Memorandum from the City of London Police
Submitted by the Office of the City Remembrancer

Introduction

  1. City of London Police is the National Police Chiefs’ Council Lead for Economic and Cyber Crime and National Lead Force for Fraud.  City of London Police operates Action Fraud and the National Fraud Intelligence Bureau, funded by the Home Office, which is the national reporting and recording centre for fraud and cyber-crime. It also provides training and continuous professional development for the police and private sector workforce through its Economic Crime Academy.

 

  1. Along with the Crown Prosecution Service and Serious Fraud Office, City Police is part of the National Economic Crime Centre which leads the cross-system law enforcement response to fraud.

 

  1. City Police and the City of London Corporation acting through its Police Authority Board (PAB), have a unique role to play in the fraud landscape, providing a bridge for law enforcement into financial institutions and, importantly, also into the fintech sector. With the support of the PAB and stakeholder groups such as UK Finance, City Police has consistently shown how it can harness and work with the private sector in the pursuit and prevention of the perpetrators of fraud. This includes working through the Insurance Fraud Enforcement Department (IFED), the Dedicated Card and Payment Crime Unit (DCPCU), and internationally with Microsoft.

Police capabilities

  1. The majority of investigations below the threshold of the Serious Fraud Office are undertaken by policing (over 90% of investigations across the system[1]). Across policing there are around 1,000 specialist fraud officers and a number of other officers who investigate fraud alongside other crimes.

 

  1. Fraud is not a priority in all police forces and it is not a Strategic Policing Requirement. It competes for resources with other high priority crime including serious violence and sexual offences. City Police is working with the Home Office to secure funding to create a new national network of investigators across the regions in England & Wales. This will increase police capacity for high harm fraud investigation including online fraud. The network will be coordinated by City Police as National Lead Force.

 

  1. The Fraud Investigation Model developed by City Police, and recognised as Authorised Professional Practice by the College of Policing provides police investigators with a best practice framework for serious and complex fraud investigations. Through its Economic and Cyber Crime Academy, City Police provides training for police officers and public and private sector partners and holds a national register of accredited counter fraud specialists. It trains around 1,000 people per annum, a majority from policing. This includes training in online investigation skills.

 

  1. City Police is part of the online fraud group comprising law enforcement, financial services companies and online platforms. The group is working together to address online fraud through information sharing, prevention and other activity.

Crown Prosecution Service

  1. As National Lead Force, City Police investigates serious and complex fraud affecting victims from across the country. At any time it has over 400 live fraud investigations affecting around thousands of victims. In 2021 City Police investigations resulted in 210 arrests, 178 charges and 152 convictions. 
  2. City Police works closely with the Crown Prosecution Service (CPS) Specialist Fraud Division on its investigations. It has a Risk Review Panel comprising senior leaders from City Police and the CPS provide a forum for management of high-risk cases. For example, a high-risk multi-million-pound investment fraud involving hundreds of victims with significant case disclosure issues was escalated to the panel. It resulted in the appointment of a disclosure counsel and scheduled fortnightly case management meetings between counsel, CPS and police. This led to an aligned strategy for dealing with disclosure, legal issues, information management.
  3. Specialist Fraud Division (SFD) would benefit from expansion, particularly with the planned uplift in police resources over the next few years. SFD prosecute the most complex and/or serious economic cases for the CPS. SFD also deal with work from the Police Intellectual Property Crime Unit and have recently started taking on cases from other specific dedicated units in City Police such as the Insurance Fraud Enforcement Department. Like policing, regional complex case units have multiple priorities meaning fraud can at times be less of a priority when competing for resources with violent crime and sexual offences.
  4. Inconsistent advice for in custody charging by CPS Direct can be an issue for complex fraud cases although the proportion of custody fraud cases is quite small. City Police is fortunate to work with the SFD and a lawyer is usually allocated to our investigations very early in the process. This allows for early investigative advice and ensures they are familiar with the case by the time suspects are brought into custody. There is then a named prosecutor who knows the case and is available to make the charging decision. We would advocate this approach for all complex fraud cases nationally as it tends to result in more successful outcomes.
  5. There would be benefit in prosecutors and investigators collaborating more at an early stage to align investigative and prosecution strategies, including the approach to disclosure and maximising opportunities for civil recovery/investigation (for proceeds of crime). Prosecutors have an important role in encouraging their use during early consultation. City Police, the CPS and private sector recently worked together using specialist powers to achieve the largest ever proceeds of crime forfeiture in the UK. A South African law firm operating from UK offices and a Cypriot registered company both agreed to forfeit €34m to settle litigation alleging that the funds in two bank accounts were from unlawful conduct. By working with partners from Europol, foreign law enforcement agencies and stakeholders from the private sector, including Lloyds Banking Group, the investigation identified overwhelming evidence the monies were unlawfully obtained from international money laundering and layered through the UK banking system to present a veneer of legitimacy. Account Forfeiture Orders were applied for by CPS Proceeds of Crime specialists and City Police at Westminster Magistrates’ Court, which were granted by consent. This was the first time the CPS has used powers under the Proceeds of Crime Act 2002 to appear in court on behalf of the police in an Account Forfeiture Order.

International

  1. Law enforcement partnerships to facilitate intelligence sharing and investigative activity are essential to tackling fraud perpetrated from abroad. City Police has economic crime officers seconded to the New York District Attorney’s Office and Interpol who build international relationships and facilitate intelligence sharing and joint operational activity.
  2. Action Fraud crime reports are routinely monitored to identify overseas links and opportunities to work with overseas law enforcement to address fraud threats affecting the UK. For example, a recent initiative to tackle romance fraud involved targeting criminals overseas committing fraud against UK citizens. A partnership between City Police, the National Crime Agency and law enforcement in Ghana was developed so policing could send intelligence referrals to the Ghanaian authorities where they had identified suspects based in Ghana, or with a link to the country. This has led to over £175,000 being repatriated to UK victims of romance fraud. There are 10 active investigations in Ghana into suspects believed to be defrauding victims in the UK as a result of these referrals (with further planned) and have been 4 arrests to date. In December 2021 there was coordinated operational activity between the UK and Ghana to disrupt a money mule network linked to multiple Ghanaian romance frauds.
  3. Another example of law enforcement partnerships relates to computer software service fraud being perpetrated by companies operating in India. City Police worked with Microsoft to develop the intelligence and supported Indian authorities to take enforcement action by providing vital witness statements detailing the victims’ dealings with the companies concerned. This led to action taken against 47 call centres and 88 arrests.
  4. Prosecutors can obtain evidence from overseas using mutual legal assistance (MLA). This takes the form of a formal International Letter of Request (ILOR) issued by a designated prosecuting authority or a Court. ILORs, however, are not always effective. Some countries accept and progress and some do not. In addition, CPS and the Home Office (UKCA) are required to carry out risk assessments before requesting evidence from many countries. These assessments mean ILORs cannot be sent in some cases. Quite often this means cases are not progressed by policing and international lines of enquiry continue to frustrate investigations. Aims and objectives of European law enforcement partners can be based on vastly different evidential requirements due differences in legal systems and stances on information sharing which makes collation of evidence more challenging. 
  5. Policing established an International Crime Coordination Centre (ICCC) to provide continuity for UK law enforcement following withdrawal from the European Union. Functions include intelligence sharing through the Foreign Law Enforcement Community and the newly formed National Extradition Unit. For the past two years, the City Police has had a Detective Inspector on secondment at the ICCC.

Financial evidence

  1. Obtaining evidence from financial institutions can be challenging. The demand for information and evidence to support fraud investigations is significant and financial institution sources in this area are limited. Pre-order enquiries are most frequently undertaken by accredited financial investigators and many financial institutions have come to expect this. It means that investigators need to rely on already stretched financial investigators to carry out their enquiries which is not the most efficient use of resources. The national register of fraud investigators held by the Economic and Cyber Crime Academy would be a useful way of extending the pool of investigators who undertake regular liaison with banking institutions providing them with confidence in their dealings with policing and assisting the fraud investigative process.
  2. In order to request charging advice, the CPS require policing to provide a full evidence file. However, financial institutions are reluctant to provide a witness statement unless legally compelled. This is because there are times when despite vast amounts of time spent preparing statements they have not been used, and staff who completed the witness statements have been called to attend court across the country only to be told they are not required once they arrive, this is often because the witnesses evidence is only agreed by the defence at that time. Without the information in an evidential format, it is not evidence against the suspect. This difficulty with getting a witness statement means police are less likely to progress the case. While acknowledging CPS charging decisions have to be made on evidence rather than information a more considered approach to what is required to inform a charging decision would help to address this.
  3. Disclosure from financial institutions can be problematic. Normally they will require a court order stipulating exactly what material the officer wishes to view and why. Given the importance of this information to fraud investigations an approach more aligned to applications for communications data and surveillance requests, or another body to authorise banking applications would help to reduce demand on crown courts. This would still provide independence and oversight of applications.

Disclosure

  1. The volume of evidential documentation relating to fraud cases is huge.  City Police has over 70 million pages of evidence relating to ongoing its investigations. The current disclosure system typically adds six months to a medium size investigation. The Attorney General Guidelines 2020 do make provision for the preparation of schedules to continue beyond the point of charge for large and complex investigations where it may not be feasible or necessary to provide schedules at the same time a charging decision is sought due to the quantity and complexity of data to be analysed. However, the position remains that disclosure schedules need to be completed and signed prior to any charging decision.
  2. The level of disclosure necessary is decided on a case-by-case basis and is subject to interpretation.  Disclosure protocols set by counsel based on the relevancy test are often effective, but dependent upon the views of the judge and the ability of counsel to reach agreements with any disputes, dealt with by applications to the court. Clearer guidance as to what is reasonable and necessary for the disclosure process to be signed off and consideration of disclosure protocols being made a requirement, not an option, would reduce the length and resourcing requirements of fraud investigations.
  3. Although there are standard approaches following 2020 Attorney General Guidance, General Data Protection Regulation compliance impacts the disclosure burden in criminal investigations. Counsel often takes a different opinion on the level of redaction required. From treatment of information relating to a co-accused no longer part of a case, treatment of moving images of members of the public in body worn footage to how many digits should be redacted from a telephone number. Early consultation between CPS and counsel to develop disclosure policies concerning the level of redaction and GDPR compliance significantly enhance the prospect of a successful prosecution.
  4. The volume of information held on digital devices is substantial and can be duplicated across numerous devices. Although key search word strategies are agreed to limit the amount of documentation that needs to be reviewed, thousands of positive results still need to be reviewed and scheduled for disclosure. Rules on disclosure require modernisation to take account of bulk data from digital media. 
  5. Other jurisdictions do not have the same rules regarding disclosure.  For example, in a case involving prosecutions in both the UK and Switzerland, we had to request, review and disclose the investigation record and transcripts of trial (approx. 50,000 pages) but the Swiss did not need UK papers for its trial.

Courts and judiciary

  1. The complexity and size of fraud cases continue to result in delayed and long trials which has been compounded by court availability during the pandemic. Cases involving physical harm such as serious sexual offences are often prioritised over fraud. The length of time it takes to go to trial and achieve a conviction causes additional stress and anxiety for victims.
  2. Backlogs in the courts system also affect confiscation hearings, which are essential to victims getting their monies back. Currently judges personally decide the extent of video viewing used in their courts, some using it significantly less than others. Remote hearings should become the norm in enforcement, confiscation and other associated proceedings under the Proceeds of Crime Act. This includes restraint proceedings in Part 2 of POCA. This would allow justice to be done more quickly.
  3. Defence statements are frequently submitted late and do not clearly identify the defence case. The judiciary could be more proactive in managing issues by increasing the use of judges orders pre-trial.  
  4. Complex fraud trials are protracted, and the evidence presented can be difficult for juries to understand. Having experts would be of assistance as they would retain focus and digest complex financial evidence. On long and complex trials there could be a case for using an expert panel to reduce jury attrition and the potential need for a retrial. Jury by panel of judges remains an option. It was recommended in the 2006 Fraud Review and there have been attempts to pass such a Bill through parliament.
  5. Although specialist economic crime courts are not currently in existence, the City of London Corporation continues to progress its plan to build the City of London Law Courts, a flagship for Her Majesty’s Courts and Tribunal Service and the Ministry of Justice containing dedicated 18 court rooms: Crown, Magistrates, County and Civil Court. The idea of specialist Economic Crime Court sessions nationally staffed by specialist judges and staff would be welcomed, alongside specialist regional courts.
  6. A mandatory CPD training module on fraud and its impacts on the victim and their vulnerability, should be introduced for all the judiciary, regardless of specialism. This should form a core element within the Judiciary College digital training and leaning and development offer.

Sentencing

  1. Fraud causes serious harm to victims’ finances, mental health and emotional wellbeing. In the 2020/21 financial year Action Fraud identified and supported 28 risk-to-life incidents and 234 individuals at risk of suicide or self-harm. Further to this, nearly 340,000 victims who reported to Action Fraud, self-identified as vulnerable, the real number is of course likely to be much larger.
  2. In some cases, it results in suicide and self-harm. For example, in October 2020 a key worker who suffered mental health issues committed suicide by jumping onto a motorway following contact by scammers spoofing HMRC that morning. The fraudsters led her to wrongly believing she was in trouble for fraud and owed £18,000. She referenced the calls from HMRC, among other pressures, in her suicide note.
  3. There are also long-term financial implications when life savings are lost, and physical and emotional harm from being deceived. Fraud victims have described scams as “financial violence”; the outcome being worse than physical injury. A victim’s ability to trust coupled with a feeling of blame and subsequent isolation shifts the discussion away from merely the impact in monetary terms.
  4. There is currently an over-reliance on the level of financial loss in the sentencing guidelines. The impact of losing £5,000 to one person can be as impactful as the impact of losing £50,000 to another, depending upon their financial stability. As identified above, harm does not always correspond to financial loss. The sentencing guidelines should allow for a full range of sentencing powers for very high harm but low financial loss. Sentencing guidelines should be updated to provide a mechanism to elevate an offender up the sentencing categories based on their actions contributing to serious emotional or other harm. Sentencing guidelines could also be updated to include other aggravating factors such as hindering recovery of money to the victim. Given the harm caused to individuals by fraud the maximum sentence for fraud (currently 10 years) should be at least in line with the maximum sentence for money laundering (14 years).
  5. In 2011, there were attempts to introduce a 50% reduction in sentence for early guilty pleas. This could be revisited for pre-charge admissions in police interview for economic crime offenders as it would save police resources, reduce court time and provide swifter justice for victims.

January 2022

[1] The Police Foundation, More Than Just a Number, Improving the Policing Response to Victims of Fraud, December 2018.