Soca: one year on

Ladies and gentlemen, for new readers I thought I’d start by saying something about what the agency is, and what it isn’t, and give you a reminder of what it’s for and what it isn’t for. I will then say something about what we’ve been trying to do in our first year of operation, what the approach has been and why; and then in anticipation of the year end, when we have to publish an annual report, to give you some highlights of the things we think have gone well, and the things we think have not gone so well.

The idea of having a national agency dealing with national and international crime has been around for a long time; there were some serious conversations about it in the early 1990s, which came to nothing. The arrival of this agency starts with some correspondence from Downing Street in 2000, and with a White Paper, following official ruminations, in 2004. The White Paper, One Step Ahead, sets out a clear framework for what Government expected this new agency to do, and I’ll read one or two bits from it. ‘The government has set a straightforward objective: to reduce significantly the harm done to the UK and its citizens by organised crime.’ That’s an important expression, ‘the harm done’. It goes on: ‘We shall do this by making the UK one of the least attractive locations in the world for organised crime to operate, but also by strengthening international co-operation to pursue criminals, wherever they are based.’ The White Paper goes on to describe the creation of this new agency, and how it’s going to conduct its business, and anchors its role as: ‘to reduce the harm caused to the UK by serious organised crime’. In performance terms, it says it’s looking to see that agency concentrate not on tactical successes, but on impacts that affect the real world, that is, the harm that is affecting our citizens and our society. There is some subsidiary text which reads: ‘This will not be straightforward,’ which might be thought to be an under-statement.

It is worth remembering the scale of the issues we’re talking about here. I’m not going to give you a taxonomy of organised crime.  Let us just reflect on the scale of, for example, the Class A drugs business and fraud, as they affect this country.  If you take just cocaine and heroin, there’s reckoned to be every year something like 900 tons of cocaine produced in South America, about 350 to 400 tons of that is despatched towards Europe, and something between 35 and 45 tons reaches the UK. With heroin, there’s about 400 tons of heroin produced a year in Afghanistan and Pakistan, though there’s been some bumper crops in recent years, so the figure could be higher, and something like 30 tons reaches the UK. Within the UK, use has grown considerably over the last 25 years.  It is said, for example, that 85% of sterling notes in circulation are contaminated by one or other of the Class A drugs, so in your wallet will be traces of Class A drugs.  This is a business that has something like 300 major importers into the UK, 3,000 wholesalers, and something like 70,000 street dealers, producing probably a turnover of £7- 8 billion a year. Looking separately at the white-collar crime of fraud. This is a large term that captures a variety of activities. A good piece of work done by academics with ACPO recently has set a global figure for fraud in the UK of about £14 ½ billion a year. The stories behind some of those crimes are pretty horrific. There is a pretty standard run of criminal enterprise making money at the expense of our weaker citizens or our elderly people, usually off-shore, sending rum prize draws, pumping worthless shares, and so on involving a sizeable quantity of harm done to our citizens.

Now, if you take anything other than a very short timescale, pretty well all of the organised crime problems such as these which affect the UK have been getting gradually worse since the 1960s. So that is the background that this new agency is starting with, and I want now to say something about the way we’re approaching it.  SOCA is established by statute (the Serious Organised Crime and Police Act 2005)  The legislation gives us three functions: preventing and detecting serious organised crime – if you like, a standard law enforcement-type function; contributing to the reduction of such crime in other ways, and to the mitigation of its consequences – that’s parliamentary draftsman’s language for harm reduction; and then in it gives us a subsidiary function to gather, store, analyse and disseminate information consistent with those previous functions. That’s quite a powerful and important piece of machinery. The legislation gives us unusual powers. We are a civilian organisation. This is not a police force, we are all civilians. Some of us are former things, but we’re all currently civilians. The legislation allows us, allows the Director General personally, subject to proper training and accreditation, to allow individual officers to use the powers of a constable, the powers of a customs officer, and the powers of an immigration officer. That is a very powerful mix of authorities. In practice, there’s a considerable amount of overlap between the first two, but it is very powerful recipe. We have also in the legislation the most wide law enforcement information gateways in the country, allowing us to share information with anybody, consistent with our functions, and to receive information from anybody, consistent with our functions, and that power overrides duties of confidence.  We have set out a in a public statement (the SOCA Statement of Information Management Practice)  how we’re going to use those powers. Finally, the legislation also does some good things about new powers for law enforcement in general, not just for SOCA, including financial reporting orders - which I can answer questions about, if people are interested - disclosure notices and now a statutory basis for Queen’s Evidence. Parliament is just debating, in the House of Lords, ‘prevention orders’, which would involve using the civil courts to make it more difficult to commit crime, to try to get ahead of the criminal enterprises, to remove the facilitation that make their crimes possible.

As well as those statutory functions and powers, SOCA has duties to support others in law enforcement in the UK, and as the previous speaker has said, collaboration is the name of the game here. In the case of SOCA, we operate as the Europol and Interpol bureaux for the UK, so we’re in the constant transit of data back and forth, something like half a million transactions a year. We conduct international enquiries with staff overseas, we run operations to support police forces with kidnap and extortion cases, where we have a particular capability (we receive about 500 enquiries from police forces about this a year). We do interception for a large part of the police service, and we provide other technical support. Behind the money-laundering regime is a substantial body of data which represents the Suspicious Activity Reports made by financial and other institutions to the authorities, in the form of SOCA’s Financial Intelligence Unit. That information is principally there for use by law enforcement. And we’ve been spending some time and money and effort in turning that round to a more efficient piece of machinery to support the work particularly of police forces.

SOCA was created from the merger of two previous policing organisations: the National Crime Squad and the National Criminal Intelligence Service, which disappeared. It has also taken on the drugs work from HM Customs & Excise, now HM Revenue & Customs, and we have a small influx of immigration specialists from the Immigration Service. We have 4,000-ish staff, over 60 buildings and about 380 different IT systems, none of which talk to each other. This year we will spend about £400 million. So that’s the background of what this organisation’s about, and what the law says it’s for. As the introducer said, there are some powerful pieces of legal machinery here for us to use, and it is very unusual to have civilians using these enforcement powers, albeit that currently the people using them are former police officers and former customs officers.

How are we approaching the task? I think there are four key issues that I want to talk about here. First, there is what everybody calls intelligence-led enforcement, and because this is such a tendentious expression, we in SOCA talk about knowledge before action, and the rationale for this goes like this. This is an organisation that is not policing a piece of ground. We are not having to respond to members of the public coming in and alleging a crime, or to events on the streets. We have to choose which of the operational opportunities that are presented hit a threshold for us to engage in, or are relevant to that harm-reduction agenda I was talking about earlier. So we have choice, and we have to choose. We have machinery centrally for making choices about which work we do, and which work we don’t do. We are not alone in doing much of that work, as there are other people out there in the police and other regulatory and enforcement organisations also involved and we are not in competition with them. So we have choice. If you need to make choices, you have to have information. Why should we do this case, as opposed to that case? You need to have some understanding of what the choice means, so we’re putting a good deal of effort into understanding the choices. We have set up some machinery that works round this, and it has three features.  The first is a thing called the UK Threat Assessment. Previously written by NCIS (the National Criminal Intelligence Service) now written by us, this is a statement of – forgive me – how little we know about serious organised crime. Next comes the National Intelligence Requirement which lists 178 issues that we need to know more about: the who, what, why, when, where questions about organised crime. For most of them, the state of our knowledge when we started was poor. So a lot of our effort is going into building up an understanding of what the problems are, not just whether Mr. ‘X’ is the bad guy who’s doing it, but what the underlying problems are, and how the criminal business works. How the cocaine price is affected by what we do, or how it’s not affected by what we do. And to make those choices, we need to do that intelligence work, we need to understand. So this organisation needs to be intelligence-led or, more transparently, to operate from knowledge to action.

My second point – and it’s a pretty obvious one – we are not going to crack organised crime on our own, and we’re not on our own, because we are part of a complex network of relationships, domestic and foreign. The most important of those, obviously, are domestic, and there are two principal ones for us operationally: the UK Police Service, with whom we have this support relationship, as well as an operational collaboration one, and HM Revenue & Customs who are doing criminal investigations into fiscal fraud and tax and excise crimes, which is a big area for organised crime. Since we know we can’t do the job on our own, we’re busy trying to make effective operational collaboration with other people. And we have put together, with others, a document called the UK Control Strategy for Organised Crime, which has 20 programmes, and it divides up nastiness into packets and says, for example, here is offshore cocaine smuggling. This is the way it feels, more or less, this is the programme of work that we’ve all agreed we’re going to do on this, and this is how it’s going to work. In short, the Control Strategy is a strategy for the collaboration of the willing. If you don’t want to play a part, that’s fine; but if you do, here’s a way of thinking about the issues so we are all shooting in the same direction. And we’ve got 20 programmes in the strategy, and we’re leading, I think, on 11 of them, and other people are leading on the other nine.

My third key point: it’s all about money, stupid. The organised criminals are doing this for money. These are acquisitive crimes. It’s all about money. So getting at the money and the profit from organised crime is likely to be a more effective lever than some others. I’ll say a bit more about that later, but the primacy of criminal assets, and the importance of understanding the money flows and how money is laundered, where it goes, and all that is a very high priority if you want to do something about organised crime.

My fourth and final point is more complex.  It is that arrest and conviction of organised criminals is necessary, indeed it is essential for success, but it isn’t a sufficient response.  This is because, firstly, quite a lot of the people who are causing us harm aren’t within the jurisdiction of our courts; and secondly, because law enforcement has been working hard on these crimes for many years in various capacities, and – it depends how you believe the numbers  -  research has suggested that only something between 5% and 10% of the serious criminals we are concerned about are in prison. So we have been running fast, and perhaps 90% of our adversaries are okay. And the theoretical figure work behind this – and you can take it or leave it as you like – suggests that if you’re an organised crook for 20 years, you have a 5% chance of being nicked. So using the criminal law, which is a powerful tool and says something about society’s hatred for crime, is very important for us, but it’s not on its own a sufficient response to the task we have been given. 

So we’re having to think about systematising some new tools for use against organised crime, doing things differently. And I need to say here straight away: we’re not doing anything that others in law enforcement haven’t tried previously. What we’re trying to do is integrate them into a holistic programme in that control strategy, bringing all these tools to bear on the problems. For example, there are, I think, in Her Majesty’s prisons 800-plus people convicted of Category A offences to do with drugs in Category A prisons, which is a sort of substitute number for people who matter, in that context. 800 is quite a small number, if you remember that 70,000+ dealers I was talking about earlier. Nevertheless, they’re all going to come out at some point, and recidivism amongst organised criminals is very high. All the academic studies suggest 85%+. So what we are trying is not to forget them when their convicted. We have set up a programme with the National Offender Management Service and the Home Office to find where all the big crooks are and to wait for when they’re due to come out, and then have a think about their licence conditions, so as to discourage re-engagement. Similarly, we have started a programme of work looking at the way the crooks do their business. Where do they get their legal advice? How do they move their money? What use do they make of the Internet to commit crimes? What vehicles do they use? What telephone…? And so on. And coming at it from the other end, from the problem end, not from the individual end.  For example, if I want to commit fraud, what do I need? What are the enablers? Well, you need a false identity, you need an address, you need a way of getting your post, where it can’t be traced back to you, and so on and so on.

We are doing more work with overseas partners than I think was previously the case, including having our staff working in, I think, now 12 different international agencies overseas. We’ve got 130 people overseas in 40-something countries. Since the crimes we’re trying to address start overseas, the place we’ve got to be is out there nearer where it begins, working with the people who know them better than we do. Similarly, we are seeking to co-operate with a wider range of partners, at home and overseas, than perhaps traditionally has been the case. I could mention the Electoral Commission, the OFT (Office of Fair Trading) and a number of others, as well as a number of private sector companies.  For the latter, we have started a programme of giving warnings about criminals’ techniques, particularly with regard to the financial sector.  This involves issuing warnings and alerts to people about the way in which somebody might get round their defences to defraud them. This can be quite tricky, because on the one hand you may be investigating a criminal enterprise, with all the requirements of CPIA (Criminal Procedures & Investigations Act 1986) for the precision of your record-keeping and the coherence of the investigation; while separately you’re seeking to use the lessons you’re learning to warn potential victims. And it’s early days, but we’re finding that people are quite surprised and interested in the opportunities that our information can provide for them to plan out fraud.

So that’s the headlines of what we’ve been trying to do. How have we got on? Shall we start with the difficult bits? If you take 4,000 staff from a variety of different backgrounds and you say to them, oh, by the way, you’re joining us, and we start in April, and it’s now November, and we haven’t yet any idea where you’re going to be working or what you’re going to do, because we don’t know what skills we’ve received from the predecessor agencies. This was not comfortable. It was not comfortable for the staff,  and it was not comfortable for the organisation. We inherited 37 different pay schemes, which we have boiled down into one. That’s not been comfortable. We inherited quite a lot of special ways of doing things which were just different, as you’d expect; a cultural inheritance going back hundreds of years, in some cases, about the way Customs do things, and the way the police service does  things, which were different; and with quite a lot of My Way’s Best around. We’ve had to say, oh, gosh, well, we don’t like either of those, we’ll do this thing, which is our way. So if I say we’ve had lots of hygiene factors around the organisation, you’d understand what I mean; and they continue. The changes required, particularly given the testing operational environment, have been pretty challenging for everybody. But our wastage rates are low, and our sickness rates are unbelievably low, which suggests a strong commitment from our staff, despite organisational problems.

On the more positive side, we have done quite a lot of work to improve our knowledge of organised crime, on cocaine in particular. And I feel we’re off bottom on some of the subjects we started with a year ago. But there’s so much more to learn. We’ve been doing a lot of work growing our asset recovery pipeline. A pipeline is what we call the cases that are coming through to fruition. The crooks have been convicted, but we won’t get the confiscation hearing for a year, and we might get the money the year after. So we’ve been going out and trying to think about building a pipeline for the future that is larger than the one we inherited. We’ve done things like: every time somebody’s arrested for a predicate offence – drugs or people-smuggling or fraud – we and the CPS also lay money-laundering charges. Because if you read Section 340 of the Proceeds of Crime Act 2002, criminal property is defined as any proceed from any crime. So if they got money for it, that’s a proceed of crime, so it’s a money-laundering offence. So we’ve been building the pipeline, and if you hang about for two or three years, you’ll start seeing the money coming out at the other end, and it’ll be large.

We’ve been trying to see how best to have an impact on criminal markets, and the one which we inherit the most experience and knowledge about is the drugs market. It is the largest and most difficult to address, and it’s the one where the vertical slice is so difficult to join up, with big dealers in Columbia or Turkey, down to the street dealer, who’s making 20 grand a year out of doing it. And we’ve been working with a number of forces to look at snapshots of how the market works in a locality, to see if we can see any reflection of that up the pipe. This has been quite a sobering experience, I have to say.  There is, for example, a small northern industrial town with 50 criminal gangs smuggling drugs for a population under 100,000.  But we are having a bumper year on seizures of cocaine. There’s two different numbers here, and they play out differently. There’s what you seize on shore, i.e. in the UK, and we’re talking about something over half a tonne so far this year; and then there’s off-shore, which is mostly in the Atlantic somewhere, where last year it was seven tonnes, and this year it’ll be 45. That second figure reflects also on the contribution of others, notably the Royal Navy, the French navy, and the Spanish navy, or the Americans doing things in the Caribbean.  If, as is thought, 350 tons is coming to Europe each year from South America, and we’ve taken nearly 50 tonnes this year. That’s one tonne in seven supplied. But in our judgement, we have all got to sustain that seizure rate for about three to four years, before you might start to see a sustainable impact on the price and availability on our streets.

Finally, I mentioned the alerts and warning we’ve issued. I think there’s probably something over £100 million saved so far this year from financial institutions being able to put in place regimes to protect themselves, to protect against fraud. But overall, we could not claim nine months in that SOCA is yet running at full speed. We still have a lot to do administratively and bureaucratically to get the organisation going as effectively and efficiently as is needed. But we have inherited a skills mix with some very, very able and talented people, particularly criminal and financial investigators.  If the Home Office was here, I would tell them this was a bid for money. What we need is some financial room to recruit new skills. They are skills that are in very short supply at the sort of salaries anybody in the public sector can pay, and if you go back and read the Butler Report on WMD in Iraq, he talks about the shortage of good intelligence assessment skills in government. It’s the same question for us. We also inherit an under-investment in technology and in forward capability, which we shall be seeking to address over the next few years.

What I’ve tried to do this evening is to explain what SOCA is for, the way we’ve been approaching its responsibilities, and to give you just a snapshot of how we think we’ve been getting on. As I said, we have to publish a statutory annual report, which says what we’ve done in our first year, and that should be out in April.  You are all invited to read it. Thank you.