The way in which criminal fraud is defined, investigated and prosecuted differs across the UK and important differences exist. This guide provides a general overview of how fraud is usually dealt with under the criminal law in Scotland. INTRO AN INTRODUCTION TO UK LEGISLATION | DECEMBER 2015

Criminal fraud in Scotland 4TH EDITION

WHAT IS FRAUD? Proving an intention to deceive simple theft. In most cases REPORTING CONCERNS is essential in all cases, and can embezzlement involves the The term ‘fraud’ refers to the often be inferred from the appropriation of money. Fraud can be reported to deliberate use of deception or actions of the accused. The Police Scotland, by calling dishonesty to disadvantage or range of ‘false pretences’ Statutory frauds 101 (non-emergency) or 999 cause loss (usually financial) observed in Scottish courts is In addition there are a wide (if in immediate danger or to another person or party. incredibly wide, from outright range of statutory offences risk of harm). A police Definitions of fraud vary from lies to sinister silence, and the which are closely related to the crime reference number country to country and practical results that have common law offence. The main will be given. between legal systems. been achieved are equally examples can be found in the diverse. If the practical result following statutes: In certain circumstances it OVERVIEW OF THE LAW is not achieved there may be ◆ Bankruptcy may be possible to report to a prosecution for attempted (Scotland) Act 1985 Action Fraud (the UK’s In Scotland, criminal fraud is fraud. ◆ Business Protection national fraud and cybercrime mainly dealt with under the from Misleading Marketing reporting centre), by calling common law and a number of Uttering Regulations 2008 0300 123 2040 or using the statutory offences. The crime of ‘uttering’ occurs ◆ Companies Act 2006 online reporting tool, or to when someone tenders ‘as ◆ Computer Misuse Act 1990 Crimestoppers (anonymous The main fraud offences are: genuine’ a forged document ◆ Consumer Protection from reporting) and sector ◆ common law fraud; to the prejudice of another Unfair Trading regulators. ◆ uttering; person. Forging a document Regulations 2008 ◆ embezzlement; and only becomes a crime if it is ◆ Criminal Justice and Reporting duties ◆ statutory frauds. shown to have been tendered Licensing (Scotland) Those in the regulated sector (to an individual or the public Act 2010 (articles for or those who are concerned It is important to note that the at large) with an intention to use in frauds) about involvement in money Fraud Act 2006 does not defraud/cause someone ◆ Financial Services and laundering (for example, a apply in Scotland. prejudice. Markets Act 2000 transaction that may involve (to protect investors) the transfer of criminal WHO DOES IT APPLY TO? In many cases, uttering and ◆ Food Safety Act 1990 proceeds) may also need to fraud are interchangeable (labelling and make a suspicious activity Fraud can be committed offences that can equally substandard food) report (s330 of the Proceeds by both individuals and apply to the same ◆ Forgery and Counterfeiting of Crime Act 2002) or an companies. Companies are circumstances, but Act 1982 (counterfeiting of authorised disclosure (s338 of liable based on the ‘directing prosecutors tend to proceed bank notes and coins) the Proceeds of Crime Act mind and will’ principle. with an uttering charge if a ◆ Insolvency Act 1986 2002) to the National Crime forged document is used. ◆ Weights and Measures Agency (NCA). WHEN IS AN OFFENCE Act 1985. COMMITTED? Embezzlement In addition, if, in the course of Embezzlement is the felonious OVERVIEW OF business or through a close Common law fraud appropriation of property ENFORCEMENT personal relationship, a person Common law fraud is the without the consent of the becomes aware or suspicious common ‘catch all’ for most owner, where the There are many interested that two or more people have fraud prosecutions in appropriation is by a person parties involved in the got together for the principal Scotland. who has received a limited detection, investigation and purpose of committing a ownership of the property, prosecution of fraud in serious crime (such as fraud), Fraud is committed when subject to restoration at a Scotland, including: that person commits an someone achieves a practical future time, or possession of ◆ Police Scotland offence if s/he does not report result by the means of a false property subject to liability to ◆ Financial Conduct Authority that knowledge or suspicion pretence. In other words, account for it to the owner. ◆ Trading Standards to Police Scotland (s31 where someone is caused to ◆ Department for Work Criminal Justice and Licensing do something they would not There is an element of breach and Pensions (Scotland) Act 2010). otherwise have done by use of of trust in embezzlement which ◆ Crown Office and deception. makes it more serious than Procurator Fiscal Service. INVESTIGATING FRAUD The SFO does not have jurisdiction to prosecute in SUMMARY OF THE MAIN FEATURES Frauds committed in Scotland Scotland, although its powers are usually investigated by under s2 of the Criminal Criminal offences Common law fraud Police Scotland, which has Justice Act 1987 may be used Uttering regional specialist units within to investigate a serious or Embezzlement its Specialist Crime Division to complex fraud which is Other statutory frauds deal with complex economic prosecutable in England, crime cases. Wales or Northern Ireland. The Reporting fraud Police Scotland SFO also works with Scottish Action Fraud Serious and complex fraud authorities in relation to Crimestoppers and other economic crimes UK-wide fraud. Other government agencies are investigated under the and regulators direction of the Economic Once a decision has been Crime Unit, part of the Serious made about the nature of the Investigating authorities Police Scotland Organised Crime Division of crime and the evidence the Crown Office and available to the prosecutors, Prosecuting authorities Crown Office and Procurator Procurator Fiscal Service the individual may be served Fiscal Service (COPFS) which is Scotland’s with one of the following. prosecution service. Sentencing A summary complaint Summary conviction Up to 12 months’ In the investigation of serious This is used for less serious imprisonment or a fine up to or complex fraud the Lord crimes and is heard by a the prescribed sum or both Advocate, the ministerial head sheriff sitting without a jury. of COPFS, may exercise The maximum penalty on Conviction on indictment Up to life imprisonment or powers under ss27 and 28 of conviction is imprisonment for unlimited fine or both the Criminal Law up to 12 months and/or a fine (Consolidation) (Scotland) Act up to the ‘prescribed sum’. 1995 to authorise a nominated It is important to note that does not apply in Scotland). investigator to compel the An indictment where insufficient evidence Often no or limited pre- production of documents and This is used for more serious exists to commence a criminal interview disclosure is to require a person to answer crimes. The case will proceed prosecution, a case may be provided. Also, unlike in questions and to provide either with a sheriff (lower- referred to the Crown Office’s England and Wales, an information. These powers are level judge) and jury or in the Civil Recovery Unit to enable adverse inference cannot be similar to the Serious Fraud High Court. If a prosecution is legal action to be taken to drawn from giving a ‘no Office’s (SFO) s2 powers. successful, the maximum recover the proceeds of crime comment’ interview. penalty at sheriff and jury level through the civil courts For UK-wide frauds, both is an unlimited fine and/or instead. FURTHER INFORMATION the English and Scottish imprisonment of up to five authorities will have years, subject to any wider PRACTICAL Available from the resources concurrent jurisdiction and it power granted by statute for DIFFERENCES WITH section of our website: will very much depend on the particular offences. In ENGLAND AND WALES ◆ Criminal fraud in nature of the crime and the addition, the sheriff may remit England and Wales level of local involvement as to to the High Court for sentence An important difference in ◆ Money laundering and the who leads the investigation. any case where they hold that criminal law between the two proceeds of crime. any competent sentence that jurisdictions may lie in the fact PROSECUTING FRAUD they could impose would be that Scottish courts require Other resources inadequate. The maximum ‘corroboration’ of evidence (ie, ◆ Action Fraud COPFS is the sole prosecuting penalty at the High Court is an two independent sources of ◆ Crimestoppers authority in Scotland. unlimited fine and/or life evidence pointing to the crime ◆ Crown Office and imprisonment subject to any having been committed). In Procurator Fiscal Service Most fraud prosecutions are restrictions imposed most fraud cases this is ◆ Police Scotland dealt with by the local by statute. unlikely to make a practical Procurator Fiscal who has a difference and, in both duty to consider the evidence On conviction, the Crown may jurisdictions, victims should available to them and make seek to use its powers under seek to identify and retain as further enquiries as necessary. the Proceeds of Crime Act much information as they can They may choose to pass the 2002 to confiscate from the in order to assist a successful ACKNOWLEDGEMENTS matter to the Crown Office’s accused a fixed sum of money prosecution. Economic Crime Unit if they relating to the benefit Thanks to Tom Stocker consider the crime serious obtained from their general Another important difference (Pinsent Masons LLP) and enough. criminal conduct in a criminal relates to the investigation of Barbara Bolton (Shepherd lifestyle case, and from their crimes in Scotland, particularly and Wedderburn LLP) for particular criminal conduct the conduct of interviews their valuable contributions otherwise. under caution (note: PACE to this guide.

FRAUD ADVISORY PANEL Chartered Accountants’ Hall T +44 (0)20 7920 8721 Moorgate Place E [email protected] London EC2R 6EA UK www.fraudadvisorypanel.org

Company Limited by Guarantee Registered in England and Wales No. 04327390 Charity Registered in England and Wales No. 1108863

© Fraud Advisory Panel 2015 All rights reserved. If you want to reproduce or redistribute any of the material in this publication, you should first get the Fraud Advisory Panel’s permission in writing. Laws and regulations referred to in this Fraud Advisory Panel publication are stated as at 1 December 2015. Every effort has been made to make sure the information it contains is accurate at the time of creation. The Fraud Advisory Panel cannot guarantee the completeness or accuracy of the information in this Fraud Advisory Panel publication and shall not be responsible for errors or inaccuracies. Under no circumstances shall the Fraud Advisory Panel be liable for any reliance by you on any information in this Fraud Advisory Panel publication.