Fraud: The battle was lost twenty-five years ago
But the war on fraud can still be won
This is the second post in a series based on a Keynote speech given to the SOCEX Economic Crime Conference in November 2024.
One of my favourite film scenes is the battle for Helm’s Deep from Peter Jackson’s ‘The Lord of the Rings’ series. Besieged by an overwhelming army the tiny garrison is losing ground, the outer perimeter wall has fallen, only a miracle can save them. At the last minute they charge out, just as the miraculous arrival of a wizard and all his magic saves them all. That at least was what I was thinking. My script, which I mostly stuck to, said this:
“The global war on Dirty Money is not going well. That is no secret AND If we carry on the same way expecting a different result, we will fail. We need to think differently.
Somehow, we (and the rest of the world) keep making the same mistake over and over again. We all separate economic crime from crime and the proceeds of crime from both. That separation lets the bad guys win. We need to bring these three things together. I see economic crime not as a problem but the solution to other crime. I see the proceeds of crime as the solution to both crime and economic crime. But as long as we keep them separate nothing is going to change. As long as we keep saying fraud or economic crime we will lose the battle and, yes, I do know that I am speaking at an economic crime conference!
My first story this evening is of Fraud in the UK. It’s a story of Chief Officers. For clarity that means all the ranks above Chief Superintendent (not just Chief Constables and Commissioners).
In 1997 the Chief Officer of the Metropolitan and City Police Company Fraud Squad went back to the City taking his officers with him. It seemed like a routine re-organisation at the time, the sort of thing big organisations do all the time. Fraud then, was perceived as victimless, convictions were rare, sentences were light, there was no Proceeds of Crime Act, so everyone kept the money. It was felt that corporate victims should look after themselves. There was even a Company Fraud Squad joke, which I was told on my arrival:
Q. “What's the difference between the goodies and the baddies?”
A. “We’ve got evidence against the baddies”.
Without a Chief Officer, the Metropolitan Police Fraud Squad was doomed. By 1999, the Superintending ranks had reduced from eleven to four, there were eight simultaneous vacancies for Detective Inspector, one of which I filled. Unbeknownst to me I had just boarded the Titanic.
At the Fraud Squad, we needed to get rid of the ‘F’ word, which was clearly an albatross around our necks. In desperation, the seventy-year old Fraud Squad changed its name from Fraud Squad to Economic Crime Unit. The ruse did not work. Two years later the Fraud Squad was asked to consider ‘stopping all fraud investigations’ and get our hats on to help our colleagues out on the streets. For context, it wasn’t all tea and muffins at Scotland Yard, we were facing a tidal wave of burglary, robbery and other volume economic crimes. Something had to give and fraud was the sacrificial lamb.
In 2003, just as the Met was enjoying a huge investment in rising police officer numbers the Economic Crime Unit budget was sliced by 30% in real terms. Without a miracle, we were doomed. I think something similar was happening across the country. We were all doomed without a miracle.
The point here is that Chief Officers are important, take them away and the resources disappear, put them back and resources will appear. We need to find a way to get Chief Officers back in the game.
I think this Fraud Squad story is important for today. The battle over fraud was lost twenty-five years ago, we just fail to see it, because the looked for miracle actually happened and all the Fraud Squads throughout the country were all saved in 2003.
The story of Proceeds of Crime Act was a triumph, specifically for the police. For the other agencies that already did asset recovery, POCA made the work significantly easier, but for the police it was revolutionary.
In the olden days, before POCA, convicted criminals kept the money. Four agencies tried to make poor legislation work. The vast majority of all casework was by Customs, then equally the National Crime Squad and the SFO, last and least the police service (including the City of London Police).
There were a few dozen cases and a few million quid.
Then after POCA, from 2003 onwards, the dozens of cases became hundreds, then thousands, the few million quid became tens and then hundreds of millions. Every year after POCA was a record-breaking year, for a whole decade. By 2012 the forty or so geographic police forces went from last and least to more cases, more Financial Investigators and more asset recovery than all the other agencies put together.
The ingredients of that success are still with us. We could do it again. I will explain how at the end of this talk.”
This post is an excerpt from a longer speech. My main point here is that if we address crimes by category the police will give them treatment they deserve. “Fraud”, “economic” or “financial” crime will always be less of a priority than violence, disorder, life-threatening situations and all the myriad of other police tasks. The battle for fraud is lost, we should accept that is true in the face of overwhelming evidence. But the war on fraud can still be won. Stay tuned for more, or as they say these days: hit the subscribe button below