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REPORT TO: Community Safety Scrutiny

DATE: 18th October 2007

LEAD OFFICER:    Charles Phillips, Head of Public Protection
Services
CONTACT OFFICER: Dave Beesley, Trading Standards Manager
                 Email: dave.beesley@conwy.gov.uk
SUBJECT:         Exploiting the financial opportunities of the
                 Proceeds of Crime Act



1.      PURPOSE OF THE REPORT
The purpose of this report is to seek agreement in principle to formally establish
a unit looking to pursue the financial opportunities offered by the Proceeds of
Crime Act.

2.    EXECUTIVE SUMMARY

2.1   On conviction for an offence that is deemed to show a “criminal lifestyle”
      for the purposes of Proceeds of Crime Act, all assets and income acquired
      in the 6 years preceding conviction that cannot be legitimately account for
      is deemed to have been a benefit of that criminal lifestyle and, on
      application, can be seized by the Courts.
2.2   The average seizure under POCA is approximately £30,000. Under the
      Government’s incentivisation scheme one-third of all the assets seized will
      be given back to the investigating authority for re-investment.
2.3   Since February 2007 the Trading Standards Section have been
      conducting a business project to determine the viability of establishing an
      in-house financial investigation facility utilising POCA. This has involved
      employing a full-time experienced Accredited Financial Investigator on a
      temporary basis.
2.4   Since inception, demand for the service has substantially exceeded
      anticipated demand. At present work is being undertaken in partnership
      with 9 other Welsh Authorities. A total of 55 cases have been referred to
      date. Most referred cases relate to Trading Standards, however
      Environmental Health and Benefits Fraud have referred cases.
2.5   It is anticipated that there will be substantial income generated from
      providing this service to other local authorities and private bodies. It is
      thought that the service will be more than self-funding next financial year
      and income generated by 2012 could be in the region of £500,000.
2.6   In order to undertake the work an Accredited Financial Adviser has to be
      employed. An appropriate case will need to be submitted for
       consideration under the Council’s Business Planning Process if the project
       is to continue.

3.        RECOMMENDATION(S)

To agree in principle that the Authority looks to pursue the financial opportunities
offered by the Proceeds of Crime and that an appropriate case is submitted for
consideration under the Council’s Business Planning Process.

4.     BACKGROUND INFORMATION

4.1    Trading Standards enforce the law in relation to a number of activities that
       constitute a “criminal lifestyle” for the purposes of the Proceeds of Crime
       Act (POCA), principally :
       • Intellectual Property Crime
       • Internet crime
       • “Loan sharking”
       • Car clocking/doorstep crime, and other forms of commercial theft.
       • Trade descriptions offences
       • Food fraud.
4.2    Conviction under, for example, the Trade Marks Act is deemed to show a
       “criminal lifestyle” for the purposes of POCA. All assets and income
       acquired in the 6 years preceding conviction that cannot be legitimately
       accounted for is deemed to have been a benefit of that criminal lifestyle
       and can be seized by the Courts.
4.3    Under the Government’s incentivisation scheme, one third of all the assets
       seized will be given back to the investigating authority for reinvestment in
       further appropriate enforcement activities.
4.4    The migration of career criminals, many with previous convictions for
       violence and drug related crimes, into the County during the tourist season
       is of concern to the Police as well as the Authority. Given that the average
       fine for Intellectual Property crime is approximately £500 whereas the
       average seizure under POCA is £30,000, it is anticipated that this will be
       highly effective in dissuading convicted counterfeiters etc., from continuing
       to operate within the County.
4.5    Anticipated benefits of appointing a Financial Investigator are :
       • The income generated will fund the cost of the service in 2008/09 and
           will enable the department to provide its efficiency saving.
       • The appointment will allow the Trading Standards section to maximise
           any enforcement impact when taking action against those committing
           “criminal lifestyle” offences and hence maximise deterrence consistent
           with the Authority’s Crime and Disorder agenda.
       • The appointment, by assisting the Trading Standards section to
           rigorously enforce the law, will contribute to the long term viability of
           existing and new local businesses.
4.6    As an experienced Financial Investigator can process up to 100 cases per
       year the feasibility of marketing this facility to other Local Authorities and
       Enforcement Agencies has been explored.
4.7    Proceeds of Crime Act has proven to be extremely flexible in its
       application. In the first 7 months of the project it has been used in relation
       to : Intellectual Property related crime; Safety offences; Housing
       benefit/Council tax fraud; and Illegal money lending.
4.8    The facility has become widely regarded as a Wales resource with
       partnership work being undertaken with 9 other local authorities
       throughout Wales relating to assisting with financial investigations and
       undertaking applications under POCA. To date 55 local authority cases
       have been referred or are being prepared for referral under POCA.
4.9    The service has undertaken work with the central Government funded
       “Scambusters” team for Wales. Its services will also form an essential
       part of the OFT funded “illegal money lending” team presently being
       developed.
4.10   Two private companies that act as Brand Holder Protection Agents for a
       number of major brands have expressed an interest in utilising this facility.
       Discussions are currently taking place with these companies.
4.11   The demand for and development of the service has substantially
       exceeded forecast. Consideration now needs to be given to the principle.

5.     CONSULTATION
       Local authorities throughout Wales have shown an interest in the
       arrangement and many have already forwarded cases to the unit. Interest
       has also been shown from the Office of Fair Trading and two private
       companies.

6.     CORPORATE SUPPORT/COMMENTS
       If agreed in principle the case will be submitted for consideration under the
       Council’s Business Planning process.

7.     RISK
       Key Risks associated with the project are :
          • Criminal lifestyle offences such as Intellectual property crime, car
             clocking, illegal money lending reduce substantially within Conwy
             and Wales.
          • Government revokes POCA or the incentivisation scheme.
          • The Trading Standards section proves ineffective in detecting,
             investigating, and securing conviction on offences showing a
             criminal lifestyle.
          • The appointed Financial Investigator proves ineffective in securing
             seizure orders under POCA.
          • The appointed Financial Investigator becomes non-operational
             through illness etc.
8.    DRIVERS AND IMPLICATIONS
      Links to Corporate Priorities/Plan –
      Assessment of impact on the Community Strategy, Equalities and
      Sustainability
      It is anticipated that the appointment will enhance the Authority’s ability to
      control and reduce the availability of counterfeit products, unsafe/illegal
      consumer products, and illegal money lending.
      A Healthy Place : Reducing the physiological effects of children and
      young people being exposed to illegal and adult content DVDs. The
      dangers inherent in being able to purchase unsafe/illegal vehicles. Debt
      particularly when incurred with illegal money lenders is a major contributor
      to stress related illness.
      A Prosperous Conwy: The selling of illegal substitute products
      undermines local businesses, reduces revenue via business rates, VAT
      etc., and finances organised crime.
      Strong and Safe Communities: Curtailing the availability and
      uncontrolled sale of dangerous and illegal products will protect all
      members of the community.
      Equalities: Reducing the exposure of children and young people to
      extreme examples of violence and sexual exploitation directed principally
      against women and young people will promote respect and gender
      equality within the local community.
      Sustainability: It is anticipated that the project would be financially
      sustainable from April 2008.

9.    REASON(S) FOR RECOMMENDATION(S)
      The unit would enable the Authority to act as a centre of excellence for
      Wales providing services to other local authorities and also provide
      considerable financial income for this Authority.

10.   SENIOR EXECUTIVE TEAM (S.E.T.) COMMENTS
      N/A

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