Joint thematic report on the Proceeds of Crime Act 2002

Introduction

1. In this section we outline the main leadership tasks to ensure what has emerged as our principal mainstreaming recommendation is achieved. We have broken these down into the following areas:

• National partnership structures
• Police
• COPFS

National partnership structures

Serious Organised Crime Task Force ( SOCT)

2. The Serious Organised Crime Taskforce was established in October 2007 by the current Cabinet Secretary for Justice. Chaired by the Cabinet Secretary, the Taskforce brings together senior officials from a range of organisations and includes among its members the Lord Advocate, representatives of Serious Organised Crime Agency ( SOCA), Her Majesty's Revenue and Customs ( HMRC), the Association of Chief Police Officers (Scotland), Scottish Government officials, and representatives of a range of other law enforcement agencies. As its name suggests, the remit of the taskforce was to tackle, in a co-ordinated fashion, serious organised crime.

SOCT remit: to work with members to help realise the Scottish Government's commitment to tackling serious organised crime by:-

• identifying priorities for tackling serious organised crime in Scotland;
• making recommendations to Scottish Ministers on setting strategic priorities for serious organised crime for the Scottish Crime and Drug Enforcement Agency ( SCDEA);
• sharing best practice and improving co-ordination between law enforcement agencies and others;
• identifying innovative ways of working together and encouraging better ways of working together;
• developing a coherent Scottish response on reserved and other serious organised crime matters; and
• making proposals for legislation, research and other measures to tackle serious organised crime.

3. During this inspection it became clear from both political focus and media attention that there was a strong public interest in removing the visible trappings of crime from those who commit crime. In many cases the criminals who are visible in communities are not those operating at the most serious end of the crime spectrum. This view was supported by practitioners at all levels who could see the advantages of utilising fully these options as part of a balanced approach to preventing, disrupting and prosecuting crime.

4. In June 2009 the SOCT published a multi-agency Serious Organised Crime Strategy ³. We refer to the terms of this strategy in this report and make recommendations about how in achieving the recommendations of this report, the police and COPFS can contribute to it in their use of the Proceeds of Crime Act 2002. Indeed the strategy highlights the use of the proceeds of crime legislation as an essential tool in tackling serious organised crime.

5. The mainstreaming of POCA and related provisions will require effective cross agency working and from experience, we consider that this type of change which will affect many agencies needs to be led by a partnership group with the following qualities:

• direct Ministerial involvement; and
• representation at the most senior levels of the relevant agencies.

6. The SOCT has these qualities and already co-ordinates action in relation to serious organised crime. We believe that by widening the remit of the taskforce this will ensure that the provisions of the Proceeds of Crime Act are used to the fullest extent against criminals working at all levels and will contribute to the aims of the Taskforce. We therefore recommend in this report that the SOCT, in furtherance of its own strategy, develops a Proceeds of Crime Strategy in order to co-ordinate action among the criminal justice agencies. In addition we believe that, through the development of such a strategy, the SOCT will be well placed to inform future deliberations regarding resource allocation and deployment in relation to financial investigation.

7. Whilst in theory a separate group could be established to take a national lead for POCA, we believe the advantages in using effective existing structures far outweigh the disadvantages.

Police

The Association of Chief Police Officers Scotland ( ACPOS)

8. At a national level in policing, the ACPOS Crime Business Area is responsible for developing policy and co-ordinating activity in relation to investigating crime on behalf of the Scottish Police Service. The Crime Business Area includes representatives of all of Scotland's forces and is supported by a number of sub-committees.

9. During this inspection we noted the extent to which law enforcement agencies and the Crown Prosecution Service in many parts of England and Wales have embraced financial investigation as a key tactic against all levels of criminality. We believe that the impetus and drive shown by the CPSPOCA Champion, the ACPO lead for POCA and full-time ACPOPOCA National Co-ordinator have been key factors behind the development and co-ordination of their financial investigation and POCA capability.

10. We believe that the Scottish police service must develop sufficient capability and capacity so that a routine proactive approach to financial investigation at divisional level can be established. It must also agree to use the full range of criminal, civil and taxation powers and apply these to all appropriate offences. Creating an appropriate infrastructure within and across agencies to facilitate this poses a significant challenge, not least because of current economic conditions.

11. Previous experience demonstrates that appointing a single lead at chief officer level is an effective way of achieving the type of change we are recommending. We therefore suggest that ACPOS appoint such an officer who would also co-ordinate the Service's contribution to and implementation of the related SOCT strategy. Since the principal existing gaps lie within forces we would suggest that this officer should come from one of the eight forces rather than the SCDEA.

The Scottish Crime and Drug Enforcement Agency ( SCDEA)

12. Within the Scottish Crime and Drug Enforcement Agency ( SCDEA) we observed effective arrangements for financial investigation and POCA. The Scottish Money Laundering Unit ( SMLU) is central to the success of the Agency and has developed investigative expertise. In addition, the SMLU is the single point of contact for the Suspicious Activity Report ( SAR) regime facilitated by the Serious Organised Crime Agency. The SMLU's effectiveness is undoubtedly assisted by the expertise developed by its staff, which includes seconded members of staff from Her Majesty's Revenue and Customs ( HMRC) and the Department of Work and Pensions ( DWP). Moreover, its structure highlights the benefits of co-located partnership working in an area where the importance of information sharing is recognised.

The Scottish police forces - force level

13. In contrast to the central position occupied by the SMLU in SCDEA, force financial investigation units ( FIUs) were typically situated in peripheral positions in their forces. This seemed to reflect the peripheral position of financial investigation and POCA generally. In many forces we also observed complex chains of command and as a consequence, a lack of clarity about where senior officer leadership was coming from. There were some exceptions to this trend most notably in Dumfries and Galloway Constabulary and Strathclyde Police where we were impressed by the level of commitment to financial investigation shown, as demonstrated by the extent to which financial investigation techniques were used and the higher relative staffing levels of FIUs in these forces.

14. It is clear that a one-size-fits-all approach will not work in Scotland, given the differences in size and demand across the eight forces. As part of mainstreaming POCA we suggest that forces should assess the effectiveness of their current financial investigation structures. Rather than having independent FIUs and Fraud Squads, often situated in different geographical locations, we believe that those forces that have not done so already should consider the merits of creating Economic Crime Units containing discrete but complementary financial and fraud investigation capabilities. Fraud and POCA offences are often related, for example when the proceeds of fraud are 'laundered', or where confiscation potential arises. Furthermore, both crime types require effective financial investigation skills in order to secure successful results. We believe that a combined structure is likely to encourage greater synergy and improve investigative performance on both fronts.

15. Co-ordinating both disciplines in a single unit is likely to improve leadership arrangements as well. In particular, supervision of such a combined unit is likely to sit with a higher ranking officer than is currently the case, which will in turn increase the profile of both units as well as present a more effective leadership arrangement.

The Scottish police forces - divisional level

16. The general lack of financial investigation capability at divisional level in Scotland is likely to be a barrier to mainstreaming POCA. Financial investigation is generally viewed as a specialist force function with knowledge and awareness amongst senior and frontline divisional officers rarely extending beyond cash seizure arrangements. Consequently opportunities to disrupt criminality and to gather and record financial intelligence are not a priority and are therefore not exploited locally. Not only does this make it difficult to disrupt local criminals but it also detracts from the fight against serious organised crime affecting communities across Scotland.

17. At the time of this inspection, Strathclyde Police was the only force to have a financial investigator in each division. Although these officers were originally intended to be a proactive resource, their work is now almost exclusively reactive in nature. This is largely due to a marked increase in cash seizure cases in the years following the reduction of the minimum threshold figure to £1,000. At the time of this inspection a business case was being drawn up for an additional financial investigator in each division to complement the force's recently established proactive Money Laundering Unit. We will follow the progress of this business case with interest.

18. In order to exploit fully the powers contained within POCA and to make financial investigation a routine investigative tool, it is essential that awareness and capability and capacity are increased at divisional as well as force level.

19. Whilst performance information relating to POCA and its related provisions can be incomplete and difficult to interpret as we discuss later in this report, the Strathclyde experience and that of forces in England, Wales and Northern Ireland, leads us to believe that an increase in capability and capacity within police divisions will have a positive impact on disrupting divisional level criminality.

20. Whilst achieving this across all divisions in Scotland will require both a force and national focus, the commitment of divisional commanders and their management teams is key.

Police leadership issues - conclusion

21. In this section we have highlighted that ACPOS should consider how best to mainstream POCA and its related provisions and in order to achieve that, should consider the appointment of a lead officer (champion). Further, that forces in considering their approach to mainstreaming, may wish to look at the structure of their current fraud and financial investigative resources. In addition forces should consider how best to support divisional commanders in their key role of making POCA and its related provisions part of everyday operational policing.

22. In achieving this, senior officers will clearly wish to make best use of existing support materials and to that end we would highlight that, although originally developed for the police service in England, Wales and Northern Ireland, the 'Practice Advice on the Management and Use of Proceeds of Crime Legislation' produced by the National Policing Improvement Agency ( NPIA) ⁴, gives sound advice on developing competence at both force and divisional level. It is vitally important that the Scottish police service produces comparable advice within a Scottish context. We further believe that this guidance should reflect the comments and recommendations contained in this report.

COPFS

Criminal prosecution

23. Leadership on POCA within the Crown and Procurator Fiscal Service rests with the Deputy Crown Agent, assisted by the Head of Operations. Beneath the Head of Operations sit the specialist units of National Casework Division and Civil Recovery Unit. Each unit is lead by a head and deputy head of unit. ⁵

24. In COPFS we observed effective arrangements for dealing with serious organised crime. As head of the prosecution service in Scotland, the Lord Advocate has prioritised the prosecution of serious organised crime cases. This is reflected in the stated strategic aims of the Service. The structure of the central National Casework Division in Crown Office with its units dealing with financial crime and serious organised crime reflects that priority.

25. The proceeds of crime legislation is recognised by COPFS as a crucial tool in dealing with serious organised crime. The central unit for confiscation (Proceeds of Crime Unit - POCU) also sits within the National Casework Division ( NCD). Being placed within the central NCD means that the Proceeds of Crime Unit is well positioned to support the work of these specialist units dealing with serious organised crime.

26. However, the work of POCU extends to confiscation work at all levels of crime and in relation to every jurisdiction in the country. Whilst there are some cases being referred to the confiscation unit in relation to lower level criminality, in a mainstreaming agenda, we suggest that greater awareness on the part of police and law enforcement partners will result in an increase in POCA workload for the Crown. In relation to confiscation work, we foresee an increase in cases in which this opportunity is identified. It is essential that leaders in COPFS are aware of these developments in law enforcement and have in place the capacity to deal with such an increased workload.

27. In each of the 11 Areas of COPFSPOCA resource deputes carry out, on an agency basis, the work which must be carried out at local Sheriff Court level to support the work of the central specialist units. At present, those POCA resource deputes do not have visible leadership in relation to their POCA work. Leaders in their areas, with some exceptions, do not appear to be aware of the extent to which the proceeds of crime can be used routinely. Such a situation has come about due to the treatment of POCA as a specialist topic. In the meantime the recent creation by the Head of Operations, of a POCA forum to provide support for those POCA resource deputes may fill this vacuum.

28. When the Act came into force in England, Wales and Northern Ireland, the CPS put in place arrangements that allowed confiscation to be an integral part of a criminal case. As a result all aspects of the case, from preparing the criminal case to considering restraint and confiscation, are dealt with in one location. It would be a massive change for COPFS to change its current structures to this model. Nor would we necessarily advocate such a radical change, which could lead to a diminution in the quality of POCA work. Whilst the knowledge of POCA should be mainstreamed in COPFS there continues to be a role for specialisation in relation to some of the more complex processes. However we conclude that, in the long term, the inevitable consequence of a more mainstream agenda for POCA across all law enforcement agencies is an increase in the volume of confiscation. In this situation, leaders may well wish to review the size and structure of the confiscation unit.

Civil recovery

29. The Civil Recovery Unit, although nominally a department of COPFS, carries out the functions of Scottish Ministers in relation to part 5 of POCA dealing with the civil recovery of unlawful assets. The Lord Advocate, as a Scottish Minister rather than as head of COPFS, has assumed responsibility for these functions. Thus the Lord Advocate, in two very separate constitutional roles, takes the lead in both criminal confiscation and civil recovery in Scotland. There is, in practice, no difficulty in such an arrangement, provided that the difference between functions continues to be clearly understood and acknowledged.

30. We have outlined our belief that the current strict and rigid system of referral of cases to Civil Recovery Unit may prevent relevant cases that meet the civil recovery criteria from ever being considered by CRU. If police and other law enforcement agencies simply look at offending in terms of who has committed a crime and whether a crime can be proved, the opportunity to tackle those who distance themselves from the commission of crime but who nevertheless own property which can be shown to have been acquired through unlawful conduct, is likely to be lost.

31. We have recommended that an early consideration of civil recovery be considered as an option where a criminal standard cannot be reached, and in doing so, that a direct route be established for law enforcement agencies to report such cases. We noted during our inspection that the volume of current referrals was already stretching the capacity of the CRU. If, as we suggest in this report, there is a greater role for CRU in the harm reduction and disruption of criminality strategy, then it will be necessary to review the size and structure of CRU also.

Leading mainstreaming in COPFS

32. Towards the end of our inspection, Crown Office announced that portfolio owner posts for specific areas of work are to be created in COPFS. It is our understanding that under these arrangements the portfolio owners, all from the senior management team in COPFS, will champion particular areas of work. We suggest that such a role should be created mainstreaming POCA within COPFS. Therefore, as we have recommended for police forces so we recommend that COPFS too appoint a POCA champion who would also co-ordinate the COPFS contribution to and implementation of the SOCT strategy.

Conclusion: COPFS

33. In conclusion it is essential that leaders in COPFS are aware of mainstreaming developments in law enforcement agencies as they occur to ensure that COPFS has the capacity to deal with the anticipated increased workload. In addition, in promoting their own mainstreaming agenda, a POCA portfolio owner or champion should be appointed to lead on delivering for COPFS a plan to mainstream POCA throughout the Service.

Recommendation 2. That the Serious Organised Crime Taskforce broaden its focus in relation to proceeds of crime and develop a Scottish Proceeds of Crime Strategy in order to co-ordinate action among partner criminal justice agencies including but not limited to ACPOS and COPFS. In particular the Strategy should focus upon:

(a) creating sufficient capability and capacity across partner agencies to address all levels of criminality and all crime types included within the provisions of the Act; and

(b) establishing a proactive rather than reactive approach to financial intelligence gathering and investigation in relation to all relevant crime.

Recommendation 3. That ACPOS and COPFS appoint leads (champions) to focus on mainstreaming POCA throughout their respective organisations.

Suggestion 1. That the ACPOS- POCA champion:

(a) be invited to join SARG and assist the Serious Organised Crime Taskforce in the development of the Scottish Proceeds of Crime Strategy;

(b) lead on the development of practice advice, training and development opportunities for the Service on the use of financial investigation and intelligence management at force and local levels; and

(c) assist forces as appropriate in establishing optimum levels of resources to be put in place at force and divisional levels to fully use the powers contained within the Act.

Suggestion 2. In reviewing current processes, forces should:

(a) review force level Financial Investigation Unit structures.

Suggestion 3. That the COPFS champion:

(a) be invited to join SARG and assist the Serious Organised Crime Taskforce in the development of the Scottish Proceeds of Crime Strategy; and

(b) in relation to mainstreaming arrangements regarding POCA, review case marking guidelines, and training and development opportunities.