Published: Saturday August 6, 2016
The following article first appeared on the webpage of CFIL’s strategic partners Today Advisory and is reprinted with permission.
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The United Kingdom encourages victims to report all fraud and has the most advanced systems in the world for recording and managing crime and intelligence. Here we provide a short guide to reporting fraud in the UK and some things to consider.
In the UK, all fraud (other than that involving an immediate danger to life and property and some particular fraud types), is reported to the police through Action Fraud using its contact centre or online reporting tool. Action Fraud is the central repository for reports of fraud and cyber-dependent crime and feeds all data it receives into the National Fraud Intelligence Bureau (NFIB) that matches and analyses data and disseminate crimes that meet a certain criteria to police forces for investigation.
Action Fraud and NFIB are managed the City of London Police, the National Lead Force for Fraud Investigation.
No. In the UK there is no legal obligation to report fraud to the police or to any other body, unless you and/or your business are part of a regulated sector that has a duty to do so (such as accountants, solicitors and financial services firms).
Government encourages the voluntary reporting of fraud and cybercrime to law enforcement agencies, particularly Action Fraud, to help build a better national intelligence picture and to create advice to stop others from falling victim.
Even if you haven’t actually lost any money to a fraudster you can still make an information report to Action Fraud to tell them about an unsuccessful attempt to scam or defraud you. The police encourage this as information may help to protect others from being defrauded.
Yes. Action Fraud, like all other police forces in England and Wales has a duty to record crime that fulfills set criteria. This is documented in the Home Office Counting Rules for Recorded Crime (HOCR), issued by the government. The rules state:
All reports of incidents, whether from victims, witnesses or third parties and whether crime related or not, will, unless immediately recorded as a crime, result in the registration of an auditable incident report by the police. An incident will be recorded as a crime if, on the balance of probability:
(a) The circumstances of the victims report amount to a crime defined by law (the police will determine this, based on their knowledge of the law and counting rules); and
(b) There is no credible evidence to the contrary immediately available.
A belief by the victim, or person reasonably assumed to be acting on behalf of the victim, that a crime has occurred is usually sufficient to justify its recording.
The vast majority of fraud reported to the police via Action Fraud is not allocated to a police force for further investigation and remains in the NFIB ‘Know Fraud’ database for intelligence purposes.
Fraud reports will be allocated to a police force or other agency for further investigation when they meet certain criteria e.g. There are viable lines of enquiry such as known suspects who are based in the UK and include factors such as there are:
• Multiple victims
• Significant losses to individuals, organisations or the State
• Organised criminal groups linked to terrorism, firearms, people trafficking and drugs
• Regulated professionals: Lawyers, accountants and financial advisors
The NFIB will conduct an assessment based on agreed guidelines. These are issued by the College of Policing and available to authorised usershere.
The police will also allocate their resources according to local and national policing priorities and will consider guidance such as Home Office Circular 47/2004, which outlines the types of frauds that should be priorities and those where a more cautious approach might be appropriate.
When a fraud is investigated by the police in the UK, there is no guarantee it will result in a prosecution. In cases such as this, the decision to charge is made by the Crown Prosecution Service (CPS) based on the guidance set in The Code for Crown Prosecutors. The prosecutor applies a test to decide if the evidence is strong enough to secure a conviction and that prosecution is in the public interest. The Prosecutor will also refer to CPS guidance on charging practice for Fraud Act offences.
For example, the guidance states:
‘The borderline between criminal and civil liability is likely to be an issue in alleged Fraud Act offences particularly those under Section 1. Prosecutors should bear in mind that the principle of caveat emptor applies and should consider whether civil proceedings or the regulatory regime that applies to advertising and other commercial activities might be more appropriate. Not every advertising puff should lead to a criminal conviction but it is also the case that fraudsters prey on the vulnerable’.
‘Prosecutors should guard against the criminal law being used as a debt collection agency or to protect the commercial interests of companies and organisations. However, prosecutors should also remain alert to the fact that such organisations can become the focus of serious and organised criminal offending’.
The police must therefore secure sufficient evidence to prove an offence beyond reasonable doubt, which differs from the civil court standard where the standard is based on the balance of probability.
There are several benefits to reporting fraud these include:
• The possibility the State will investigate, seize assets and prosecute the offenders
• When a fraudster is prosecuted and found guilty, the Court may order the confiscation of assets and award compensation
• Alerting the police to the identity and activities of fraudsters may help to protect others from being defrauded
• Reporting fraud shows others that you take the matter very seriously
A guilty verdict at court will lead to the sentencing process for the defendant. Depending on the circumstances this may happen immediately or after several weeks. Victims are given a voice in the sentencing process by way of a Victims Personal Statement. This will explain how the fraud has affected the victim, whether financially, emotionally, psychologically, etc. The statement may be taken during the investigation stage, or at any point before sentencing.
After sentencing the court will move to consider any compensation. Provided the defendant(s) has the means to pay, the court may make an order for the defendant to pay the victim(s) the amount defrauded by the offence (compensation).
Confiscation proceedings may also be launched. These allow for the use of intrusive powers (access to bank accounts, etc.). The purpose of these proceedings is for the state to deprive the defendant of any benefit they have obtained from their criminal conduct (e.g. the value of any investments they made with criminal property, etc.). If the defendant has only sufficient means to pay either money to the victim or to the state, but not to both, then the victim comes first and the compensation order will be satisfied before the confiscation order.
Many victims who report fraud in the UK are critical that no action is taken even when suspects are known. This is especially so in the case of investment frauds such as boiler room fraud (pressure selling of worthless shares), Ponzi schemes and dating scams.
When you decide to report fraud to the police, you are providing information that helps the police build a better intelligence picture that may prevent others falling prey to criminals. However, there is a likelihood that the police will not investigate your individual case, even when you’ve suffered a substantial loss.
You should also be mindful that if the matter does go to crown court it may attract media attention. Publicity highlights the plight of victims and alerts others of the risk.
The police must decide what cases they investigate based on their policies, priorities and available resources and these will be applied on a case by case basis. Factors that may influence the police decision to investigate a fraud include:
1. Alleged frauds that are ongoing and present a serious threat to other citizens in the UK.
2. The crime report is not being made solely to recover monies for the victims.
3. Names and addresses of suspects are known
4. Suspects are in regulated professions and are acting together to defraud investors.
5. The police investigation is straight forward and action would disrupt the criminal enterprise and prevent others falling victim.
6. The victim(s) exercised adequate due diligence to avoid falling prey to the fraud. Click here to see how to identify fraudsters.
No. The two systems can work together. There is nothing to prohibit a civil claim following a criminal claim, or vice versa – or even both happening simultaneously (called ‘parallel proceedings’). Simultaneous proceedings are allowed unless the defendant would face a real risk of serious prejudice which may lead to injustice in either the civil proceeding, the criminal proceedings or both.
For instance, serious prejudice would occur if there was significant adverse publicity generated by both cases occurring simultaneously.
Please visit the Fraud Advisory Panel charity website and complete their interactive decision tree that will help you understand more about the civil and criminal justice routes.