Organised crime bosses will be barred from using “designer divorces” to hold onto their illegal profits under plans for a wide-ranging overhaul of the law announced today.
Under the changes, set out by Labour as part of its blueprint for the general election, criminals who ignore court orders to repay their illicit gains will also lose their right to early release from prison.
Further reforms will beef up prosecutors’ asset freezing powers and introduce new prison sentences for offenders who sell off foreign assets that should be used to clear their debts.
The shake-up follows a series of reports by the Evening Standard about the way in which criminal “Mr Bigs” are holding onto their multi-million pound gains because of flaws in the enforcement system.
It also comes in the wake of a highly critical report by the National Audit Office which warned that only 26p in every £100 generated by criminal activity was recovered by the authorities.
Announcing Labour’s seven-point plan for overhauling the law, Shadow Attorney General Emily Thornberry said that the criminals were “laughing at the system” because of the failings.
She added: “Criminals are running rings around the laws that are supposed to strip them of their profits. The system is out of date.
“Our reforms will give police and prosecutors the tools they need to pierce the bogus schemes that criminals use to wriggle out of paying back their ill-gotten gains.”
Under the proposed reforms, criminals serving “default” sentences imposed for failing to repay their illicit gains will lose the right to early release halfway through their sentence.
Another change will seek to stop offenders using “tactical” divorces to thwart confiscation of their profits by diverting much of their wealth to their former wives and out of reach of prosecutors.
This will be achieved by requiring such “third party” claims — which are currently dealt with after conviction — to be lodged much earlier in the process.
Ms Thornberry said that would make it harder for criminals to “drum up bogus claims” and that the courts would be entitled to assume that any divorce claims made later were a device to dodge repayment.
Other changes will introduce new criminal penalties, including prison terms, for offenders who sell assets held overseas subject to confiscation or asset freezing orders.
Stronger asset freezing powers and shorter deadlines for criminals to repay their profits will also be introduced.
One of the worst examples of criminal defiance was revealed last year by the Evening Standard when this paper disclosed that fraudster Gerald Smith, whose conviction in 2006 was hailed as a “landmark success”, still owed taxpayers £54 million.
Smith, who has already been freed from prison, made his illicit fortune from a dotcom swindle and used the money to buy a £3 million house overlooking Wentworth golf course, another home in Jersey, a yacht and an art collection.
