Will the proposed National Economic Crime Centre ('NECC') really increase the effectiveness of fraud investigations and prosecutions for victims and, if not, will it be needed at all?
What is the NECC?
A new government unit, which will be based within the National Crime Agency, was announced by the Home Secretary Amber Rudd on 11 December 2017. The NECC forms part of the Government's eagerly awaited anti-corruption strategy and is intended to improve cooperation between the UK’s economic crime-fighting agencies. By overseeing the national police response to financial crime, and supported by enhanced intelligence, its function will be to ensure that financial crime cases don't get lost in the gaps that are said to exist between the different agencies that operate in this area.
It is reported that the Centre will have new powers to coordinate the private sector as well as being able to directly task the Serious Fraud Office, although at this stage the details are limited on what exactly these powers will be. Amber Rudd's announcement was that the Government "are taking action against economic crime and by that [she] mean[s] the high-level crime, the billions that have been laundered through the City of London".
Is there a need for the NECC?
Whether a dedicated agency is really needed to coordinate financial crime cases is, however, debatable. Official statistics show that there were 8,304 prosecutions for financial crime in 2016. In contrast, figures from the Office of National Statistics ('ONS') indicate that from July 2015 to June 2016, 627,000 fraud offences were reported to the National Fraud Intelligence Bureau. For the year ending June 2017 that figure had increased to 653,468. These figures only represent reported crime and may actually make up a relatively small proportion of the overall volume of fraud. This is because many instances, particularly those involving credit card and bank account fraud, are reported straight to the financial institution rather than the authorities. It was on that basis that the Crime Survey for England and Wales estimated that the number of frauds in the year ending June 2017 was in reality likely to be significantly higher.
What is clear, however, is that on any reading there is a huge disparity between the number of reported cases and those which result in prosecution.
Very few police forces have dedicated fraud squads to investigate financial crime, the City of London Police and the Metropolitan Police being notable exceptions. Those specialist agencies charged with investigating and prosecuting fraud, such as the Serious Fraud Office, tend to focus on high value white collar crime (e.g. the SFO will not usually investigate a case unless the value is in excess of £1,000,000 and is generally well regarded as an effective prosecutor).
This year the SFO has had a number of notable convictions both in respect of individuals and corporates (including via DPAs). However, looking at the year-on-year reduction in the Crown Prosecution's budget and the SFO's increasing reliance on blockbuster funding to investigate and prosecute the large scale frauds, it is clear that these agencies most need funding support.
It is therefore likely that the gap revealed by the ONS statistics is populated by the fraud cases which are not within the SFO's remit. These tend to go untouched by the police due to lack of specialist investigators and resources more generally, rather than demonstrating a need for better coordination between the existing agencies. These are the fraud cases that the government needs to address, but the creation of the NECC is not necessarily the solution.
For individuals and companies whose cases fall into the gap, private prosecutions provide an alternative mechanism to access the criminal justice system. The Business Crime team at Mishcon de Reya is uniquely placed to advise on this area of law.