Web of deceit

The internet has opened up a whole new array of opportunities for organised crime. Miranda Moore QC looks at government agencies’ latest measures to tackle it

On 1 April 2006, the Serious Organised Crime Agency (Soca) came into being, bringing together the National Crime Squad (NCS), the National Criminal Intelligence Service (NCIS) and parts of HM Revenue & Customs (HMRC) and the UK Immigration Service.

Soca’s goals
The aims of Soca are to reduce the opportunity for organised criminals to make money, disrupt and dismantle their enterprises and raise the personal risks they run by successful targeted prosecutions of the major figures.

These are all laudable aims. However, targeting the organised criminal of the 21st century requires a clear understanding of how the situation has evolved. Only then can this the new species of criminal be dealt with effectively.

The history of organised crime
Twenty-odd years ago the organised crime of the day was typically ‘hands-on’ crimes such as bank robbery, protection racketeering and prostitution. Fraud was for the white-collar brigade. A classic example of the former is the Brinks Mat robbery: £26m worth of gold bullion stolen, 15 people involved, four arrested, three convicted, and sentences of between 14 and 25 years handed down.

From armed robbery to drugs, the ease of foreign travel and the increase in availability of routes of importation led to the staggering levels of drug importation seen today. Massive consignments are still the province of organised gangs, and increasingly these are foreign-based.

The sentencing for drugs importations is, however, in the same league as armed robbery. The high financial returns are tempered by the risk of sentences of between 10 and 25 years.

New avenues for making illicit money emerged where the risk/return ratio was less precariously stacked. The Krugerand gold frauds of the 1980s gave way to the duty frauds of the 1990s. Huge amounts of revenue were lost, enormous illicit profits made, safe in the knowledge that, if caught and convicted, the sentence would be at worst seven years, and often far less.

In the late 1990s organised criminals turned to missing trader intra-community (MTIC) or carousel fraud involving computer chips or mobile phones. Millions of pounds were paid out by the Treasury on a daily basis. HMRC was overwhelmed by the volume of prosecutions. The Treasury Minister John Healey hailed the success of a VAT crackdown in November 2003, saying that the UK’s pioneering efforts had produced an estimated decline in the fraud.

It is just as well the decline was described as ‘estimated’: in April 2006 the Government suffered the first annual fall in VAT revenue since the tax was introduced 33 years ago – it tumbled by 14 per cent when comparing March 2005 and 2006. The fall was said to be partly due to reduced consumer spending, but the large part was due to MTIC fraud. Those of you that read the inserts in your VAT return will have noted that measures are only now being put forward to make this type of fraud uneconomic.

The situation today
The vice trade continues to be a feature of crime gangs, who now import young women with the sole intention that they should work in the sex trade.

In April 2006 the UN office on Drugs and Crime reported that the UK was in the top 10 destination countries for the victims of human trafficking. Unsurprisingly the statistics also showed that 77 per cent of the victims were women, and 87 per cent of victims had been trafficked for the purposes of sexual exploitation. The perception, however, that this trade is carried out here by the nationals of other countries is shattered, as statistics showed that the criminal groups exploiting trafficking victims had strong national connections to the destination country. This trafficking is also for the purposes of forced labour, as highlighted last year by the tragedy of the Morecambe cockle pickers.

When the Government cannot even tell how many people are here illegally, or the whereabouts of those due to be deported, there is a long way to go before we are confident that human trafficking can be challenged effectively.

Although the large-scale drugs importations will always be with us, organised crime continues to evolve. And the big profits are to be made online. The internet respects no international boundaries. A gang could be working out of Russia with its victims being based in the UK via a website hosted in Brazil.

High-tech crime is often described as no more than old crimes with new tools. That view is somewhat simplistic. The net provides many opportunities for new crimes. Denial of service attacks and online blackmail are two high-profile examples.

Direct losses from online phishing scams, where customers are duped into disclosing personal financial data, rose by 90 per cent, from £12.2m in 2004 to £23.2m in 2005, according to the Association for Payment Clearing Services . Not only does the net provide new victims, but also new customers.

In a recent raid by the Turkish authorities, not only did they seize 51kg of heroin and thousands of ecstasy tablets, but also counterfeit pharmaceuticals and the materials for their manufacture. It goes without saying that, in order to distribute that volume of heroin, organised crime is involved. It should come as no surprise that the pharmaceutical industry is one that is ripe for plunder. Online shopping has spawned a generation who think nothing of buying just about anything over the net. The relative security and anonymity of online shopping enables many who would not know where to go, or who to go to, to buy illicit drugs from a selection of sites that pop up as soon as a computer accesses the web.

The Pharmaceutical Security Institute has published figures comparing 2004 and 2005. Worldwide there has been a 40 per cent increase in reported cases of counterfeit pharmaceuticals. The sentencing powers available to deal with those peddling these drugs are limited to 10 years, under the Copyright Designs and Patents Act. Soca’s 2006-07 plan recognises “counterfeiting” as a threat; but it is not one of its priorities, and pharmaceuticals are not mentioned at all.

As with any business, organised crime will go where the profit is high and the risk is low. It falls to agencies such as Soca to spot the trends and take proactive steps to prevent emerging criminality from becoming profitable and risk-free. n
Miranda Moore QC is a barrister at 5 Paper Buildings