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Every Transaction Leaves a Trace: The Role of Financial Investigation in Serious and Organised Crime Policing

Helena Wood
Occasional Papers, 12 September 2017
Centre for Financial Crime and Security Studies, AML/CTF, UK, Information, Organised Crime
This paper makes the case for the wider use of financial investigation techniques in the fight against serious and organised crime.

The international drug trafficker buying a plane ticket to Spain to arrange shipment of his next consignment; the people trafficker leasing a property to use as a safe house to keep his victims; the cyber fraudster purchasing computer equipment with which to commit his crimes. What do all these disparate activities have in common? They leave an indelible financial footprint. And it is this footprint which creates a vulnerability ripe for exploitation by law enforcement, through financial investigation.

Whether as a means of gathering valuable building-block financial intelligence, supporting a strong evidential case for prosecution, or a tool for predicting future activity and movements, this paper makes the case for the wider use of financial investigation techniques in the fight against serious and organised crime. Currently, both the scope and value of these techniques is frequently misunderstood and underestimated by being assigned solely as a tool for tackling ‘financial crimes’ (such as money laundering, fraud and corruption) or as a route to asset recovery, while undervaluing their role in the broader policing response to serious and organised crime more generally.

The government’s Serious and Organised Crime Strategy (SOC Strategy), published in October 2013, aimed at countering a ‘Tier Two’ national security threat, also fell into this trap. Although the strategy should be given credit for committing to ‘[a]ttack criminal finances by making it harder to move, hide and use the proceeds of crime’, it did not explicitly make the intellectual leap to seeing financial investigation as an integral investigative tool in the fight against serious and organised crime. It was, in fact, a retrograde step from its 2011 predecessor, Local to Global: Reducing the Risk from Organised Crime, which had committed to ‘mainstreaming’ financial investigation into organised crime policing. In short, the new strategy was a clear demonstration of the miscomprehension of the role of financial investigation and a missed opportunity to drive the discipline forward.

In light of this lack of a clear policy commitment, this paper seeks to examine the current state of play regarding the use of financial investigation tools in the fight against serious and organised crime at the local and regional policing levels, setting this against wider factors in the policing landscape. This lack of direction is ill-timed, given the intense budgetary pressures within policing at a time when the service is being asked to respond to a growing array of strategic risks.

This wider landscape leaves the future of the discipline at a precipice. While pockets of progress have been made to cement the use of financial investigation as a mainstream tool in some areas of policing, this is largely dependent on the vision of certain key individuals and not part of a systemic plan. In many forces and law enforcement units, the discipline remains culturally marginalised and housed within an Economic Crime Unit rather than badged as a tool for use in the broader policing response. In others, budgetary cuts are reversing previous gains. In sum, the discipline is at risk again, as before, of being seen as ‘nice to do’, rather than part of core policing.

The remedies to this issue are multifaceted. However, this paper makes the case for implementing key measures to ensure that wider budgetary and political factors do not push the discipline into decline. At a local policing level, there is a case for financial investigation being explicitly referenced in The Strategic Policing Requirement (SPR) set by the Home Secretary. It is also crucial that the strategic communications efforts by the Treasury- and Home Office-chaired cross-government Criminal Finances Board (CFB) reach out more effectively to police and crime commissioners.

At a regional policing level, Regional Asset Recovery Teams (RARTs) should be re-branded as a broader financial investigation resource and their capabilities should be more fully exploited by Regional Organised Crime Units (ROCUs). To improve recruitment and retention of financial investigators, the ROCU funding settlement should be put on a multiyear (rather than annual) footing.

The above measures are aimed at mitigating the risk of decline of financial investigation in the existing policing landscape. However, a strategic change is needed, in the form of a refreshed SOC Strategy, to push the discipline forward for the future. Although it would be easy to look at this issue as one of resourcing, this is unrealistic in the current climate. Working within the constraints identified by the research, this paper proposes key reforms along all four strands of the CONTEST model.

PURSUE: A future SOC Strategy should ensure that financial investigation is incorporated as a mainstream tool in the investigation of serious and organised crime. The strategy should make the case for doing so on the grounds of the cost-effectiveness of the tools compared with other investigatory techniques, such as mobile surveillance.

PREVENT: Financial tools should be seen as an integral part of a ‘lifetime offender management’ approach to tackling organised crime, through greater use of financially focused ancillary orders, such as Serious Crime Prevention Orders (SCPOs). Capacity to monitor and manage these orders is currently lacking at force level. Responsibility for long-term monitoring should be handed to a dedicated Lifetime Offender Management Unit within ROCUs resourced with accredited financial investigators to ensure that they have the desired deterrent effect. These units should take a partnership approach with the private sector to help detect breaches.

PROTECT: The current SOC Strategy’s focus on the UK’s physical border neglects the porosity of Britain’s less visible ‘financial border’. A future strategy should remedy this. Taking into account the difficulty of using financial investigation tools to gather evidence across borders, especially in relation to countries where the law enforcement response is weak or corrupt, the UK should expand its sanctions regime, along the lines of the US model, to include transnational organised crime sanctions tools.

PREPARE: It is essential that financial investigation capabilities are considered part of a response to future and growing threats, such as cybercrime. The May 2017 malware attack on the UK and its impact on national infrastructure, including the National Health Service, demonstrate the need to ensure the right tools are in place to respond to a future attack. As part of future planning, the UK government should review the place of financial investigation in the current policing cybercrime response. It should also debrief the events of May 2017 to consider whether exploitation of financial investigation was at an optimum level.

In sum, the need for financial investigation to undergo the same cultural transformation as forensics – a tool once misunderstood which has, over time, become a standard policing tool – is a compelling analogy. While it is a well-accepted adage in policing that ‘every touch leaves a trace’, this concept is less accepted when it comes to financial footprints. It is crucial that a refreshed SOC Strategy makes this case.

Ten Recommendations for Policymakers

  1. Include a specific reference to proactive financial investigation capability in The Strategic Policing Requirement. 
  2. Consider greater use of strategic policing alliances and regional collaborations to ‘pool’ specialist financial investigation capacity and capability.
  3. Reinvigorate the CFB strategic communications effort and place particular emphasis on highlighting the successes of financial investigation within serious and organised crime policing to police and crime commissioners.
  4. Rebrand RARTs as a regional criminal finances capability, which encompasses financial investigation capability alongside its original role in asset confiscation.
  5. Ensure that clarity is given on the duration of ROCUs’ ‘top-up’ funding to improve recruitment and retention of financial investigators in those RART facilities funded via this settlement.
  6. Include financial investigation as a core mainstream principle to refresh the SOC Strategy as a cost-effective means of achieving results.
  7. Promote wider use of financially focused SCPOs and create a standalone lifetime offender management unit within ROCUs, staffed with financial investigators, charged with monitoring and overseeing compliance. These units should consider how to make best use of public–private partnerships to help identify breaches.
  8. The UK should expand its sanctions regime to include powers to sanction transnational money launderers and organised criminal groups.
  9. Review the current exploitation of financial investigation as a means of responding to financially motivated cybercrime at the local and regional tiers of policing. 
  10. Debrief the May 2017 ransomware attack on the UK’s infrastructure to ensure that financial investigation tools were exploited to their full potential and were agile enough to respond to the threat.
Helena Wood
Associate Fellow

Helena Wood’s areas of research will focus on the efficacy of Proceeds of Crime Act (POCA) powers in the fight against organised crime... read more

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