The Solicitor General, Mike O'Brien MP QC, has said that enforcement agencies around the world need to cooperate in more sophisticated ways to catch criminals engaged in economic crime.
Speaking at a symposium on economic crime in Cambridge* the Solicitor General said "Today, economic crime has reached unparalleled levels of sophistication with the use of new technologies and that means that those in government and enforcement agencies must cooperate in more sophisticated ways to catch the criminals."
Mr O'Brien said that economic crime is estimated to cost UK businesses over £100 million per day - or £4.5 million per hour. "On a global level economic crime is big business" he said, adding that greater international cooperation between governments "places great importance on mutual support by agencies in investigations, agreements for courts to recognise the orders of judges in other countries, the importance of tackling delays in extradition and a more effective use by governments of technology to monitor and tackle economic crime."
The Solicitor General referred to the creation of the Serious Organised Crime Agency, a key aim of which is to work in collaboration with UK and overseas agencies to prevent criminals avoiding detection by crossing borders into other jurisdictions. He also pointed to the current modernisation of the UK's laws on fraud which, he said will "provide a clear and robust framework that is flexible enough to deal with increasingly sophisticated types of national and international fraud."
Ends
Notes for editors
* Annual Symposium on Economic Crime, Jesus College, Cambridge, 4 September.
The text of the speech is below:
CAMBRIDGE SYMPOSIUM - 4 SEPTEMBER 2006
THE PRICE OF CRIME
Welcome to delegates on behalf of HM Government.
The focus of this 24th conference on Economic Crime is on the price of crime and the risks presented to the business world and economies by organised crime and terrorism. I see from the list of those attending that there are a number of distinguished experts in the audience from all over the world.
For my part I would take this opportunity to concentrate on firstly how we quantify the risks to economies posed by economic crime, secondly to refer to the links between economic crime and terrorism and thirdly to look at some of the steps we are taking here in the UK.
THE SCALE OF THE PROBLEM
It is estimated that economic crime costs UK businesses lose more than £40Billion. To put it in perspective that equates to over £100 million for every day, £4.5 million per hour or £76,000 per minute!!!
I suspect that if anything this figure is conservative and the damage to the wider economy is much more if you include other indirect forms of economic crime such as smuggling, trafficking in drugs and illegal migrants.
On a global level crime is big business. Today economic crime is has reached unparalleled levels of sophistication with the use of new technologies and that means that those in Government and enforcement agencies must also become more sophisticated to catch the criminals.
Combating international crime requires greater international cooperation between governments, it places great importance on mutual support by agencies in investigations, agreements for courts to recognise the orders of judges in other countries, the importance of tackling delays in extradition and a more effective use by governments of technology to monitor and tackle economic crime.
THE SIZE OF THE PROBLEM
One of the key problems we face in the UK is to identify the size and nature of economic crime. When you think about the various ways in which economic crime can be committed, from the small time thief all the way through to organised crime gangs obtaining monies through illegal activities and laundering the proceeds on an international level, you can see that economic crime is not an easy item to measure! Attempts have been made. Despite valiant efforts by several firms of chartered accountants or lawyers to count court cases or client's losses, it remains very difficult to find out how well or how badly we are doing in our fight against fraud. Of course, if we have no accurate problem baseline to work from, it is difficult to design better and more effective means of prevention, detection or deterrence.
So the first plank in any strategy is to work to accurately identifying the problem. Again, this may seem basic to a small businessman. If you do not count your stock you cannot know how much you have sold. But translated to a national level this is not easy. We count many things, but usually in different ways! The trick will be to ensure consistency, so that we can be accurate.
As a result, the Fraud Review currently being undertaken recommends that we set up a unit to measure fraud. The National Fraud Reporting Centre, run by the Police, will seek to capture all reports of fraud from industry and the public. It aims to provide a one-stop shop for victims who currently have to complain to a wide variety of police stations, consumer protection organisations or websites. The Centre will be linked to other specialist reporting lines such as the Office of Fair Trading and the Bank and Credit Card Fraud hotlines. If the Centre can capture all the data on fraud, it can also begin its second task, which will be analysing trends in fraud and economic crime and the methods being used by criminals. It can then, provide proper intelligence to investigators so that they can focus our resources including our fraud squads more effectively. It also enables us to give timely warnings to potential victims about the kinds of offences that are developing and how to reduce the vulnerability of targets. Year on year, we should also be able to more accurately estimate whether our agencies, laws and courts are making a difference.
Impact of terrorism
Terrorism has made the task of dealing with economic crime all the more urgent. There can be a link between the two. Sadly, terrorism is not a new phenomenon in Britain. We dealt with a campaign by the Provisional IRA for a number of decades, until recently. What is new is the international nature of terrorist activity in the last few years. Terrorist acts like 9/11 or the Madrid bombings needed significant financial and human resource. It takes years of planning and a significant amount of time, effort and money before something on the scale of these atrocities can be carried out. The current level of terrorist activity is likely to lead to an increase in crimes by supporters to fund it. The intelligence agencies have already indicated that there is unlikely to be any reduction in the threat posed by terrorism in the short-term. The damage caused in economic, social and political terms by terrorism seeks to undermine democracy. We need to better learn how to deal with it.
Terrorism needs to pay activists and their families, to get weapons, equipment and training. Many of the things terrorist require are not cheap so they need ways of getting money. The major sources of terrorist funding include:
- Drug Trafficking;
- Extortion/Kidnapping;
- Fraud;
- Smuggling/trafficking in people and commodities.
- Donations from individuals channelled through a series of banks and organisations.
If we can disrupt the fund raising and the funds then we can weaken the terrorists. The Bank of England and other international banks have developed increasingly effective means of tracking money laundering and preventing it. We often get cooperation from other countries to freeze assets and to help trace lines of funding. More work needs to be done to make these systems effective and wide ranging. We are still in the early stages of what will need to be an increasingly sophisticated process and we will need to expand the level of cooperation, particularly to countries where Banks have traditionally relied on personal confidentiality to sell their services and to minimize tax. International agreements and the participation of leading reserve and supervising banks show we have come a long way in the few short years since 9/11, but there is still more to do.
Under the Terrorism Act, the provision or receipt of money or other property for the purposes of terrorism is criminalised to prevent fund-raising and use of money for terrorism. In addition other offences criminalise the laundering or any funding arrangements related to terrorist property. These provisions effectively ensure that anyone assisting terrorists by funding them, providing property or in keeping money for them is likely to face a significant penalty. The maximum sentence for these offences is 14 years imprisonment.
I will be particularly interested in reading about your deliberations in the coming days on how we can improve our efforts to tackle the link between terrorism and economic crime.
INTERNATIONAL ORGANISED CRIME-
As we all know, organised crime in its many forms is big business. It makes billions of pounds for those who are involved in it. But the price is paid not just in money. Often the path of the economic criminal is strewn with the pain and suffering of countless people. Drug trafficking and money laundering creates addicts who commit further offences in their constant search for more money for more drugs. Economic migrants are often forced to work under duress and compulsion. Smuggling can include the unspeakable damage caused to people smuggled for sexual or other forms of exploitation.
New legal problems are presented. A criminal may set up a business in one country quite legally and commit no offence in that country but may target another country where people are victimised. We need to develop ways of dealing with that.
Both International fraud and computer pornography are big business. Internationally organised crime demands robust trans-national policing. International policing agencies like Interpol are not new but the demands on them are increasing. Developing cooperation between national police forces is crucial and so is the creation of new tools like the creation of the European arrest warrant. There must be no compromise on the provision of mutual legal assistance and on extradition arrangements. Both these tools are crucial to the fight against trans-national crime and they must remain as sharp as possible if we are to win the fight against the criminal organisations involved. Similarly the powers to seize proceeds of crime must be used effectively and all legitimate organisations in the field of banking must strengthen systems and processes to prevent the laundering of ill-gotten gains.
International cooperation makes for difficult legal issues. For example, no two legal systems are identical. They have different legal tests and procedures. We extradite suspects to every country from Australia to Russia and Azerbaijan based on a test of reasonable suspicion. Three years ago we agreed to extradition of suspects from the UK to the USA based on the same test. The USA has a similar but not identical test of "Probable Cause" under their Bill of Rights. They could not realistically change that so we agreed to extradite on the basis of a rough parity of tests based on reasonable suspicion here and based on probable cause over there. It has produced controversy; not when we extradite terrorists, but when we extradite white-collar workers based on that test. It used to take eighteen months to extradite from here to the USA. We can now extradite in less than half that time. Effective extradition procedures like this are crucial in enabling agencies to combat the growth of international crimes.
Computer Crime presents wider challenges. Pornography that is illegal here may not be illegal in other countries. We are developing a agreements to enable police and judicial systems to work together. If someone who uses a computer in Japan to scam someone in Britain, then I would want them to be able to be arrested in Japan and the computer seized - even though the only victim was on the other side of the world.
As with other areas of life, IT now forms an integral part of policing and crime. We must be ready to take advantage of the challenges that new technology provides and use it to improve our response to the threat posed by organised crime. This may be in improving the speed of communication between agencies or in deriving new methods of gathering evidence but whatever the way it must never be overlooked or delayed as this will simply hand an advantage to our mutual enemies.
Here in the UK the creation of the Serious Organised Crime Agency, SOCA, was specifically to deal with organised crime. Its purpose is to reduce the harm caused by serious organised crime. One of the key aims of SOCA is to work in collaboration with UK and overseas agencies and thus prevent serious and organised criminals avoiding detection by crossing over borders into numerous other jurisdictions.
THE FRAUD BILL
The Government is currently modernising our laws on fraud and before closing I would like to highlight the new fraud Bill.
The Fraud Bill replaces the eight deception offences in the Theft Acts with a new general offence of fraud. This aims to provide a clear and robust framework that is flexible enough to deal with increasingly sophisticated types of national and international fraud.
The new general offence of fraud carries a maximum sentence of 10 years.
The three ways of committing the general offence are:
- First, by false representation in any form.
- Second, by failing to disclose information to another person where there is a legal duty to disclose the information.
- And last, by the abuse of position - meaning taking advantage of a position where one is expected to safeguard another's financial interests.
In addition to the general offence of fraud, the Law Commission recommended a new offence of "obtaining services dishonestly" to replace the current Theft Act offence of "obtaining services by deception". Clause 11 provides a new "theft-like" offence to cover services, thus addressing the current loophole regarding the fraudulent use of machines.
Clause 6 represents an addition to the Law Commission proposals, which we made following consultation with stakeholders. It introduces a new offence of "possessing articles for use in fraud and aims among other things to enable us to prosecute those using a home computer to commit fraud.
The Fraud Bill has been developed through extensive review process, involving consultation and dialogue. This should therefore ensure that committing fraud in all its different forms would become that much more challenging and increase the penalties for criminals and organised gangs alike.
Concluding remarks
In concluding my presentation to you, I would like to thank the Cambridge International Symposium for organising such a useful event.
Economic crime is not only a challenging practical problem for police agencies but also a challenging intellectual problem for lawyers, bankers, businesses and all of us who use the Internet.
Its victims range from those in the twin towers on 9/11 to the user of a home computer, to the international banking system.
In dealing with this, what is required is an international enforcement response that utilises all the tools available and, if necessary, develops new tools to meet the needs of preventing international crime.
There could be few more important topics for you to discuss at the moment and I wish you well in you discussions.
Thank you.