hey presto, almost as if by magic, the report’s summary provided for these changes in a form of a series of recommendations.
This is exactly what happened with the introduction of the Proceeds of Crime Act 2003.
It is my assertion that these provisions are all intended to enable governments to be able to ‘tax’ more effectively, and under Gordon Brown, these ambitions are not being diminished. In order to achieve this objective, the government has had to implement some significant changes in the ways in which the powers of the State can be levied against the individual and more importantly, against his property.
To do this they had commissioned the Policy Innovation Unit’s report of June 2000 entitled ‘Recovering the Proceeds of Crime’. Among the Report’s initial observations were the following observations;
The Government should take urgent steps to maximise the benefits that the pursuit and recovery of the proceeds of crime can offer. To achieve this, there will need to be:
a more strategic approach, with joined-up action from all relevant parts of the criminal justice system;
better trained and supported law enforcement officers able to pursue complex financial investigations;
a simpler and more robust legal regime, including extended civil forfeiture powers;
greater efforts to stem the laundering of criminal assets;
full use of the existing taxation powers;
a higher international standard, set by the UK; and
new structures and incentive mechanisms to underpin these changes.
I am sure you did not miss the careful use of the ‘taxation powers’ provisions identified in the fifth paragraph. This was always going to be the hidden agenda, but in order to be able to link it to the crime issue so as to provide the necessary degree of public support for its introduction, the government had to obfuscate the real reasons behind its policies. It did this by stressing the organised crime angle, in an attempt to give greater credence to its ambitions. The biggest problem with these arguments, as I have stressed before, is that they had very little if any criminological legitimacy, and certainly no real criminogenic logic.
In an article I wrote in June 2003 I reviewed some of the government’s assertions for the need to introduce a far more draconian regime of anti-money laundering compliance, and in doing so, I questioned some of their supporting arguments.
“…If we review the latest Treasury principles produced in a document entitled The UK Anti-Money Laundering Strategy, dated June 2003, we can see clearly enunciated, some of the glaring fantasies and intellectual weaknesses which are being promenaded as facts, but upon which the UK Government bases its AML policies, and with which the regulated sector is required to comply.
First, there is a complete absence of any empirical knowledge or evidence of the volume of dirty money in the system. The Strategy document states;
‘…There are no reliable estimates of the amount of money laundered in the UK every year. It cannot be measured directly and estimates based on measuring overall criminal proceeds will not pick up the costs of unreported crime. In June 2002, HMCE estimated that somewhere between £19 and £48 billion of criminal money is available annually for money laundering in the UK, with £25 billion being a realistic figure…’
This is a vital admission, a fundamental flaw in the argument, and one which immediately drives a coach and horses through the whole debate. The fact is we just don’t know how much money is being laundered, and we have no idea how to go about finding out. There is a huge and glaring disparity between £19 billion and £48 billion, and where do these figures come from in the first place? The Strategy document continues;
‘…Global money laundering has been estimated by the IMF as the equivalent of between 2 and 5 per cent of world output which could amount to $500 billion a year. Such an estimate applied to the UK would imply money laundering of £18-45 billion annually. It would be unwise to place great reliance on any of these estimates but it is undeniable that money laundering involves huge sums of money and that, as long as there are criminal proceeds there is going to be money laundering…’
There is that ubiquitous $500 billion figure again. It crops up in every report you read about money laundering, and it is based on no measurable or determinable fact at all.
So, it seems clear that we are basing a national policy which is costing significant sums in compliance costs, not only on a complete ignorance of the financial size of the problem which we are being asked to confront; but also underpinned by statistics of such dubious provenance that even those who parrot them most vociferously, are forced to admit that they are merely used for attracting attention, (most commonly political), and should not be relied upon! But what the hell, there must be a problem out there even if we cannot measure it or find any evidence to support it, so lets just throw lots of other people’s money at it!
What other nonsense is lurking in the pages of the Strategy Document? Consider this little gem!
‘…Acquisitive crimes are committed to enjoy the proceeds of crime. Deprive criminals of the proceeds of their crimes and they have less incentive to commit these crimes. Putting in place robust systems of regulation to detect, intercept and confiscate criminal funds will make it harder for criminals to profit from their criminality. Such controls are not going to stop all money laundering. But they will make it harder and this will reduce the profits, and the incentive to commit crime...’
Only a pure economist or perhaps a senior consultant in a leading consultancy could have dreamed up this particular piece of naive and uninformed gobbledegook! For the record, there is absolutely no criminological evidence whatsoever to support the assertion that depriving criminals of the proceeds of their crimes provides them with any disincentive, at all, to committing further crimes. If anything, its most likely outcome is to encourage them to commit further crimes to replace what they have lost.
This kind of bald and unsupported theory, masquerading as established fact, and being used therefore to underpin government policy, is not only nonsense, it is dangerous nonsense! It is dangerous because if government policy is based on such fundamentally flawed premises, then its enthusiastic enforcement is likely to cause more damage in the medium to long term to the legitimate market, than the very damage it is intended to prevent.
In the next edition we shall look more closely at the methods which have been adopted to bring this policy into fruition.
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