By Chris Lang
Fraud accounts for one-third of all reported crime in the UK. People in the UK are more likely to be a victim of fraud than any other offence. Since 2014, the City of London Police has hosted Action Fraud, the national reporting centre for fraud. But an investigation by Paul Morgan-Bentley, a journalist with The Times, published in August 2019, revealed that Action Fraud was not fit for purpose.
In January 2020, Sir Craig Mackey QPM completed a review of Action Fraud and how the City of London Police deals with fraud. He found serious problems, such as the following:
For fraud to be investigated effectively, Action Fraud and the NFIB need to work seamlessly with the 43 police forces in an assured ‘end to end’ process. However, the reality is that when cases are sent to forces for investigation, they frequently become lost among other priorities; there are disagreements about which force should take responsibility for investigations; and, most importantly of all, rarely are there sufficient detectives available to investigate them.
In October 2020, the Treasury Committee launched an Economic Crime inquiry.
On 25 January 2021, the Treasury Committee held a formal meeting in which politicians asked questions to Graeme Biggar, Director-General, National Economic Crime Centre, National Crime Agency, Patrick Campbell, Temporary Assistant Chief Constable, executive lead for Organised Crime, Counter Terrorism and Intelligence at Police Scotland, and Angela McLaren, Assistant Commissioner for Economic and Cybercrime, City of London Police.
The meeting is two hours long and is available in full on parliamentlive.tv. The transcript is available here. At 15:57, Angela Eagle, Labour MP for Wallasey, started a series of questions about investigations of frauds, and how many convictions are obtained.
The questions and answers reveal the failure of the UK authorities to deal with the plague of boiler room scammers. Of the frauds reported to Action Fraud, only between 1 and 3% result in cases going to court.
Action Fraud takes no further action on many of the reports of fraud that it receives.
Below is the part of the Treasury Committee meeting resulting from Angela Eagle’s questions. While it’s depressing, it is at least being talked about in a Treasury Committee. NECC’s Graeme Biggar is fully aware of the scale of the problem, and the fact that the authorities are both failing to provide a deterrent for fraudsters, and failing to address the needs of people who have been scammed.
Dame Angela Eagle: Graeme, what percentage of frauds reported are cleared up and convictions secured?
Graeme Biggar: Angie might be in a better position to answer that if —
Angela McClaren: Thank you. Sorry, please bear with me: I am just getting some figures out. We can provide to the Committee figures in written format, if that is helpful for your evidence gathering. This is quite complex and I still consider myself relatively new here, so you will forgive me if some of my explanations are not as precise as some of my predecessors’.
Dame Angela Eagle: Sure — and feel free to send us that written evidence once you have given us your verbal answer.
Angela McClaren: I will. If I look at trends over the past few years in terms of judicial outcomes and balancing those judicial outcomes against the disseminations that we have made from Action Fraud to forces, we are seeing improvements in the number of positive judicial outcomes that are coming through. That is the number of positive outcomes; it is not the same as somebody being convicted in a court. If I were explaining this in Scotland, it would be the number of charges that had been put forward. So that’s how many reports we are making into —
Dame Angela Eagle: You have said that it has gone up, but you have not told me what the figures are.
Angela McClaren: The figures are these. In 2016-17, the percentage of positive outcomes was 11%; that has now risen to 19%. I don’t have that in front of me in figures; I only have it in percentages, but we can provide that—I apologise; it’s a few lines further up. What we are seeing is that this year—sorry, last year, we saw 6,377 outcomes from 33,000 disseminations. That is, in terms of a percentage—19% is the figure that I have been given and is in front of me.
Is that where we want it to be? No, it’s not. We would like to see further improvements in this space. We can, as I say, provide some written information to you, but what I would say is that, on the figures that we have seen this year to date, which I don’t have in front of me at the moment, we are seeing that figure rising again. So, percentage-wise, we are seeing improvements—as I say, we can put that in—but it is not as positive as I would like it to be.
Dame Angela Eagle: Right.
Graeme Biggar: Dame Angela, could I add to that? The figures Angela provided were as a percentage of disseminations, I think. Those are when the data and the reports come into Action Fraud and they pull it together to see whether they can link it with other frauds or whether there are any leads that a police force could actually follow up, and if there are, they pass it off to a police force.
There are, of course, an awful lot that come in where there is just no information to follow up on, which is very unfortunate for victims and, frankly, very uncomfortable for us, but it means that the percentage of results compared with actual reports that come into us will be a lot lower than the figure Angela mentions.
Dame Angela Eagle: It is tiny, isn’t it?
Graeme Biggar: It will be between 1% and 3%, depending on exactly which figure you take it from.
Dame Angela Eagle: “Well I mean there’s not that much difference between 1 and 3% in terms of trying to persuade potential criminals that indulging in fraud might actually be a risk for them, is it?”
Graeme Biggar: No, there is not. We are working really hard to pull that up.
[ . . . ]
Graeme Biggar: The amount of money defrauded from the public reported to Action Fraud — Angela will correct me if I am wrong — was £2.3 billion last year. However, that is still an enormous figure; I am not in any way trying to diminish the point. If your point is that there is not a sufficient deterrent for fraudsters and there is insufficient recourse for victims, we absolutely agree.
Dame Angela Eagle: Do you think there is a hostile environment against economic crime in the UK at the moment?
Graeme Biggar: I think there is a more hostile environment than in some countries, but it is not nearly hostile enough. On fraud, Angela spoke earlier about some of the things we are trying to do.
My quick pitch on it is that there are five things we need to do to make a material difference here. The first is around leadership and governance. We have not pulled this community together previously. One reason why the National Economic Crime Centre was set up is to do that, but we need really clear policy leadership in the Home Office and then operational leadership from my team to pull everyone together, because it has been a disparate community.
Secondly, we need much stronger intelligence capability. We have traditionally looked at fraud on the basis of victim reports. That is not sufficient. We need to combine it with bank data. We need to put our covert collection assets on it. We need to bring in the intelligence agencies to significantly improve our understanding.
Fraud does not happen in the volume that it happens unless it is done in quite a sophisticated way by organised groups, so we need to get that understanding and identify those groups. Thirdly, we need to pursue those felons in a much more top-down, targeted way. Instead of chasing every single victim report that we get in, which we would love to be able to do but will never have the resources to do, it is better to try to identify the groups that are creating the most harm and go after them. Fourthly —
Dame Angela Eagle: This is crime 101, though. Why has this not happened before now, given the damage being done and the relatively risk-free environment in which fraud is being allowed to fester?
Graeme Biggar: It has ebbed and flowed over the years. We have been better at this in the past.
Dame Angela Eagle: Ebbed and flowed between 1% and 3%?
Graeme Biggar: Ebbed and flowed in terms of the quality of our response over a decade past, but it is not good enough at the moment, and I am not defending that.
Dame Angela Eagle: The issue is surely that those who are very good at making their money in this way are often organised crime, and if you can defraud or create circumstances where you can get round the law in one instance, you can be involved in trafficking, drug trafficking and terrorism and all sorts of other things. You are allowing crime structures to flourish by not tackling fraud, aren’t you?
Graeme Biggar: You are certainly allowing crime to flourish and there is more poly-criminality, as we call it. As it happens, we do not see that much interchange between —
Dame Angela Eagle: Can we have some poly-convictions as well as poly-criminality, please?
Graeme Biggar: As Angela mentioned, there were 6,000 last year. It is nowhere near enough, and we are trying to do a lot more with the intelligence capabilities that we are developing and the procedure that I talked about.
Dame Angela Eagle: The Mail on Sunday recently reported that NCA [National Crime Agency] financial investigators have privately stated “that they believe targeting corrupt businessmen with access to ‘expensive QCs and claims of private wealth’ is a ‘waste of time’”. Does that show the kind of determination to crack down on these highly dangerous people that we want to see in a modern democracy?
Graeme Biggar: It does not. I am baffled by that comment. It has not been part of any conversation that I have had within the NCA. We have really dedicated people working very hard, both investigators and lawyers, to do are exactly what The Mail on Sunday was suggesting we do.
Dame Angela Eagle: How many convictions have they managed?
Graeme Biggar: It is a mixture of convictions and civil action as well; I think the context of that particular article was pursuing people through civil action. We have been trying to use the new powers that we got in the Criminal Finances Act 2017, unexplained wealth orders and account freezing orders, to go after criminals in a different and better way, and we have been trailblazing with that.
We have had four unexplained wealth orders so far; we have lost one of those in the courts and another one has gone all the way to the Supreme Court. The point that was implicit in the article you were referring to—that criminals with a lot of money will fight you very hard in the courts and that is very expensive—is true, and that presents challenges for us, but we have also had successes. We won in the Supreme Court recently on the very first unexplained wealth order, and then on another we managed to seize £10 million, or come to a settlement where we took £10 million, off a suspected money launderer in Huddersfield and Leeds. We have had a really good success there.
We can use account freezing orders much more often than unexplained wealth orders, which will be used in fewer circumstances, and we have done many more of them. That is now in their hundreds, rather than just in the few for unexplained wealth orders. I am not saying we do not have a long way to go, but we are making progress.
Dame Angela Eagle: I think we have a very long way to go. Thank you, Chair.
Chair: I will come to Harriet in a sec, but may I very quickly follow up on that, Graeme?
Given the level of resource you have, I am trying to work out in my mind, given the very low clean-up rate here, whether this is an order of problem where more resource and being smarter is going to get us to the point where criminality thinks it is not worth it, or whether it is just unrealistic for us to expect, given the resources you are likely to have, to ever get that number up to, say, 20% or 30%, where people start to think that it is not worth the chance.
Graeme Biggar: I think we can make a material difference to it. There will always be fraud and there will always be criminals who are incentivised to do it, in the same way that there will be other crime. The fourth leg of what I was going to suggest was around protect: it is designing out fraud. You are absolutely right that we will not have the resources to pursue everyone, but we can make it harder to do this. That means working with the banks, the social media companies, the telcos and everyone else to try to design out the opportunity for fraud.
The fifth element is making sure we put the right victim support in place and get the right reporting in from victims, which City of London police have been working very hard at. There will always be fraud, of course, but I absolutely believe we can make a material dent in it if we carry on with this plan, get better data-driven intelligence and use it to go after the people at the top of the tree.