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Subject Area: Accounting and Finance
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Article citation: Barry Rider, (2010) "All aboard!", Journal of Financial Crime, Vol. 17 Iss: 4, pp. -
It seems that governments, of whatever political persuasion, cannot resist the temptation to meddle with whatever arrangements they inherit for the control of fraud and related issues. While at one level, I suppose we must applaud the aspiration of the former Attorney General, Baroness Scotland, to render Britain the “most hostile of any country” to fraudsters, the naivety with which this objective was pursued and in particular the willingness to assume that what appeared to work in New York would work here, resulted in very little – other than the creation of a plethora of organisations and new jobs – arguably to the detriment of frontline work. The present government even in opposition gave notice that it intended to re-arrange the “deck chairs” as soon as it came into office with the creation of a super agency – the Economic Crime Agency.
While one must congratulate the new government on its historical research, as such an initiative was first proposed in 1877 and has been often extolled, including by the Fraud Trials Committee in 1986 as a sensible approach, there is perhaps less to commend in the manner that this new creature is being bred. The initial (and inopportune) announcements and odd references to the gestation of this beast while tantalising some have simply destroyed the morale of many. While one does not doubt that the ministers responsible have been and are taking appropriate advice – so did – presumably their predecessors – and those that came before them. The reality is that the control of fraud is almost impossible to separate from the control of financial crime and the economic aspect of most serious crime is increasingly apparent and significant – in terms of motivation, detection and investigation. Furthermore, the notion that there can be a bright line between the role of the traditional agencies of criminal justice and those performing regulatory, disruptive and intelligence functions is in the modern interdependent world illusory.
The complexity of the practical and institutional issues that will arise may not serve to sink the initiative within the limited period of political accountability upon the basis of which governments now operate. However, it is important to appreciate that it is not merely the efficacy with which the system addresses fraud and the like that is of importance but how such initiatives impact on the control and inhibition of other criminal and unacceptable activities. The complexity of such issues has recently been demonstrated by a US report which has identified just how diverse, deep and complex the institutional network is that has developed to address terrorist-related risks since 9/11. In the USA, there are now over 1,270 governmental bodies and almost 2,000 private organisations concerned with counter-terrorism. Over 50 US Federal organisations are concerned with tracking terrorist-related finance alone. It is arguable that the situation in Europe is even more complex (if not confused!). The government, as did its predecessor has recognised the need for integration and efficiency, not least for financial reasons. However, as attempts to improve the integration, utility and deployment of even something as significant as terrorist-related intelligence has shown, this is not an easy or risk-free exercise. Indeed, there is much to commend the view that fighting economically motivated crime should be simply part and parcel of the work of the proposed National Crime Agency.
It would be a serious mistake if in establishing the Economic Crime Agency the considerable expertise and experience that has been developed, in particular, over the last few years, in the SFO and FSA were dissipated. While there are obviously many serious weaknesses in the present system, it remains to be seen whether the government has the resources and perhaps political will to ensure that a constructive and long-term initiative is born and then nurtured.