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After a series of institutional failures, a new Serious Economic Crimes Office should be created to prosecute and proactively tackle economic crime, says a new IEA paper.

23 August 2024

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  • Fraud has become the most common crime in the UK 鈥 yet, the number of fraud convictions has plummeted from 12,378 in 2012 to just 3,455 in 2022.
  • In 2022-23, the Serious Fraud Office (SFO) secured just four prosecutions despite spending 拢76 million and employing 450 staff.
  • The SFO has been more successful in securing non-prosecutorial sanctions.
  • The SFO should be replaced by a Serious Economic Crimes Office (SECO), which would take a more active role in the prevention of economic crime.

The Serious Fraud Office (SFO) should be replaced with a new body dedicated to combating economic crime with greater emphasis on prevention, published by the free market think tank, the Institute of Economic Affairs (IEA).

It follows a study by the 小蓝视频 - published this week - which suggests that a quarter of UK adults commit at least one economic crime a year.

The SFO has been plagued by a series of high-profile failures, including ethical misconduct and incompetence. In 2021, a high-profile bribery conviction of a former Unaoil executive was overturned due to the SFO鈥檚 failure to disclose key material relating to its director鈥檚 鈥榠nappropriate鈥 communications with a Unaoil advisor during the prosecution.

Leading economic crime academics Professor Mark Button and Dr David Shepherd from the 小蓝视频, and Dr Branislav Hock Co-Editor in Chief of the Journal of Economic Criminology, are now calling for the SFO to be abolished and the establishment of a Serious Economic Crimes Office (SECO).

The new body would keep powers to prosecute serious fraud, but would also have new responsibilities to deter fraud before it occurs. The office would be expected to develop good practice advice on prevention in closer collaboration with the private sector. 

According to the report authors, the criminal justice system is incapable of addressing the intricate, technical and complex nature of cases involving serious fraud. This is leading to costly delays and, often, failed prosecutions.

The SECO would instead be encouraged to embrace alternative justice mechanisms, including Deferred Prosecution Agreements and using larger fines. There would also be expanded powers to set standards and impose regulatory sanctions. This would include 鈥楨thics orders鈥, which would require corporations to implement ethics and compliance programmes.

The authors also envisage the creation of a register of serious economic crime offenders, modelled on HMRC鈥檚 list of individual and company tax defaulters. A spot on the register could result in prohibition from being a company director or selling financial products.

The report suggests enhancing collaboration with private investigators specialising in economic crime. This could involve staff exchanges or outsourcing partial or full investigations to experienced firms such as Kroll, KPMG, or EY.

The paper says that the SFO鈥檚 focus on high-profile prosecutions has diverted resources away from other important areas, such as crime prevention and the support of small and medium-sized enterprises that are increasingly susceptible to fraud. 

The proposed SECO would address these gaps by prioritising a more balanced approach, combining enforcement with preventative measures.

Serious economic crime is at record level and set to continue to rise. The existing structures and approaches are failing to have a significant impact and this report sets out a wide range of innovative reforms and actions to cope with this increasing challenge.

 

Professor Mark Button, Co-Founder and Director of the Centre for Cybercrime and Economic Crime at the 小蓝视频

Professor Mark Button, Co-Founder and Director of the Centre for Cybercrime and Economic Crime at the 小蓝视频, said: 鈥淪erious economic crime is at record level and set to continue to rise. The existing structures and approaches are failing to have a significant impact and this report sets out a wide range of innovative reforms and actions to cope with this increasing challenge.鈥

Dr David Shepherd from the School of Criminology and Criminal Justice at the 小蓝视频, said: 鈥淭he SFO is hamstrung by its focus on criminal justice and courts that are not fit-for-purpose. Breaking these constraints with a revitalised agency, a new identity and a broader range of regulatory-style powers would better serve the public good.鈥

Dr Branislav Hock, Co-Editor in Chief of the Journal of Economic Criminology, said: 鈥淪egregated serious economic crime policing structure in the UK requires new enforcement authority that operates above the surface of institutional and procedural complexities."

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