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The Policing Of Fraud

Aziz Rahman, of business crime solicitors Rahman Ravelli, explains why he remains to be convinced by the bold changes to the investigation of fraud

There is little doubt that changes are going on when it comes to the policing of fraud. Lisa Osofsky took up the role of Serious Fraud Office (SFO) Director in August and has already expanded and restructured its management team with the aim of enhancing its effectiveness and making it more proactive in identifying and taking on new cases. She has emphasised her desire to see fine tuning of both the SFO’s investigative strategy and the development of its investigators and to forge and improve relationships with authorities in other jurisdictions.

She seems to be someone who is intent on hitting the ground running – and running fast.

Also newly arrived is the National Economic Crime Centre (NECC). It has been formed specifically to orchestrate the UK’s response to economic crime by identifying and prioritising the most appropriate type of investigations - whether criminal, civil or regulatory – and to use the likes of Unexplained Wealth Orders and Account Freezing Orders to tackle the funding and proceeds of crime.

The NECC is seen as the UK’s new command centre for coordinating the fight against economic crime. Working within the National Crime Agency (NCA), most of its members come from the NCA but it also includes representatives from the SFO, HM Revenue & Customs, the Crown Prosecution Service, the City of London Police, Financial Conduct Authority and officers from police forces around the country. Crucially, it will be able to direct the SFO to carry out investigations.

Shortcomings

Fraud, it would appear, seems destined for more attention from the authorities than it has ever had before. But it is worth exercising a little caution before anyone makes any bold claims about winning the battle against fraud. The NECC may now be in place to pull the strings and ensure fraud is investigated appropriately. The SFO is on hand to help the NECC do this and also appears to be making improvements to the way it works. But for years we have had shortcomings when it comes to the policing of fraud in the UK. And only time will tell whether these apparently bold changes have a positive effect.

The SFO has never made any secret about it only being designed and resourced to deal with a small proportion of fraud and bribery cases – basically those considered to be the most serious and complex. The problem has always been with the investigation and prosecution of cases that are not taken on by the SFO. While most, if not all of these cases, may not be of the size and significance of those that the SFO accepts, this does not mean that they are not important. And yet it is debatable whether many of them are investigated with the same perceptive thoroughness that they would have been if they had made it into the SFO’s in-tray.

It has been the way that if the SFO decides not to take on a case, it will find its way to an organisation such as the Financial Conduct Authority (FCA), the Financial Reporting Council, City of London Police or even a regional police force. As a result, the policing of fraud that has not been taken up by the SFO or the FCA is often skewed and disjointed. The agencies such cases are passed on to have often lacked, through no fault of their own, the resources or expertise to properly investigate frauds that are very often lengthy, complex and involve large numbers of individuals or organisations. Will this change with the NECC overseeing matters? Possibly. But it cannot be guaranteed.

Expertise

The NECC’s pooling of expertise and coordinating of fraud investigations makes perfect sense. Having it direct investigations may also lead to greater consistency when it comes to policing fraud in the UK.

But will this really mean that fraud is tackled any better or any more thoroughly than it was before the NECC existed? It is clearly too early to say, as the NECC has only been up and running a matter of months. But it is hard to see how all those cases that were left to other agencies once the SFO had passed on them will somehow be better investigated.

For all the efforts to improve the SFO’s way of working and for all the thought that has gone into creating the NECC, we are not seeing a sudden and huge expansion in resources and expertise to tackle fraud. And, as fraud is constantly evolving, the lack of such an expansion raises doubts about whether these new measures will have any notable effect.

As a self-contained, well-resourced body packed with the relevant expertise and experience and valuable fraud contacts here and abroad, the SFO is well equipped to manage a fraud investigation, regardless of its complexity. It may benefit from the guidance coming out of the NECC. But that does not really address the thorny issue of how best to manage all those cases that the SFO does not take on.

Such cases may be subject to more preliminary scrutiny with the arrival of the NECC. The rhetoric so far regarding the NECC has referred to tackling serious and organised crime and the most harmful of criminals. That is obviously a worthwhile use of the expertise that is being put at the NECC’s disposal. But that expertise can only be stretched so far. So it appears that many of the fraud cases that the SFO does not take on will still be left in the hands of agencies that could dearly do with some assistance in seeing them through to completion.

As an example, what challenges will a regional police force - or any other agency – face when it comes to obtaining the specialist manpower that a complex fraud investigation can require? Will the NECC prove more effective at ensuring such agencies do gain access to the personnel they need? Ideally, the NECC will prove to be the body that makes sure that expertise goes where it is most needed. But the pool of such expertise is not infinite, which suggests there will still be many instances of fraud that do not receive the proper investigation they require.

Fraud policing is, without doubt, going through exciting and changing times. But the age-old issue of resources may determine whether these changes lead to real progress in the battle against fraud.

This article originally featured in Fraud Intelligence.

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Azizur Rahman

Azizur Rahman

Senior Partner

aziz.rahman@rahmanravelli.co.uk
+44 (0)203 911 9339 vCard

Specialist Areas of Practice: International Regulation and Corporate Crime, Fraud and Business Crime, Complex Crime, Civil Fraud, Corporate Investigations.

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