UK Government's Latest Take On Asset Forfeiture Is Pretty Much 'You Can't Afford That!'
from the we'll-be-the-judge-of-that,-said-the-gov't-to-the-judge dept
The UK government has adopted a spin on asset forfeiture so brazenly abusive of citizens, American cops are probably kicking themselves for not thinking of it first.
Dutch law enforcement raised the bar for forfeiture-related audacity early last year when they promised to start taking the literal clothes off people's back if it didn't seem like they had the (legal) funds to afford high-end designer wear. Dutch officials said a lot of things about gaudy timepieces but made it clear shirts and pants might follow if deemed sufficiently expensive.
The UK has this beat. As Walter Olson opines for the Washington Examiner, the UK plan does away with all the comparative politeness of American asset forfeiture. There will be no fishing expeditions masquerading as traffic stops. There will be no pre-dawn raids predicated on tips by informants whose trustworthiness is only exceeded by their willingness to commit crimes using taxpayer dollars.
As Olson points out, all UK law enforcement needs to do is claim "You can't afford that!" in front of a sufficiently-credulous magistrate.
It's like, "Your papers, please," but for things you own.
Authorities in Britain have begun trying out a new police power called unexplained wealth orders under a law that took effect last year. The police go to a court and say you're living way above any known legitimate income. The judge then signs an order compelling you to show that your possessions (whether a house, fancy car, or jewelry) have been obtained honestly and not with dirty money. In the meantime, the boat or artwork or other assets get frozen, and you can't sell them until you've shown you obtained them innocently.
The entire burden of proof resides on the UK resident the government has accused of living beyond their means. Don't have receipts? Well, I guess the government gets to keep your stuff.
The origin of this stupid law is the sort of thing that conjures calls for the guillotine from the rabble.
The first person named as a target of the law was Zamira Hajiyeva, whose story could make even an oligarch blush, assisted by a small fortune in purchases from Harrods cosmetics and perfume counters. Hajiyeva's husband is serving time after being convicted of extracting at least $100 million from Azerbaijan's state-controlled bank, of which he was chairman. She's fighting extradition to that country herself.
In the meantime, her possessions include a £12 million London house and a golf course on the outskirts. Details of Hajiyeva's wild Harrods spending sprees were neatly captured for authorities and readers by the store's loyalty card program. They included a £1,190,000 Cartier diamond ring and tens of thousands at a Godiva chocolate shop, adding up to $20 million over a decade. The high-end London store reserved two bespoke parking spots for her. She used at least 54 credit cards, many issued by the state-controlled bank her husband ran.
I know, right? But government officials might want to remember it wasn't just the filthy rich that ended up under the blade. It was also members of the ruling class, including the inbreeders at the top wearing crowns.
There are some caveats:
First, there has to be some suspicion the person whose property is being targeted is suspected of violating a crime. It's not a very high bar but it's something. Second, this power is being handed over to tax collectors, so it's not just suspected links to violent criminal activities being utilized.
As Olson points out, the definition of "serious crime" in the UK covers such innocuous activities as running an unlicensed gambling operation, even if your gambling site pays all winning bets and otherwise operates as least as cleanly as the licensed ones do.
All caveats aside, this is fucked up. It doesn't require the government to prove anything about a person's wealth or criminal activities. It allows the government to freeze assets and, eventually, keep them, if the person accused can't come up with proof their possessions were purchased with clean money. Considering the meandering flow of cash around the world (and the intricacies of international banking), who's going to have acceptable evidence on hand when the government starts seizing property?
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Filed Under: asset forfeiture, uk, unexplained wealth
Reader Comments
The First Word
“"even if your gambling site pays all winning bets and otherwise operates as least as cleanly as the licensed ones do"
I'm not sure what to make of this point, Tim. Are you saying that gambling shouldn't be licensed, or that a person should be able to continue running an illegal gambling operation so long as they don't break any other laws while doing so? It's a heavily licensed industry for very good reasons. It's also illegal to run an unlicensed one. Whether or not you think that should be the law, it certainly is the law of the land right now.
"Second, this power is being handed over to tax collectors, so it's not just suspected links to violent criminal activities being utilized."
Yes, tax evasion is also a crime. Having spent millions of it before it gets seen by the tax man is frowned upon in most places.
We're not talking about some abuse of power here. It's a woman who may be in the process of being kicked out of the country, whose sole means appears to be the money that her husband stole, and who is likely in the process of laundering it. It warrants at least further investigation, which sensibly involves stopping her from spending more of it on whatever random crap she sees in front of her before it's confirm it's her stuff.
You might not agree with it or think it's a slippery slope, but this example is a far cry from the US cops who currently rob people at gun point because they had too much legal currency on their person.
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I love it!
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I think you've got this the wrong way around- the government isnt asking for your receipts to show you bought something- they want your payslips to show that you earned the money rather than stole it.
Taxes may be unpopular, but if you tell the government you earn £30K a year, but live a multi-million pound lifestyle, then that's going to raise some eyebrows unless you have the winning lottery ticket to prove it. More likely you are a criminal.
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tax
so it all boils down to TAXES
the government wants a cut of everything -- and gets really aggravated if it suspects anybody is holding out on it
in America everybody is required to self-incriminate themselves with annual sworn statements of all income (formal tax returns)
This is a direct violation of the 5th Amendment, Bill of Rights
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Due Process
At least in the UK system there’s some actual due process involved, and the seizures seem to be targeted at people wealthy enough to afford a lawyer. Beats the pants off a cop taking a few thousand in cash from some immigrant who doesn’t stand a chance of ever seeing the money again.
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UK Police claim - "Prove the entire house of lords are not all witches and warlocks by drowning".... Go ahead prove us wrong..../sarcasm
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Re:
I'm sure they want BOTH, the payslips showing you earned the money AND the receipts showing you bought the items in question. Gotta cover both ends for the best chance at keeping the goods.
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Re: Due Process
TODAY it's targeting wealthy people who appear too wealthy. Tomorrow it's targeting teens in ratty clothes with an iPhone.
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Re:
They spent too much time and effort stacking the house with their blackmailable picks to risk the chance of having unimpeachable replacements.
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"even if your gambling site pays all winning bets and otherwise operates as least as cleanly as the licensed ones do"
I'm not sure what to make of this point, Tim. Are you saying that gambling shouldn't be licensed, or that a person should be able to continue running an illegal gambling operation so long as they don't break any other laws while doing so? It's a heavily licensed industry for very good reasons. It's also illegal to run an unlicensed one. Whether or not you think that should be the law, it certainly is the law of the land right now.
"Second, this power is being handed over to tax collectors, so it's not just suspected links to violent criminal activities being utilized."
Yes, tax evasion is also a crime. Having spent millions of it before it gets seen by the tax man is frowned upon in most places.
We're not talking about some abuse of power here. It's a woman who may be in the process of being kicked out of the country, whose sole means appears to be the money that her husband stole, and who is likely in the process of laundering it. It warrants at least further investigation, which sensibly involves stopping her from spending more of it on whatever random crap she sees in front of her before it's confirm it's her stuff.
You might not agree with it or think it's a slippery slope, but this example is a far cry from the US cops who currently rob people at gun point because they had too much legal currency on their person.
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It's neither a law, not available to ordinary police.
This explains the limitations
https://www.gov.uk/government/publications/circular-0032018-criminal-finances-act-unexpl ained-wealth-orders/circular-0032018-unexplained-wealth-orders
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This law may be used to take money from drug dealers ,or people who launder money.
if someone makes their living from unlicensed gambling they should be paying tax.
Theirs a law in ireland where a government agency can take money or property
from criminals , its mainly used to take items from known drug dealers .its possible to see a situation where it might be reasonable to take assets
from known crinimals .
basically everything is taxed in the uk,
apart from charity donations and welfare payments ,
so if someone is buying expensive jewellery cars or property at some
point they will be required to show that their income is from a
legal source and they have to pay tax on it .
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The moment this easily exploitable law gets abused to target political opponents, outspoken individual citizens or even the press will be the moment Britain becomes officially a shithole country.
The incentive to abuse is just too great, with the government potentially getting hooked on the revenue stream that asset forfeiture provides. Just ask US police. They love using it as a slush fund, with one department in particular going as far as buying a margarita machine with the proceeds.
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Bad move
If your government (or police) can do as it pleases, including robbing arbitrary people, the people will loose all restraint that keep them from becoming criminal themselves.
You'll end up with a downward spiral of criminals.
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Re: Taxes
Not that big a deal - Canada has had something similar for decades, just not widely used. The tax department can do what's called a "net worth assessment" and demand that you show that the money you have or spent, the goods you have (your lifestyle) is supported by your declared income. If you fail to show it to the judge's satisfaction, they take what is needed to pay imputed taxes; then they can assess a penalty for failure to declare taxes. Since the top tax rate is close to 50% and the penalty for failing to pay taxes is usually equal to taxes or higher, that implies they can take 100% of your assets.
Usually applied to criminals living the high life, so money laundering becomes a necessity. Also applied in a lesser way to people such as small contractors, who can do a decent amount of work under the table for cash. Get too greedy, the tax people come calling. Don't buy that fancy vehicle if your declared income can't support it.
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Re: Gambling
If you're consistently making a very decent income from illegal gambling operations, either you're the house or you will quickly be persona non grata there or the operation is so big that it too comes to the attention of the authorities.
The government always wants its pound of flesh, taken from closest to the heart.
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Re: tax
"in America everybody is required to self-incriminate themselves with annual sworn statements of all income"
In theory, yes. In practice however ... only the commoners are held to this standard, the rich elite ruling class are immune.
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Re: Re:
Because earned money can only be obtained via payslips, this is an attack on side jobs not reported on tax forms.
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Re: Re: Taxes
That sounds ridiculous at best, and outright criminal at worst.
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They have some crazy laws over there. What will one be forced into upon receipt of an inheritance? Will they have to turn it over to some corporation so the they can be issued a proper payslip documenting their inheritance is valid? I'm sure said corp would charge a heft fee.
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Re:
The executors of the will deal with inheritance tax, and issue relevant documents to recipients of the Inheritance, so no problems there. Besides which the executors need to keep proper records for their own protection.
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Re: Due Process
Thanks, that's exactly the point I was going to make. Any law that puts a person in the position of proving his innocence to keep from being ripped off is an abomination. Variants that require no judicial oversight to steal, keep, and spend a citizen's money are the worst.
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so, like every other right and freedom citizens are supposed to have, innocent unless/until proven guilty has gone straight out the window! has this been tried in court? have the authorities got away with it? how come, if they did? it's throwing the whole world's legal system totally on it's head! good old UK! useless at almost everything, but brilliant in fucking it's own citizens up good and proper
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Re: Re: Re: Taxes
It's slightly leaning to 1984 but the logic is simple. You MUST declare your income every year. If you have assets that imply an income, prove the assets came from declared income. Basically the tax department is saying "we know you received money, we just don't know how and your tax returns don't explain it either". Not much different than if you deposited $100,000 in the bank and the tax returns didn't back it up. As usual in tax cases they can freeze your accounts until you pay up.
Of course, they have to find you first. I assume the IRS is like Revenue Canada and is happy to pay finder's fees for tips about cheats. And as another commenter says - it has to go to a hearing, and with the number of people involved to hold a hearing, it's got to produce a decent amount to just break even. It's not like they stop people on the street for spot-checks.
US Asset Forfeiture bypasses all this by having a default that they simply take it, and no hearing is even scheduled unless you contest the seizure. Cheap and quick.
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Re: tax
Eh, couldn't you simply report the income in question as "Other income" on Box 3 of a 1099-MISC and then use the Fifth Amendment protection to decline to provide further details as to its source? Might have saved Al Capone's butt many moons ago...
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Re: Re: Re: Re: Taxes
I'm sure the simple logic employed is equally enforced across the income spectrum /s
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Re: Re:
And said person has to carry said papers with them at all times in order to prove the upscale clothing they are wearing is indeed theirs and they did not steal it?
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Re: Bad move
Gosh, "Seegras", you hit every point wrong.
It can. Read history. Individuals are unable to resist. That's why the US 2nd Amendment exists. But even that won't work with the poor attacking each other instead of unified against The Rich.
But these aren't "arbitrary", are caused by apparent wealth with "no visible means" of support.
Have. Calls here everyday to ignore the law and take other's people work in the form of content (so can waste time on crap), ignore borders and let in foreigners to live on welfare (see next), and above all here, quit trying to keep people from doing drugs.
Have. -- Everyone trying to live as The Rich do without producing and trading work or other products. There's an entire class of parasites including masnicks who are just handed an "entitlement" to live off the poor.
This effort is part of the solution, but needs extend to confiscatory inheritance taxes above 100 percent if necessary.
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Re:
This is actually an attempt by a feeble govt to reduce money laundering. The UK has a deservedly poor reputation vis-a-vis p(loot)ocracy. It's not really taxes or state theft but justify how you got that cash.
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Mistake?
" taking the literal clothes off people's back if it didn't seem like they had the (legal) funds to afford high-end designer wear. "
Wording???
If it seemed they Shouldnt have the Funds..
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That one needed more time in the oven.
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Ye Gods...!
Violating things or people is vile enough already, but if triggering this indeed requires violating a crime - those dirtbags totally deserve everything coming their way! Have they no shame?!? :)))
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Re:
Why infer anything more than whan Tim stated? When we say serious crime, people are probably thinking of murder, maybe million-pound frauds, not unlicensed but honest gambling. That can remain "regular" crime or a civil offence.
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Loose horses in the swimming pool...
Although the word should be "lose," not "loose" - it actually works both ways.
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Re: Re: Re: Re: Re: Taxes
In fact, it is. To be sure, it is more enforced against higher income people, although you hear from time to time of, for example, a blitz of all the waiters and waitresses in Kelowna to ensure they declared all tips.
Keep in mind the super rich can afford fancy accountants and lawyers to hide their income in legitimate ways - plus they have the advantage of turning tricks with accounting to make income become capital gains taxed at half the regular rate. And, when they do get caught, they have the fancy lawyers to talk down the penalties. Slimy ex-prime minister Brian Mulroney sued when he was accused of being crooked, only to have it come out that he was given a paper bag with $300,000 in it. He then talked the tax department down to only half the tax owing... He "forgot" to report it. No explanation about how he got the cash across the border from NYC or whether he structured money activities to avoid the $10,000 reporting limits. But... that's evading other prosecutions, not taxes.
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Re: Re:
"When we say serious crime, people are probably thinking of murder, maybe million-pound frauds"
Like the one in the article, where the husband of the woman involved is currently in jail for stealing over $100 million - and there's a good chance that some of this is the money that the woman is squandering/laundering while waiting to see if she is being extradited? Because that's where the conversation was before silly distractions were inserted.
"unlicensed but honest gambling'
That's something of an oxymoron. Gambling is heavily regulated specifically because there's so much dishonesty involved when it's not. If someone is setting up a gambling operation outside of the official routes, chances are there's a reason for that, and it's usually not because they're honest.
"That can remain "regular" crime or a civil offence."
OR... it can be serious criminal offence, as stated.
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So, if I was poor and bought a second-hand iPhone off a slightly more well off relative because they bought the newer model...
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Re:
Then, not only would your situation be vastly different than anything discussed in the article, the law is clearly not something that's intended to be used to track standard consumer purchases from people not already suspected of major criminal operations. There's thousands of other laws you'd be better off worrying about if that's your situation.
It is amazing what hyperbolic worst-case scenarios people are thinking through because there's a rule trying to prevent people from laundering hundreds of millions of dollars of criminal proceeds. I understand concerns, but nobody's going to use this law todo anything that current laws won't do to a greater degree.
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Re: Re:
<i> [...] nobody's going to use this law todo anything that current laws won't do [...]</i>
I disagree with that. The government and police have routinely abused RIPA for numerous things.
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The asset being seized has to be worth at least £50,000, Tim. That's a restriction you seem to have deliberately left out of your section of caveats.
One of the things that really bothers me about this website is its habit of writing bad stories and then endlessly referencing them in future posts. It's particularly egregious in Karl's posts about ISPs these days, which tend to spend anything up to a third of their content in a soporific rehash of ancient headlines.
I can only assume that this story will end up similarly referenced ad nauseum on every single asset forfeiture post for the rest of forever.
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Blame the list was on drugs and weird writing
Just what-if anything-does "some suspicion the person whose property is being targeted is suspected of violating a crime. " mean. Interesting nonsense for an otherwise we'll written column.
Asset seizure was spawned by the goofy "war on drugs" that was doomed from the start-the volstead act was such a success-and more harm than good. It would have cost less just to let the druggies go and kill themselves. Citing out the criminal elements would have saved trillions of dollars (enough to pay for real treatment) and likely a million or so lives. Asset seizure is nothing but theft!
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Re: Re: Re:
The government has routinely abused many laws. That doesn't mean they should be repealed or not passed at all. Cautiousness is good. Demanding that the rich get away with massive fraud because you're scared of abuse that's unlikely if the law is applied as intended is not. There should be oversight, but the criminals should be held accountable as well.
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Re: Re: Re: Re:
The rich get away with lavish fraud regardless.
People in the UK forget that the people who run this country charged the tax payers for things like second houses, moat cleaning, etc, etc.
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Re: Re: Re: Re: Re:
Oh, they don't forget... they've just been brainwashed into blaming foreigners for the money that's been taken. Then, of course, into voting for crap like Brexit so the same rich people can cash in again.
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This isn't about the rich getting screwed or buy with anything it's about the government turning into a criminal enterprise that the mafia would love to be. A government which uses arbitrary and capricious laws to steal from people can't be considered legitimate!
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