The Fraud Act 2006 creates a new general offence for fraud and introduces three possible ways of committing the offence:
- By false representation
- By failing to disclose information
- By abuse of position
Each of the above acts requires dishonesty and intent to make a gain or cause a loss. As can be seen from these three simple methods of committing fraud many of the suspicious activities we may come across may be defined quite simply as fraud. For example, HMRC may penalise by civil penalty in the majority of cases of tax evasion, this does not detract that it is criminal offence which can be punished by criminal sanctions.
Whereas the Fraud Act provides the principal offence for prosecuting fraud, repealing most offences of ‘deception’, many of the previous offences still remain, for example:
Under Common law – The offence of “cheating the Revenue”, often used in offences involving indirect taxes and duties;
- S72 of the VAT Act details the criminal offences of incorrect declarations of VAT.
- Theft Act 1978 – S17 “false accounting”, for individuals, sole traders and partnerships for false financial statements.
- Theft Act 1978 – S19 “false statements by company directors”.
- Companies Act 2006 have various elements of criminal activity, for example, fraudulent trading.
- Forgery and counterfeiting offences under sections 1- 5 and 14 -19 of the Forgery and Counterfeiting Act 1981.
We have to be mindful that all suspected criminal offences, no matter how they may be dealt with are reportable events under PoCA.
Law Enforcement Agencies
As regulated sector businesses, your firm may have to deal with a whole range of different agencies who may be ‘interested’ in the affairs of your customers, for example;
- HMRC – will investigate all aspects of tax evasion, VAT fraud, customs and excise fraud and wrongful claims for benefits such as Working Families Tax Credits.
- SOCA – our UK FIU concerned with drugs and human trafficking and sexual child abuse running a number of major investigations either in their own right or in conjunction with other law enforcement agencies.
- Traditional law enforcement, the police which will include those departments investigating financial crime. All suspicious activity reports are now looked at by a SAR officer in each police force.
- The Department of Works and Pensions (DWP) – have access to the SAR’s system and investigate all types of benefit fraud
- BIZ (Part of the Department of Trade & Industry) – company investigation unit, which investigates the affairs of companies, such as fraudulent trading and the conduct of directors’
- Asset Recovery Agency (ARA now merged with SOCA) – deals with the confiscation of criminal assets, also has the power to tax criminal proceeds though civil processes. It has increased powers under Chapter 8 PoCA,
The Fraud Act 2006 and SOCPA 2005 have made it easier for all these agencies to investigate and prosecute criminals and also confiscate their assets when they are deemed to be the proceeds of crime.
The burden of proof against a suspect for prosecution under the newer legislation has been lowered from ‘knowing or believing’ and ‘acting dishonestly’ to just having ‘reasonable grounds’ to suspect’. This makes prosecution easier.