Financial Regulation

Written evidence submitted by the City of London Police

Introduction

1. The City of London Police (CoLP) has led the delivery of the National Lead Force (NLF) and National Fraud Intelligence Bureau (NFIB) since 2008. Prior to this, the City Police had been designated lead force for fraud for London and the South East since 2003. These fraud functions come together as the Force’s Economic Crime Directorate (ECD).

The National Lead Force (NLF)

2. The NLF provides specialist advice on law enforcement dealing with often highly complicated and detailed criminality. Its objectives are to provide advice to all police forces, industry investigators and other law enforcement agencies to disseminate best practice, deliver training and act in an independent advisory capacity to other forces on request. The Lead Force provides a national investigative capacity to deal with all types of fraud (subject to agreed case acceptance criteria) and to assist other forces in local investigations and acts as a single point of contact for anti fraud advice.

The National Fraud Intelligence Bureau (NFIB)

3. The National Fraud Intelligence Bureau (NFIB) was created to help UK law enforcement agencies and their partners catch and disrupt criminals and to alert communities to threats from fraud. The Bureau gathers a large volume of information on suspected fraud much of which is not reported to or made routinely accessible to the police. This is analysed and turned into intelligence such as the identification of the scale of fraudsters’ criminal activities. The intelligence is then used to support law enforcement operations.

Working with other Agencies

4. Although the deployment of the NLF is subject to agreed case acceptance criteria, in practice there is a lack of clarity over referrals with the result that overlap occurs with other agencies responsible for the investigation and prosecution of economic crime. The need to overhaul structures gives rise to a question of whether the existing architecture should be remodelled, or whether doing so would unnecessarily compromise arrangements which have been shown to work. The NLF/NFIB model has been shown to be effective in providing a delivery arm for other agencies.

The City of London Police's capabilities in dealing with economic crime

5. The cost-benefit ratio of CoLP’s capability has, arguably, never been more apparent or more important. A wide range of policing resources each with expertise in their given area is available to the Economic Crime Directorate of CoLP [1] . This feature, combined with established experience in general fraud investigation, allows CoLP to undertake a wide-range of investigations, invariably requiring methods and bringing skills, knowledge and experience which are often beyond the cumulative capability of other agencies.

6. More specifically, CoLP is the UK lead for delivering and managing covert investigations linked to financial crime. This includes possessing an independent infrastructure to both authorise and review covert activity in line with current legislation, an ability recognised by partners, which leads to regular requests for assistance from overseas law enforcement agencies.

7. Intrinsically linked to this is CoLP’s expertise and existing infrastructure for dealing with duty of care issues for victims and witnesses, including when required complex witness protection issues. CoLP has already adopted ACPO best practice guidelines, so as to manage and disseminate products which are linked to either confidential or sensitive intelligence sources.

8. CoLP has pioneered the management of mass-victim cases. The processes and relationships developed to deal with often hundreds of victims within one case, have taken considerable time, experience and trust to develop. The techniques now regularly used for mass marketing investigations and other types of investment fraud are now being recognised as national, and in some cases, international, best practice for victim care and management. These relationships have flourished and reflect the Force’s long experience of fraud investigation and its history of partnership working.

9. The Force’s reputation is an essential ingredient of the Force’s ongoing operational success. The willingness of other agencies, both private and public sector, to engage with CoLP across its range of operational and strategic activities is a significant enabler for the Force’s joint operations and prevention work.

10. CoLP has well established working practices with the Bank of England, central to the work of the Force in terms of both economic crime and security functions, along with its strong relations with colleagues in the Security Services. The Force has built on established relationships within the UK and internationally to enhance its effectiveness with the US Federal Bureau of Investigation (FBI), US Immigration and Customs Enforcement (ICE), the Spanish National Police, the German Federal Police, the Royal Canadian Mounted Police (RCMP), the Australian Federal Police, Interpol and Europol. Other parts of the Force also contribute to the delivery of National Lead Force and National Fraud Intelligence Bureau functions. by providing supporting services.

11. Progress since the establishment of the lead force arrangements in 2008 has been rapid, with over 600 investigations currently underway dealing with financial crime involving assets valued at over £5.2 billion [2] . A total of 603 suspects are linked to current ECD investigations of which 338 are on police bail, 129 have been interviewed under caution (but not arrested) and 68 are wanted/missing. There are 32 defendants wanted on warrant and a new process has been completed to assign responsibility to ensure these are monitored and actioned. 188 defendants have been charged and are awaiting prosecution. The detection rate is currently 80%. The total number of victims linked to ECD investigations is 3,080.

12. The CoLP has an established reputation within the Criminal Justice System, especially among defence counsel. It utilises a tried and tested case management system which is supported by a dedicated and effective team, with an over-arching CPS unit. This is undoubtedly a direct contributor towards a conviction rate of 85% for CoLP’s Economic Crime Directorate.

13. Until recently, the true extent of fraud was not visible to the police or public despite accurate data being held by numerous parties outside the police service. This situation prevented the police and public from seeing the true extent of fraud and making appropriate judgements on how to deal with it. CoLP adopted a different approach by securing agreements with partners to allow their data to be fed legally, securely and automatically into the NFIB. Working with partners, CoLP has built ‘Know Fraud’ (probably the most sophisticated police intelligence system in the world), which is able to analyse millions of records to identify crime networks.

14. NFIB allows the police and others to see for the first time, crimes, and the organised criminals who perpetrate them along with the thousands of victims who suffer as a result. It has enabled law enforcement bodies across the UK to arrest criminal groups which had previously escaped the attention of the police because crimes were not reported or shared with the police. The Force’s Economic Crime Directorate has the ownership of and resultant responsibility for the management of the serious organised crime threat in relation to non-fiscal fraud (including money laundering) on behalf of the Organised Crime Coordination Centre (led by the Home Office). Currently, this stands at approximately one hundred and fifty organised crime groups across the country.

15. The CoLP has an international brand and an established track record of delivery, leading and supporting complex investigations, and looking after the needs of victims. Its geographical placement within a global financial centre enables the force to continue to build and extend the reach of NLF and NFIB by conducting further major cross border investigations against serious organised crime groups of which those with Northumbria Police and the FSA and West Midlands Police are current examples.

16. In performing its role as NLF, the City provides support and leadership to local forces in their counter-fraud work. In most cases, smaller scale local frauds are remitted back to local forces to act as the lead enforcement agency. This maintains local democratic accountability but with the reassurance that forces are able to draw on without recharge, the wider resources of the force that are required to support NLF investigations and the continued development of NFIB. In addition, many operations on larger frauds continue to involve local forces.

NLF and NFIB as part of a new Agency

17. It is possible at least in theory to consider the possibility of extracting the economic crime functions from the City police and placing them in a new Agency. But in practice it is likely such a move would be hightly disruptive both to the contiued smooth running of those functions, and also to the City of London Police whIch would become a 'residual' force. Stakeholders that supply CoLP with fraud data for the NFIB do so under legal agreements that took 2 years to negotiate and may not be transferable. Loss of these agreements would prevent the NFIB from operating, thereby denying the police and public access to vital data on criminals and victims that has taken so long for the police to acquire. Continuation of the existing financial and related support currently provided to CoLP by the City of London Corporation could not be assumed.

18. But more than these concerns, uprooting arrangements which have been shown to work for those which are untested and will require relationships to be rebuilt and confidence earned would be risky. Examination of alternative models, including those where the investigative and prosecution arms are contained within the same agency provide no grounds for assuming they achieve better results. A recent report suggests [3] , that the number of investigations conducted and successful prosecutions secured by SOCA, SFO, FSA and others is disappointing given the level of investment in those bodies. In the same paper, it is inferred that the City of London Police remain the most cost-effective response to fraud with a budget of approximately £8m per annum and 140 personnel, compared with the FSA (£43.7m and 35) and SFO (£43.4m and 300) respectively. The current figures for the City of London Police are shown in the Annex.

Conclusion

19. The need to avoid overlap and consequent inefficiency in the work of the agencies dealing with economic crime is clear. The CoLP would welcome clarification of the case referral criteria. An Economic Crime Agency could provide such clarification in respect of the agencies with which CoLP deals as NLF in high level fraud cases.

October 2010

ANNEX

City of London Police – Summary Statistical Data [4]

(a) ECD Budget

The figures above show a direct contribution of £6.85 million from City Corporation sources. This represents just under 50% of the ECD Budget.

In addition, the City Corporation contributes approx £490,000 to the rent of ECD Headquarters.

(b) Support to ECD from other CoLP directorates

(c) Manpower

The current Force complement is 879.

The ECD complement stands at 154 Police Officers and 51 other staff.

(d) Value of Cases under investigation as of October 2010

1. 664 reports are under investigation.

2. Value of crimes under investigation - £5.2 billion.

3. Of this sum –

(a) £1.5 billion was subject of attempted criminality which was prevented so the assets were not, in the event, lost;

(b) £168 million has been recovered.