Europe ill prepared for fraud

Europe is “ill-prepared” to deal with the huge expansion of international fraud which accompanied the abolition of exchange controls, the director of the Serious Fraud Office (SFO) George Staples told delegates at the IBA conference.

However, the subsequent signing of bilateral agreements and mutual assistance treaties has boosted efforts to investigate and prosecute cross-border cases, he said.

In Europe, the Convention on Mutual Legal Assistance on Criminal Matters of 1959 enabled evidence to be gathered in one state for use in the courts of another. Although not ratified by the UK until 1991, it has “enormously improved the response to international fraud in Europe,” he said.

Staples said that although many countries now had modern mutual assistance laws, others still relied on old legislation to aid fraud investigation.

“Where the relationship between the UK and the overseas territories is closest, the mutual assistance arrangement may be most constrained,” he said. If England requested help from Switzerland, it would be acted on swiftly under the European Convention, he said.

“But if a similar request goes to some of our dependent territories, which are often significant offshore financial centres, it is rejected unless and until a defendant has been charged.”

Staples also said the UK has done its best to improve the legal regime in order to ensure goodwill internationally.

An example of these improvements included the fact that the SFO is now able to assist in fraud investigations being conducted by foreign authorities following an extension of the powers initially awarded to it under the Criminal Justice Act 1987. “Since the powers were extended we have received a total of 47 requests from as far afield as Argentina and the Ukraine. Because the UK has been able to provide assistance in this way, it has been easier for us to obtain evidence abroad,” Staples said.

Staples also said sovereignty means borderless investigations will “not be possible in the foreseeable future, but cooperation must be the means by which we meet the challenges of the international criminal”.