For some time I have been highlighting the failure of UK authorities to deal with the proceeds of telecoms crime. TelCos agree that crime would be reduced if payment didn’t reach the fraudsters, but they don’t have a consistent and effective means of stopping those payments. POCA (Proceeds of Crime Act 2002) creates powers to seize funds via both civil and criminal courts but UK authorities have failed to make any visible effort to use it.
Previous Freedom of Information (FoI) requests have shown that Action Fraud’s figures for telecoms crime from 2013 to 2015 are between £3 million and £10 million. However, this is just a tenth of the estimates provided by a poll of RAG delegates at the Summer Conference:
When I recently asked Ian Smith, the Chairman of TUFF for his estimate of UK telecoms crime, he thought it was probably £250-300 million per annum. By contrast, in 2015, Action Fraud recorded fraud losses of £1,014,163 under ‘Misuse of Contracts’ and £2,071,520 under ‘PBX/Dial Through’ for a total of £3,085,683. This is just 1% of the TUFF upper estimate.
The story is no better for telecoms crime prosecutions, with only 15 prosecutions being brought between 2013 and 2015, for the feeble sum of £14,179.77. In this same period, there were no POCA confiscation orders made, so there were no POCA recoveries.
Home Office POCA Stats
The absence of POCA proceeding in telecoms made me wonder how it’s used in other industries so I requested the Home Office to provide data for the years 2013, 2014 and 2015:
- the number of civil recovery proceedings initiated under part 5 of POCA
- the value of civil recovery proceedings initiated
- the value of unlawful property forfeit.
Here is the answer:
|Civil recovery orders in England & Wales and Northern Ireland||Number of Orders||Value of Orders||Amounts recovered|
In its response, the Home Office pointed out this response doesn’t include data in respect of orders granted to agencies that are exempt from freedom of information requests, which it has decided is exempt from disclosure under section 23(1). Section 23 exemptions essentially relate to the Security and Intelligence Services, the Government Communications Headquarters and the special forces, so the omission of their data is completely irrelevant to financial crime and don’t make the numbers above look any better.
National Crime Agency
Contrast the numbers above with NCA’s National Strategic Assessment of Serious and Organised Crime 2016 which states that the international money laundering average of 2-5% GDP underestimates the threat, given UK’s position as a key global financial centre. But let’s say it’s 5% of a GDP of £2.3 trillion, so that would mean we’re laundering £114 billion annually through the UK. And those numbers don’t look any better against the Annual Fraud Indicatorproduced by Portsmouth University which estimates that fraud is costing the UK £193 billion per year – that’s nearly £3000 per head of population.
Why is nobody using POCA?
Fraud investigation is complex, time consuming and expensive so it makes sense to use every tool at our disposal to take the money back off the bad guys. POCA part 5 civil recovery via the High Court enables the recovery of property obtained through unlawful conduct. The proceedings are against the property, not against a person and the civil standard of proof applies. This means we only need to demonstrate a civil burden of proof to satisfy the court that property is the proceeds of crime. It’s sufficient to prove that the property was obtained through fraud. It isn’t necessary to show that the person in possession of the property was responsible for the fraud. Compared to criminal proceedings its quick, simple and cheap, so why is nobody using it?
Anything to say on POCA, Home Secretary?