Joint thematic report on the Proceeds of Crime Act 2002

Police resources dedicated to financial investigation

242. In this report we have called for a more proactive approach to financial investigation that uses the powers contained within POCA to their full potential in order to disrupt criminality at all levels. In particular we have called for an increase in the capacity and capability of police divisions across Scotland. Clearly such a shift in approach will affect staff levels working in this discipline. It is of course virtually impossible for us to suggest an optimum number of financial investigators for each force and its divisions not least because of the huge variation in size and demand. We believe that the Scottish police service can usefully draw on the experience of the police services of England, Wales and Northern Ireland.

243. As we have already mentioned, the National Police Improvement Agency conducted a review of POCA arrangements in England, Wales and Northern Ireland in 2007, involving eight pilot sites. One outcome of the review was the production of a practice advice guidance document for the Service ²⁴. According to the data examined, the most effective ratio of financial investigators to other staff in a division was approximately 1:100. If financial investigator staffing levels were too low, these staff were unable to operate effectively. Conversely in situations where the ratio of financial investigators exceeded 1:100 the team was too large to be efficient.

244. In Scotland there are currently in the region of only 60 police officers and fewer than 20 members of support staff working in FIUs across the country. This includes staff within the SMLU in the SCDEA. (In assessing capacity it should be borne in mind that, unlike in England, Wales and Northern Ireland, there are certain financial investigation powers only open to constables and not civilians in Scotland.)

245. Given the lack of any divisional financial investigators in Scotland with the exception of Strathclyde Police there is little point in producing a comparable ratio in Scotland. Instead to illustrate the vastly differing levels of resources working in this field in Scotland compared to England, Wales and Northern Ireland we have calculated the ratio of financial investigators against total police numbers in Scotland, which is around 1:200. We believe that it would be overly simplistic and unhelpful to state how many additional financial investigators are needed to support the mainstreaming of financial investigation across the country. Consequently we believe that the Serious Organised Crime Taskforce and the ACPOSPOCA champion will be best placed to help Chief Constables develop realistic, well-informed and phased resource plans supporting the deployment of divisional financial investigators over the next three years.

COPFS

246. The establishment of a confiscation unit in NCD reflects COPFS' decision to handle all confiscation cases centrally. As COPFS' involvement in these cases comes at the end of the process it must allocate resources on the basis of the workload it anticipates from law enforcement agencies. This has resulted in a gradual increase in the staffing levels of National Casework Division which deals with the substantive case work from serious organised crime, financial crime and the work of the confiscation unit. It follows that any increase in financial investigative capability will have a resultant effect on COPFS workload both within NCD and at area level for POCA resource deputes.

247. To date, the monies required to fund the increased workload have been met largely by existing budgets. In addition the sum of £400,000 was provided to COPFS by the Scottish Consolidated Fund in April 2008. This extra funding has been used to recruit full-time forensic accountants in NCD and CRU, a settlement negotiator in NCD and additional legal staff and analysts in both COPFS departments. Some of these appointments were only being made as our inspection was carried out and their impact was yet to be felt. This funding also allows for outsourcing some of the specialised CRU work on an ad hoc basis.

248. We noted a sharp increase in cash seizure referrals to the civil recovery unit from 231 in 2007 to 453 in 2008. This 96% increase in referrals took place at a time when staffing levels remained the same. The head of the Unit acknowledged that without the goodwill of the staff the total cash forfeiture for 2008 of £1.3 million would not have been achieved.

249. Elsewhere in this report we have called for greater awareness and use of the civil recovery options under POCA in relation to the civil recovery of assets (aside from cash forfeiture). There has been a year on year increase in referrals to CRU. In 2004, 26 cases were referred to CRU. This figure had risen to 73 in 2008. Staff in CRU reported that they were dealing with a backlog of referrals and they attributed this situation to some extent on a shortage of resources.

250. It is clear that the joint Scottish Proceeds of Crime Strategy will require a co-ordinated approach to resources if partners are to be in a position to exploit the legislation to its full potential. Recent experience of potential referrals from law enforcement agencies shows that investigative work for civil recovery is just as resource-intensive as that for criminal confiscation, a fact that is not always fully understood by law enforcement agencies. Nevertheless we believe that there is a need to monitor resources in this area of work particularly and to ensure that resources are in place to meet any anticipated demand.

Funding arrangements

251. Although it is beyond our remit to recommend how additional posts should be funded, our observations both north and south of the border may help future deliberations. In the first instance we draw attention back to the debate in the Scottish Parliament prior to the introduction of POCA, when the then Justice Minister Jim Wallace stated that,

"…a significant proportion of the receipts that are generated will be used in Scotland to improve performance in asset recovery and to fund schemes in support of crime prevention and our drugs strategy".²⁵

252. At the outset of POCA, the Scottish police service received Government funding in the region of £3.5 million to fund financial investigator and financial analyst posts. Following the implementation of the Act Scottish Ministers initially decided to invest the money recovered from POCA to drug rehabilitation projects and then those communities hardest hit by serious and violent crime. More recently the money recovered has been directed for use in the Cashback for Communities scheme. Virtually none has been used to improve performance with the exception of £400,000 provided to Crown Office mentioned above.

253. During this inspection a number of senior police officers expressed the view that a portion of the recovered proceeds of crime should be returned to law enforcement agencies in order to improve performance in this area. Shortly before the end of the inspection the Cabinet Secretary for Justice indicated his agreement in principle with this proposition. However at the time of writing, details of how this process might work were not available.

254. We are supportive of this move but urge caution on two fronts. First, we believe that 'Cashback for Communities', which almost exclusively returns the proceeds of crime to Scotland's communities by funding of appropriate projects, is and will remain the most deserving recipient of the majority of recovered assets. The scheme represents a virtuous circle in which money taken from communities in Scotland is returned to them. At the same time we accept that an initial injection of funding to raise the capability and capacity of law enforcement agencies will lead to more assets being recovered and ultimately returned to these communities.

255. Second, we believe that the 'incentivisation' scheme used in England, Wales and Northern Ireland is not the best way to proceed in Scotland. There, in broad terms 50% of monies recovered are allocated to the Home Office. The remainder of funds is distributed to law enforcement agencies calculated by a formula that is based upon their pro-rata input. In our visits in England we noted at best mixed views about incentivisation. On one hand, the scheme was acknowledged to have led to a significant increase in financial investigation capacity and capability. On the other, concern was raised about the potential of the scheme to skew law enforcement attention to the most asset-rich criminals and not necessarily those causing most harm to communities. Furthermore, the formula for determining the percentage due to one law enforcement agency as a result of a particular enquiry covering a number of jurisdictional areas can be problematic. The formula is also used to allocate a share of the proceeds of crime to prosecutors and the court service and as such can have a divisive effect in an area where good partnership working is essential.

256. It is clear that relevant parties in Scotland have the opportunity to learn from the experience gained elsewhere. For that reason we would favour a 'reinvestment' rather than an 'incentivisation' scheme in which a portion of the recovered proceeds of crime are returned to law enforcement agencies and COPFS according to need rather than being linked to targets or performance. However, we accept the need to pump-prime and as such we believe that this area requires additional investment. Properly used, an increase in capability and capacity will significantly increase the disruption of criminality and at the same time raise the level of assets recovered.

257. We understand the attraction of funding the necessary increases in resources entirely from existing recovered monies not least because of the current economic climate. However, even leaving aside the impact that this would have on 'Cashback for Communities' we believe that current returns are not large enough to fund the kind of increase needed in the short or indeed medium term. In addition, given the success of 'Cashback for Communities' it is our view that an increase in resources should not be funded exclusively from recovered assets but should be part-funded by existing police budgets.

258. During the inspection we met with the ACPO lead for POCA. His view was that the police service should be striving to remove assets from criminals in order to disincentivise potential criminals because it is the right thing to do. The notion of potential cost would not prevent a force from investigating, for example, an allegation of rape and therefore arguably the potential cost of increasing financial investigation capability should not prevent forces doing so. We share this view. We therefore believe that the Scottish Government and chief constables should agree a funding formula that will lead to a phased increase in capacity, based upon reinvestment of criminal assets and redeployment of a portion of existing police budget.

259. In this section we have made the case for increasing the resources available for policing activity under POCA. In doing so, we recognise that there will be a need to increase in resources in COPFS to deal with the anticipated subsequent rise in workload. Indeed we believe that the relative funding needs of other law enforcement agencies, prosecutors and the court service should be examined in relation to the Scottish Proceeds of Crime Strategy so that each organisation is funded to the appropriate level.

Conclusion

260. We consider that there is a case for reinvesting a proportion of the proceeds of crime that are realised as was envisaged when the Act was originally debated. It is also important that a balanced, strategic view of how this reinvestment is distributed across criminal justice agencies is taken. This is necessary to avoid a situation whereby a system that is already stretched in places becomes overwhelmed. This particular concern underpins our recommendation that the SOCT through coordinating a POCA strategy prevents this situation from occurring.

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.

Suggestion 1. That the ACPOS- POCA champion:

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

Suggestion 2. In reviewing current processes, forces should:

b) develop plans to increase capability and capacity at divisional level assisted by the ACPOS- POCA champion.