Grigol Katamadze: The establishment of the Financial Investigation Service Using the concept of the ILP Model
At the beginning of my latest article in the series on the need of creating a new common body — the Financial Investigation Service as soon as possible, I reiterate, the Taxpayers Association of Ukraine has been publicly and consistently proposing the Concept of merging economic units of tax police within frame of the State Fiscal Service of Ukraine, The Department of the State Service for Combating Economic Crime in the structure of the Ministry of Internal Affairs of Ukraine, the Department of the Сounterintelligence Protection of the National Economy in the structure of the Security Service of Ukraine, in all of which there are issues concerning the distribution of competences, the increase in authority overlapping, lack of personal responsibility for the «shadow» economy, for the abuse and the damage, not to mention the fact that there is an absence of coordination for the interaction between financial control authorities.
However, I deeply believe that a thorough study and balanced implementation of positive European experience is important for establishing our own model of the role of our state in regulating financial and economic security, which is a guarantee of independence and integrity of our country and a condition for financial and economic security.
The accumulated foreign experience (Austria, Georgia, Italy, Poland, USA, Sweden, Lithuania) shows that the state can effectively operate a single body in order to combat financial and economic crimes. Reducing the number of state bodies of financial control and those of financial investigations and creating a single law enforcement body specializing in the investigation of financial crimes is a fairly common practice among the developed countries and it only increases the efficiency of its own activities.
Thus, for the last 20 years, the European methodology of pre-trial criminal proceedings is based on the concept of ILP (Intelligence-Led Policing). Undoubtedly, this model has become an effective response to rapid globalization, which has expanded the possibilities of international organized crime, and quickly proved its effectiveness. It revolutionized the European system of pre-trial investigation and made it possible to make a colossal leap forward both in terms of respect for the rights of citizens and legal entities and in increasing of the detection and of the work of police “ahead of the curve” (preventive, proactive work to detect crimes): the pre-trial investigation based on the data, collected from the national and the international databases, registers of other sources, analyzed using special tools of criminal analysis, specially trained detectives-analysts who work only with databases and information and are not directly related to specific criminal proceedings. Intelligence analytics provide information using which law enforcement agencies identify objects of attention. Today, ILP is integrated and successfully operates in most countries of the European Union and in the United States.
I want to emphasize that the ILP model uses integrated data of all available information for risk management. To put it simply, this model involves identifying and analyzing of the problem before the offense is committed. The main tools for this model are the information exchange and the decision analysis. The existing model for combating economic crime in Ukraine, on the contrary, is more focused on overcoming the consequences of crimes. The successful implementation of ILP principles of the law enforcement in the economic sphere requires serious reform, significant organizational and structural changes, redistribution of law enforcement personnel, professional retraining of personnel, revision of functional tasks and job responsibilities, etc. The establishment of the Service would be a logical step towards such an implementation.
Now it is necessary to dwell on the main advantages of using the ILP model, which are:
— detection of criminal technologies and individuals and legal entities involved with them is carried out by processing large arrays of Big Data information using criminal analysis software products;
— focusing on the exposing of criminal groups, criminal infrastructure, schemes and technologies of committing crimes that significantly affect the criminalization of public relations and focusing on their investigation;
— accompanying the simplification of the pre-trial investigation procedure, changing approaches to determining the sufficiency and admissibility of evidence, as well as the making of the management decisions, building trust in the police body and in the social protection of its employees, respectively, reducing corruption risks;
— the definition of strategies to combat crime and tactics of criminal investigation is carried out through methodologies for assessing risks and threats;
— a unified form of activity of foreign law enforcement institutions, as a consequence of its introduction would promote the integration of domestic law enforcement bodies into the European and international police community.
I shall note that the main advantage of the new law enforcement body should be a radical change in the approach to the investigation of financial crimes. Since the creation of a new structure, without a vision of the concept of its activities, without the establishment of an innovative approach to work, in itself would give a zero result effect. The future law should implement the concept of law enforcement body in a completely new format, its feature would be the changing the force oriented approach to the analytical one, and the Service would be guided by the analysis and would be based on the use of modern risk-oriented methods of criminal analysis, as well as by the activity of the relevant law enforcement bodies in the EU. Thus, one of the most important functions of the new body would be information and analytical, and its work would be dominated by the intellectual component. The analytical activity will be based on monitoring of all existing databases in the country and abroad. The main focus would be on the systematic collection and evaluation of information through a well-defined analytical process, and as a result of it the data is transformed into strategic and operational analytical products that support the actual data of the process of making sound management decisions. Therefore, the activities of the Service will be based on the use of its own information resources, data and information from existing sources and on the assessment of large data sets. This would eliminate the need to attract significant human resources, and the result would not depend on the algorithm set either by an investigator or by a detective. These are the developed risk-oriented technologies that have long existed in countries where economic crime is really being fought.
In the process of the establishing of the Service, information and analytical systems and databases operating as parts of separate existing law enforcement agencies will be merged into a single analytical center of the new body, which will increase the efficiency of such analytical activities. Combined analysis of existing databases, formed in various domestic regulatory and law enforcement agencies, can be made quite efficient and productive by combining these information flows together, since the information content of existing databases is quite satisfactory, and modern software allows one to fulfill the task.
Obviously, if we talk about the competence and the authority of the Financial Investigation Service, it would be entrusted with the exercise of the key functions:
— participation in ensuring of the security of the state by the comprehensive counteraction to the spread of criminal threats in the economic sphere;
— prevention, detection, detering, investigation and solving of criminal offenses in the sphere of economic activity;
— preparation of proposals for the formation of state policy in the field of comprehensive counteracting against the criminal offenses, counteracting to which is within the competence of the Service.
In order to perform its functions, the Financial Investigation Service, as a body that would combat financial crimes, should be empowered with a wide range of powers in relation to access to information, opportunities in the field of information and analytical activities, application of procedural and operational measures, etc. This is appropriate because such a body must operate efficiently and independently of an established bureaucratic system. The service should become a full-fledged law enforcement body with all the powers of a pre-trial investigation body defined by the Criminal Procedure Code of Ukraine. At the same time, according to the recommendations of the EU member states, this law enforcement body should be autonomous, i.e. the one that conducts both investigations and operational work, as well as carries out analytical activities. This should be implemented in a concept where the analytics would serve as a basis for the work of the whole body, while the investigation would remain as a separate unit.
So, finally, I want to emphasize that the formation of the pre-trial investigation process should be based on the ILP model, i.e. managed by the intelligence analytics. The process of forming management decisions should be based on a system of risk and challenge analysis. This is ensured by the creation of an appropriate Big Data Centre in the structure of the Body.
Once again, I would like to say frankly that the need to create a single body to investigate financial crimes is caused, first of all, by the great losses of our country due to various abuses, and I am sure that no one will object this.
Lastly I would like to note that the Taxpayers Association of Ukraine in its articles shall continue to inform public about the prospects of the future body to combat offences in the field of finance and to combat the economic crimes, the creation of the which has long and purposefully been advocated by us together with the Ukrainian business. We hope for a significant progress in this matter in the nearest future.
President of UNGO TAU
Vice President of the Taxpayers Association of Europe
Member of the Supervisory Board of the Ukrayinsʹka Rada Biznesu
Ambassador Extraordinary and Plenipotentiary Grigol Katamadze