money laundering investigation in england and wales quality of intelligence and investigation ian...
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Money Laundering Investigation in England and Wales
Quality of Intelligence and Investigation
Ian Davidson
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The Problem
“Systematic quantitative or qualitative data that would provide defensible bases for assessments and recommendations are not now available for most countries, nor likely to be available in the foreseeable future”
‘Global Surveillance of Dirty Money’ – Halliday, Levi and Reuter 2014
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Our Objective
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Method
• Study was split into two parts:
• Intelligence – Organised Crime Group Mapping
• Offender based – criminal justice process
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Intelligence
• OCGM – money laundering element - complexity
• OCGM – education• Money laundering perception• National priorities – reasoning?• Data quality checking
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OCGM – Money Laundering ‘Groups’ before latest tracker changes
• Cash Based Businesses• Money Service Businesses• Cash Smuggling Through National Borders• Trade Based Laundering• Professional Enablers• Use of Legitimate Finance Systems• Transparency of Ownership of Seemingly Legal Entities
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OCGM – Money Laundering ‘groups’ current tracker
• Cash Based Business• Cash Based Business/Organisations (High Value Dealers, Casinos, Restaurants, Charities etc.)• Cash Consolidation• Cash Collection• Smuggling Criminal Property (Cash)• Smuggling Criminal Property (Precious Metals, Stones)• Computer/technology enabled money movement.• Exploitation of Bank Accounts (including smurfing, 3 rd party account usage, front accounts)• Exploitation of retail banking products (mortgages, loans, insurance, bonds ISA’s etc.)• Exploitation of specialist financial markets/products (loans, letters of credit, bonds, trusts, stock markets trading, precious metals/stones)• Informal Value Transfer Systems (hawala, black market peso)• Money Service Businesses (MSB’s) – Currency Exchange• Money Service Businesses (MSB’s) – Money Transmission• Money Service Businesses (MSB’s) – Other• Overseas Placement of criminal finances of assets (specify (use additional info))• Professional Enablers• Self-investment/acquiring of assets through criminal contacts, influence, personally controlled fronts and/or intimidation.• Trade Based Money Laundering (manipulation/forging of Imports /Exports/Purchased/Sales)• Transparency of ownership of legitimate entities• Use of Legitimate Financial Systems• Using/Providing professional services for criminal logistic finances e.g. drug shipment costs/bribes (solicitor, accountant, company formation agent,
shell companies, IFA or individual with knowledge)• Using/Providing professional services to invest/disguise ownership of criminal assets (solicitor, accountant, company formation agent, shell
companies, IFA or individual with knowledge)• Virtual Payment System, Digital Currencies, Online Gaming/Betting, Pre-Paid/stored value cards – not online retail banking (PayPal, ukash, e-
money)
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Intelligence
• OCGM – money laundering element - complexity
• OCGM – education – no guidance• Money laundering perception• National priorities – reasoning?• Data quality checking
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Offender – Success in prosecution?
• Available data – accuracy?• Police recording• Secondary status• Lack of use of ‘stand alone’ approach• Attrition mapping• Comparison to other countries
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Detected crimes data – Money Laundering by Force
Region 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 TOTALLondon, City of 1 48 51 39 35 24 79 12 16Metropolitan Police 1 161 211 458 543 418 355 326 223Bedfordshire 2 21 19 16 15 23 37 22 13Cambridgeshire 2 39 40 17 21 24 23 7 20Essex 2 4 15 6 13 13 14 6 14Hertfordshire 2 83 252 266 252 173 132 130 108Norfolk 2 3 9 4 5 3 4 6 3Suffolk 2 22 32 29 22 37 30 13 10Hampshire 3 14 4 19 16 13 21 25 21Kent 3 11 11 11 12 15 8 18 10Surrey 3 3 49 7 11 16 12 12 13Sussex 3 15 25 21 9 34 11 11 28Thames Valley 3 22 19 14 8 14 36 27 21Avon & Somerset 4 19 22 27 7 20 9 16 31Devon & Cornwall 4 31 53 42 66 25 42 28 19Dorset 4 10 2 4 4 9 13 17 8Gloucestershire 4 19 22 32 27 20 5 4 6Wiltshire 4 7 4 4 1 8 3 11 4Derbyshire 5 79 93 126 84 103 61 76 41Leicestershire 5 56 61 48 35 61 59 53 36Lincolnshire 5 27 27 16 43 24 44 17 19Northamptonshire 5 17 20 27 15 29 19 20 7Nottinghamshire 5 37 32 32 27 24 29 19 10Staffordshire 6 33 42 34 18 18 19 33 22Warwickshire 6 1 2 4 16 5 11 5 8West Mercia 6 40 70 48 32 29 15 16 10West Midlands 6 9 36 57 26 26 18 14 13Cleveland 7 5 10 13 14 13 14 7 9Durham 7 27 39 41 18 30 41 60 25Humberside 7 8 10 18 44 27 159 52 42North Yorkshire 7 15 9 154 12 14 6 14 10Northumbria 7 14 11 26 15 34 33 37 20South Yorkshire 7 9 7 13 13 18 11 16 29West Yorkshire 7 161 186 192 233 333 282 208 126Cheshire 8 3 7 8 20 19 16 20 9Cumbria 8 16 32 12 19 17 14 7 1Greater Manchester 8 26 23 25 38 29 50 52 30Lancashire 8 14 22 25 16 11 30 16 11Merseyside 8 4 17 7 7 34 24 26 43Dyfed-Powys 9 0 0 1 0 1 0 0 0Gwent 9 6 6 1 15 1 2 6 3North Wales 9 1 2 14 5 13 9 10 5South Wales 9 7 9 5 10 5 9 9 13British Transport Police 0 6 4 29 46 41 17 41 184TOTAL 1147 1619 1967 1871 1853 1850 1501 1151 12959
800
168
1653
730
2987
2999
2070
667
701
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Total Number of People Sentenced* for 327,328 & 329 POCA offences 2003 -2012
S327 S328 S329Total Number of People Sentenced for POCA offences in England and Wales
2003 Magistrates Court 3 4 5Crown Court 1 3 4Total 4 7 9 20
2004 Magistrates Court 37 22 62Crown Court 29 15 39Total 38 37 101 176
2005 Magistrates Court 150 69 326Crown Court 127 55 158Total 179 124 484 787
2006 Magistrates Court 290 151 788Crown Court 236 120 300Total 417 271 1088 1776
2007 Magistrates Court 281 191 832Crown Court 221 137 328Total 517 328 1160 2005
2008 Magistrates Court 322 217 720Crown Court 281 186 367Total 543 403 1087 2033
2009 Magistrates Court 338 258 779Crown Court 289 228 357Total 619 486 1136 2241
2010 Magistrates Court 476 240 834Crown Court 397 216 454Total 765 456 1288 2509
2011 Magistrates Court 447 239 799Crown Court 384 214 449Total 744 453 1248 2445
2012 Magistrates Court 468 225 694Crown Court 407 180 381Total 852 405 1075 2332Total 2003 - 2012 16324
*Persons sentenced used to avoid double counting of those convicted at Magistrates Ct and sent to Crown Court for sentence
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Crimes recorded v People sentenced 2005 - 2012
2005 2006 2007 2008 2009 2010 2011 2012 TOTAL
Crimes Recorded 1147 1619 1967 1871 1853 1850 1501 1151 12959
People Sentenced 787 1776 2005 2033 2241 2509 2245 2332 15928
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DRAFT ONLY
Crimes Recorded by Police v CPS Data -Number of Convictions 2007 – 2010 (April to March)
Crimes Recorded Convictions0
1000
2000
3000
4000
5000
6000
2007/20082008/20092009/2010
Expected trajectory Actual Trajectories
• Significant under recording by Police – rectifying this would be very difficult• SOCA never recorded any money laundering crimes – counting rules say they should have done so• Uncertain picture for other agencies• Difficult to estimate the scale of under recording (See later MoJ data for sentenced offenders)• This data is CPS data for anyone with a POCA conviction whether on its own or linked to another offence – the numbers are higher than MoJ data
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Where is the UK data for 2007 -2010?*Source – Eurostat Paper – Money laundering in Europe 2013
Table 11.: Number of persons/legal enterties convicted for money laundering offences (1)2005 2006 2007 2008 2009 2010
3rd party
Self-laundering
Unable to distinguish
TOTAL3rd part
y
Self-laundering
Unable to
distinguish
TOTAL3rd part
y
Self-
laundering
Unable to distinguish
TOTAL3rd part
y
Self-
laundering
Unable to distinguish
TOTAL3rd part
y
Self-
laundering
Unable to
distinguish
TOTAL3rd part
y
Self-
laundering
Unable to
distinguish
TOTAL
Belgium : : : 1799 : : : 1601 : : : 1492 : : : 1436 : : : 1231 : : : 1156Bulgaria : : : : 2 2 0 4 : : : 10 1 24 0 25 : : : 37 : : : 37Czech Republic 804 33 0 837 731 33 0 764 636 24 0 660 : : : : : : : : : : : Denmark : : : : : : : : : : : : : : : : : : : Germany 97 : 0 97 216 : 0 216 603 : 0 603 608 : 0 608 416 : 0 416 704 : 0 704Estonia : : : : 0 1 0 1 0 11 0 11 0 11 0 11 : 5 7 12 : 20 39 59Ireland : : : : : : : : : : : : : : : : : : : : : : : Greece : : : : : : : : : : : : : : : : : : : : : : : Spain : : : : : : : : : : : : 36 10 0 46 41 8 0 49 73 24 0 97France : : 290 290 : : 270 270 : : 320 320 : : 381 381 : : 353 353 : : : Croatia : : 0 0 : : 4 : : 4 : : 5 0 6 0 6 0 6 0 6Italy : : 721 721 : : 570 570 : : 768 768 : : 736 736 : : 908 908 : : 739 739Cyprus 0 6 0 0 0 10 0 10 0 13 0 13 1 21 0 22 0 4 0 4 0 15 0 15Latvia 1 2 0 0 0 4 0 4 1 61 0 62 2 27 0 29 1 9 0 10 2 11 0 13Lithuania 0 0 0 0 0 0 0 0 0 4 0 4 1 0 0 1 0 1 0 1 0 1 0 1Luxembourg : : 0 0 : : 1 1 : : 3 3 : : 2 2 : : 5 5 : : 51 51Hungary : : : 1 : : : 2 : : : 8 : : : 6 : : : 6 : : : 15Malta 0 0 0 0 0 0 0 0 1 0 0 1 1 1 0 2 : : : : : : : Netherlands : : : : : : : : : : : : : : : : : : : Austria 5 : 5 10 : : 10 18 : : 18 20 : : 20 12 : : 12 : : 14 14Poland : : : : : : : : : : : 53 : : : : : : : Portugal : : 2 2 : : 0 0 : : 6 6 : : 10 10 : : 12 12 : : 12 12Romania : : 13 13 : : 2 2 : : 7 7 : : 4 4 : : 2 2 : : 0 0Slovenia 0 0 0 0 2 1 0 3 0 0 0 0 1 0 0 1 1 0 0 1 0 0 0 0Slovakia : : 8 8 : : 19 19 : : 9 9 : : 10 10 : : 10 10 : : 14 14Finland 4 0 0 0 7 0 0 7 15 0 0 15 28 0 0 28 19 0 0 19 20 0 0 20Sweden 15 : 15 12 : 12 19 : 19 97 : 97 50 : : 50 40 : : 40UK:England & Wales : : 595 595 : : 1273 1273 : : : : : : : : : : : : : : : Iceland 0 0 0 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 0 0 0 2 0 2Liechtenstein : : : : : : : : : : : : : : 1 1 : : 0 0 : : 1 1Switzerland : : 139 139 : : 148 148 : : 159 159 : : 194 194 : : 185 185 : : 238 238Serbia (2) : : : : : : : : : : : : 2 2 : : 5 5 : : 6 6Turkey (3) : : 8 8 : : 2 2 : : 43 43 : : 2 2 : : 64 64 : : 60 60
Convictions for ‘Money Laundering’ by EU member state 2005 – 2010*
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Table 11.: Number of persons/legal enterties convicted for money laundering offences (1)2005 2006 2007 2008 2009 2010
3rd party
Self-laundering
Unable to distinguish
TOTAL 3rd part
y
Self-laundering
Unable to
distinguish
TOTAL 3rd part
y
Self-
laundering
Unable to distinguish
TOTAL 3rd part
y
Self-
laundering
Unable to distinguish
TOTAL 3rd part
y
Self-
laundering
Unable to
distinguish
TOTAL 3rd part
y
Self-
laundering
Unable to
distinguish
TOTAL
Belgium : : : 1799 : : : 1601 : : : 1492 : : : 1436 : : : 1231 : : : 1156Bulgaria : : : : 2 2 0 4 : : : 10 1 24 0 25 : : : 37 : : : 37Czech Republic 804 33 0 837 731 33 0 764 636 24 0 660 : : : : : : : : : : : Denmark : : : : : : : : : : : : : : : : : : : Germany 97 : 0 97 216 : 0 216 603 : 0 603 608 : 0 608 416 : 0 416 704 : 0 704Estonia : : : : 0 1 0 1 0 11 0 11 0 11 0 11 : 5 7 12 : 20 39 59Ireland : : : : : : : : : : : : : : : : : : : : : : : Greece : : : : : : : : : : : : : : : : : : : : : : : Spain : : : : : : : : : : : : 36 10 0 46 41 8 0 49 73 24 0 97France : : 290 290 : : 270 270 : : 320 320 : : 381 381 : : 353 353 : : : Croatia : : 0 0 : : 4 : : 4 : : 5 0 6 0 6 0 6 0 6Italy : : 721 721 : : 570 570 : : 768 768 : : 736 736 : : 908 908 : : 739 739Cyprus 0 6 0 0 0 10 0 10 0 13 0 13 1 21 0 22 0 4 0 4 0 15 0 15Latvia 1 2 0 0 0 4 0 4 1 61 0 62 2 27 0 29 1 9 0 10 2 11 0 13Lithuania 0 0 0 0 0 0 0 0 0 4 0 4 1 0 0 1 0 1 0 1 0 1 0 1Luxembourg : : 0 0 : : 1 1 : : 3 3 : : 2 2 : : 5 5 : : 51 51Hungary : : : 1 : : : 2 : : : 8 : : : 6 : : : 6 : : : 15Malta 0 0 0 0 0 0 0 0 1 0 0 1 1 1 0 2 : : : : : : : Netherlands : : : : : : : : : : : : : : : : : : : Austria 5 : 5 10 : : 10 18 : : 18 20 : : 20 12 : : 12 : : 14 14Poland : : : : : : : : : : : 53 : : : : : : : Portugal : : 2 2 : : 0 0 : : 6 6 : : 10 10 : : 12 12 : : 12 12Romania : : 13 13 : : 2 2 : : 7 7 : : 4 4 : : 2 2 : : 0 0Slovenia 0 0 0 0 2 1 0 3 0 0 0 0 1 0 0 1 1 0 0 1 0 0 0 0Slovakia : : 8 8 : : 19 19 : : 9 9 : : 10 10 : : 10 10 : : 14 14Finland 4 0 0 0 7 0 0 7 15 0 0 15 28 0 0 28 19 0 0 19 20 0 0 20Sweden 15 : 15 12 : 12 19 : 19 97 : 97 50 : : 50 40 : : 40UK:England & Wales : : 595 595 : : 1273 1273 : : : 2005: : : : 2033: : : : 2241: : : : 2509 Iceland 0 0 0 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 0 0 0 2 0 2Liechtenstein : : : : : : : : : : : : : : 1 1 : : 0 0 : : 1 1Switzerland : : 139 139 : : 148 148 : : 159 159 : : 194 194 : : 185 185 : : 238 238Serbia (2) : : : : : : : : : : : : 2 2 : : 5 5 : : 6 6Turkey (3) : : 8 8 : : 2 2 : : 43 43 : : 2 2 : : 64 64 : : 60 60
Convictions for ‘Money Laundering’ by EU member state 2005 – 2010*
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DRAFT ONLY
OCGM Criminal Finances
• OCGM Concept is sound• OCGM – Criminal Finances – strategic
objectives unclear• Quality checking• Education• Need to move from opportunity based to
intelligence based
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Investigation and Prosecution
• Data sources are confusing• UK has some success compared to other
countries but could be better• UK legislation is sound• Attrition rate of 25% is very high – we need to
know the reasons – on-going• A need for better performance reporting• Need to focus on operational activity and
impact