4. Evaluating the status quo in Latvia
This chapter builds on the last two, drawing on the insight gleaned through the interviews to give a more up-to-date picture of the current state of play, specific to the investigation and prosecution of economic crimes in Latvia. It explores areas identified in the reports discussed that still appear to negatively affect the proper investigation and prosecution of such crimes, providing additional context as to why some areas have yet to be addressed. It highlights also other areas as identified by the interviewees that require attention to ensure the proper investigation of such cases.
The aim of this study is to provide a gap analysis on existing cooperation and coordination mechanisms in Latvia among the State Police departments involved in economic crime investigation, and also between the State Police and other institutions. Throughout the last chapter, several critical areas have been identified that continue to present challenges for the State Police and the other bodies involved in the investigation and prosecution of economic crimes. To provide more nuance to these issues and to delve deeper into the factors influencing these areas, the researchers conducted 21 interviews with key professionals in the field, to assess and deconstruct why some of these challenges remain, despite recognition of positive advances made. Thus, providing more in-depth analysis of where the gaps remain in cooperation and coordination on investigations and handling of evidence for such crimes as the circulation of illegal goods and illegal circulation of excise goods, and economic crimes that have a negative impact on the business environment in Latvia.
A potential approach that could have been taken with the interviews would have been to design the questions specifically about the areas highlighted within the reports discussed in the last chapter. While important, this would have missed the opportunity to delve further into the underlying, potential interrelated conditions that are influencing the continuation of these issues, despite the well-documented improvements. To explore these areas and to declutter the information from the reports, the interviews took a more probing approach, exploring the perceived reasons behind these well-known problems, with some interesting and pertinent findings. This next section is structured such that it provides insights into these in a manner that reflects the structure of activities and internal regulations and practices that are involved in the proper investigation and prosecution of such cases, presenting the interviewees insights in the context of the life cycle of an economic crime case.
The increasing threat of economic crime to national security and to the economy is widely understood in Latvia, especially by those interviewed for this study. Without exception, the interviewees collectively perceived increasing numbers and complexity of economic crime cases, those of a type, nature and scale that have the potential to impact at the national level1. While this research focused predominantly on crimes of this nature, it is important to highlight that similar to the State Audit Office report 2017, there appears to be very little difference in how the State Police respond to low level economic crime cases (for example, at point of sale) to how they deal with more serious cases. This places a significant burden on them and on state resources, which could be better used elsewhere, most noticeably in the context of this report, on more serious crimes of this nature2.
While the process of investigation is similar across different crime types, economic crimes have their own peculiarities, which often make them attractive to criminals, for example, the low risk, high reward nature of such crimes. According to Europol, the complexity of these cases and subsequent investigations makes the likelihood of them being detected and prosecuted low (Europol, 2020[1]). Europol specifically noted this in relation to those where international cooperation is required, and where the internet is involved (Europol, 2020[1]). Interpol reiterates this, asserting that financial crime has evolved because of the advancement of digital technology (Interpol, 2021[2]). This resonates with this study, which focuses on economic crimes of a serious nature, as it shows the importance of understanding the specifics of economic crime investigation that may affect the investigation and prosecution of cases on a more general level. It also reverberates with the findings of Eck and Rossmo, which found that despite significant technological improvements in investigations, the clearance rate for serious crimes has declined significantly for almost the last 60 years (Eck and Rossmo, 2019[3]). This broader recognition of the complexity in this area is important, as it directly influences the response required3. Bocaniala, et al., for example, note that the complex and sophisticated modes used by criminals of economic crime are such that the police require teams or inter-force units, consisting of specialists equipped with the latest technology, to respond to crime in this area (Bocaniala et al., 2012[4]). The need for a mix of specialist services is based on an awareness that those committing economic crime are well versed and experienced, have specialised knowledge (economic, financial, computer, etc.), which often limits the success of the law enforcement responses (Bocaniala et al., 2012[4]). This observation was also made by the European Commission, which in part influenced the creation and introduction of the Law on the Exchange of Information for the Prevention, Detection, and Investigation of Criminal Offences (European Commission, 2021[5]).
Economic crime cases are largely initiated in two ways, through a report of a criminal act, or suspicion thereof, or through intelligence gathered into suspicious activities. With Latvia, the former must be reported by the alleged victim (s) to the police for it to be investigated. If cases are reported at the local station where the skills are not available to properly investigate a case, they can be passed to the regional offices for investigation4. The second pathway of cases can emanate from several sources. For example, the police themselves can suspect a crime (or crimes) has occurred and start investigating whether activities are such that they constitute a criminal offence; the Financial Intelligence Unit (FIU) can notify the police of suspicious activities and request an investigation to be initiated5; and some institutions have a legal obligation to report suspicious activities (even prior to a crime having occurred). In these different cases, investigations can be initiated by the police. Of the 156 economic crime cases reported to the police in 2020, 135 were investigated.6
Crimes that constitute economic crime are laid out in law and via internal documents7. The main type of crimes commonly reported and that constitute economic crimes in Latvia are frauds, counterfeit money, money laundering, sale and supply of illegal goods, embezzlement, white collar crime, confiscated goods, crimes regarding oil and gas, corruption, and crime involving excise goods, alcohol, cigarettes8. Cases are often complex, labour intensive and can involve other criminal activities. Investigators, therefore, must be professionals and be able to understand and identify a lot of elements. For example, the law, economics, technological advancements, etc. These cases can involve working with and depending on information from a range of different sources, which are not always easily accessible9. Because of this, information and evidence can take a long time to gather10, which often affects the timeframe of the case.
Unlike traditional crimes, which largely aim to identify the offender and prosecute them, economic crime such as those mentioned above have two often complementary elements to their investigation; the first, similar to the above, and the second being to follow and confiscate the money. In the context of the latter, some interviewees noted that these activities often supersede the former for several reasons. Chief amongst these is (i) that where cases involve elements that are outside the jurisdiction and conviction is unlikely11; (i) because it is often easier to secure a confiscation order rather than a conviction within the time frames available; (iii) because there is strict timeframe in which seizure of assets must take place (within 22-24 months); (iv) and because of improvements in the legislation and capacity to perform such tasks12. Overall, economic cases are very different from the majority of other cases, in that they are often highly complicated and require a lot of work and additional information, which requires a lot of analysis, hence they produce a high workload13. Moreover, they require more interaction between the police and the prosecutor14. Opposing actions are often taken by the accused, who rarely cooperate, which creates another burden on the case15.
The problem of highly complex, labour intensive investigations in relation to economic crime cases is not unique to Latvia. While it presents challenges for those investigating and prosecuting cases, it should not be viewed as a problem that can be fixed easily, rather these characteristics accepted as specificities of such crimes, and prepare for such by building capacity and resources. Another factor identified within the interviews that makes these cases slightly different from traditional crime, similar to that noted by Interpol, is the increasing cyber dimension and extra-territorial nature of such crimes (Interpol, 2021[2])16. These factors are also further influencing the complexity of the economic cases, especially those whose scale and scope (collectively or individually) are likely to affect national security or the economy.
Once a case is initiated, a lead investigator is appointed. The chief of the unit is responsible for the allocation of cases to the investigators, based on the case specifics17. The investigators, at least in complicated cases, inform the relevant prosecutor's office of the case, and seek instructions on how to proceed, or sets out how they are planning to proceed and seek advice18. Mostly, the interviewees (both prosecutors and police) reported positively regarding this phase. Some noted that this process happens less in basic or uncomplicated cases, but for the serious ones, few reported this process was not happening. The lack of interaction in simple or uncomplicated cases is reportedly because there is often very little to discuss with the prosecutors19, given that most investigators have the knowledge to deal with such cases. The police investigators only show these cases to the prosecutors when finished. One interviewee suggested that because of the ease with which these less complicated cases can be managed, there would be merit to having a simplified process for dealing with them20.
In contrast, where cases are deemed complicated, interaction with the prosecutor is accessed early (for the most part) 21. In these latter cases, reports emerging through the interviews indicate that engagements on such cases are positive and improving22. This reflects the findings of the Audit Report 2020, which identified improvements in the prosecutor supervision of serious economic crime cases. One specific positive change that is contributing to better interaction between the prosecutors and the police relates was attributed to the change of Prosecutor General. One interviewee noted that the change at this high level has influenced positively at the operational level, but also the strategic level23. It was reported in the interviews that when the Prosecutor General is reviewing cases now; the police sit in and can access and give feedback on the case. The meetings are deemed important because all parties also get a sense not only of their own cases but also of the emerging trends in other cases, which helps them stay informed24. These improvements are reportedly having a positive impact on the number of cases reaching conviction25 and regarding the speed cases are proceeding to prosecution, especially pertaining to the seizure of assets26.
Interaction with prosecution
This early intervention between law enforcement, despite their different roles, was deemed to be very important for the success of the case27. Cooperation guidelines are set out in internal documents written in 201528, such as Guidelines for Simplifying Criminal Investigations. If the cooperation and engagement is not working, there is room for escalating it up the chain of command by both parties29. In positive cases, prosecutors were described as being very good, very knowledgeable and helpful, aim driven and understand what the police need30. In these cases, interviewees noted prosecutors help set out the plan for the investigation, oversee the steps taken, through good, timely and professional management31. They help determine where and when and how to get and gather evidence, so none is lost or missed32. It was also noted that even where an investigation has yet to start, good prosecutors are always willing to provide support and guidance33. In other cases, where reports of interaction and cooperation were described as very good or even excellent, both parties reportedly work as a team, work very closely together, know each other well and understand each other’s requirement34. Some described relationships as having the trust and faith in each other to take risks in cases, to test the law, and to learn from the outcome35. Other examples of good engagement and engagement were where some prosecutors come up with innovative ideas about where to take the case36. It was also highlighted that whether it is other police officers or prosecutors; it is good to get to know the people involved in the case personally, as it helps when making requests37.
Some prosecutors highlighted that trust is key to these relationships38, but acknowledged it was not always at the level required, especially between new members on both sides. Others admitted, however, that the level and nature of interaction often depend on the specifics of the case and those involved39. Some prosecutors were previously police officers40, and in such cases, cooperation appears good, because of a perception that they understood the role of the police officers. In cases where cooperation was deemed not at the level required, excluding those because of the perceived simplicity of the cases, several plausible explanations were given; (i) too large a workload on behalf of the prosecutors and the police41; (ii) insufficient experience and knowledge regarding complex economic crime investigations and technological advancement42; and (iii) conflicting personalities.
The issue of heavy workloads of prosecutors, highlighted in the 2020 State Audit Office report, was reiterated by some interviewees, noting that this often influences the time that prosecutors can give to cases. Some noted, however, that while the workload in the office per prosecutor is not very high in terms of numbers, the cases are usually very complicated43. A similar issue was made regarding workloads for police officers. One police officer interviewed, for example, reported their involvement in a case in which there were approximately 700 victims, which resulted in a large volume of materials and related workload44. This issue was also noted in the European Union (EU) Commission Report (2021) which stated that the workload can differ between offices, which was also recognised across the interviews with prosecutors. Within this context, it was acknowledged that if prosecutors got involved earlier in cases and had more hands on, supportive function, the outcome may improve. They noted that, however, this was not feasible at present, given the small number of prosecutors in comparison with the number of cases45. This was echoed by the police, who asserted that there are too many cases to get individual support on all46. To ease this, the police prioritise cases with several red flag indicators, such as complaints made against investigators, arrest of a person or search of a house (active phase–intervention) and seizure order for funds (mandatory to have an injured party in court), in order to determine what cases needs support47.
Given the complexity of such cases, a number of the aforementioned documents discussed the need for specialisation, especially in economic crime cases (State Audit Office of Latvia, 2020[6]; OECD, 2021[7]). At present, however, specialisation is not the norm in many of the prosecutors' offices, which can negatively affect the level of experience and knowledge the prosecutors bring to the case48. Some interviewees asserted that where prosecutors are not fully informed or equipped, they are not beyond asking the police for advice to gain or clarify their understanding49. While this was deemed positive where the police investigator was experienced, some noted it as a negative if the police officers were also in-experienced. A similar situation was also reported in the context of the police, who also asserted that there was limited specialisation outside of the Economic Crime Enforcement Department (ECED). Furthermore, it was noted that police investigators are increasingly been appointed without experience, probably most noticeably in the regional departments50.
In the context of the police, it was asserted by many that this may be because of the lack of operational training available to police officers since the Academy closed, which had formerly provided specialist training to investigators. Since 2006, the State Police College implemented the first level professional higher education program ‘Police Work’. This includes specialised training in investigative work, order police work and criminal police work. These courses will be implemented up to and including the 2022/2023 academic year. In 2021, the State Police College launched a new first-level professional higher education program. Although, the content of this does not include specializations, the program aims to provide students with the necessary knowledge, skills and competencies to perform professional duties, including effective and efficient work, to carry out high-quality crime prevention, police response and criminal investigation through the fight against crime and the protection of the rights and legitimate interests of individuals.51. Despite these courses, however, there is still no formal training specialized programme, for investigators taking up such a position as economic crime investigators, for example. That said, after graduating from the State Police College, a police officer may continue his or her education at Riga Stradina University, which implements the Professional Bachelor's study program “Police Work”, which contains specialization study courses, one of which relates to the investigation of criminal offenses in economics.
Many of those who had the training from the Police Academy were described, by prosecutors, as very good, professional, highly skilled, and experienced investigators, which in turn, they noted, directly contributed to successful investigations52. This is not always the case, however, with newer investigators. One prosecutor noted that some new investigators, although often highly educated, can come with a bit of a chip on their shoulder and feel they know everything, which can cause tensions between them and prosecutors53. Despite this knowledge, however, they often lack experience in applying the law and practical investigative skills necessary to conduct effective investigations, which can cause an unhealthy competition between both bodies54. Despite this critical feedback on the interaction between the prosecutors and the police, the overarching comments were positive, with the recognition that improvements have been made in this area over the last year or two, which was influencing greater success with cases. Notwithstanding these improvements, however, the interviewees noted areas that require further attention. The first to be discussed builds on the recognised negative impact of the police academy closure under the umbrella of training.
A consistent theme garnering criticism throughout the myriad of the reports reviewed and highlighted in the interviews, related to a lack of awareness, understanding, and appropriate education amongst police and prosecutors. Similar to previous debates in this area, interviewees noted that some police and prosecutors lack the knowledge to recognise or identify cases of economic crime, and as importantly to recognise the complicated nature of such cases, which is leading to non-convictions. It was noted in the interviews that investigative and prosecuting these complex cases requires a combination of ongoing training and experience55. However, currently, the standard often differs between experienced officers and those new to such investigations. As mentioned above, many attribute this to the closure of the Police Academy and the suspension of specialist operational training56. For those police investigators who had attended the Police Academy, they highlighted that for the investigation of serious and complex crimes, such as economic crime, the courses that the Academy delivered were better than anything that is now available from the Police College57.
The college currently offers some training in this area, albeit not deemed to be of the same standard as that offered in the Academy58. That said, it is hard to compare the current provision of training by the Police College and the Academy given the closure of the latter occurred in 2010, and the sophistication of training needs has transformed over this period. The College currently provides online and in person training in combating Money Laundering, Asset Recovery, International Economy, and Economic Crimes59. The Police College reportedly trained 402 officers in the area of money laundering and 389 in relation to asset recovery in the last three years. Despite this, the absence of training at the standard previously provided by the Academy is viewed as an impediment to officers getting the material to equip them to be effective investigators60. On a more positive note, and in discussions with the Police College, plans were shared about the proposed creation of a new training centre–Capacity Building Training Centre for Investigators. The concept for the centre has been approved, which is an important recognition of the need for a dedicated training function for serious crime investigators. A lot of work has been completed in advance of this role out, which is envisaged to start providing such training around September 2022, with the aim of providing specialist training for investigators and operatives, forensics personnel, analysts, and technicians. The centre will also provide in-service training for officials investigating, prosecuting or providing analytical and criminal intelligence in criminal investigations to ensure the development and implementation of high-quality continuing education programs with the necessary teaching and methodological tools. Given the challenges identified in this area, these plans appear well overdue, and should be prioritised to better support the needs of investigators and those in specialist roles.
In the absence of appropriate training at this time, new members reportedly learn on the job61, building on the basic training they received on entry. In this context, it was acknowledged that these individuals have to create opportunities for learning themselves to access the skills and knowledge needed, but also noted that not everyone can or is motivated to do this62. It was also highlighted that because of the fast pace of evolution of economic crime cases, this can mean a lot of self-learning, even for the most experienced63. This may be the reason a high number of investigators seek to acquire academic 3rd level qualifications in their own time. This is similar to an assessment made in the OECD’s report (2020) that states that there was an expectation that prosecutors would learn on the job64. Prosecutors reiterated this lack of training on behalf of the police, stating that the academy, or at least a body to train at that level, is required to ensure the police investigators have the skill set to investigate complicated cases, as it is not available anywhere else65. Without the skills, the impact on cases can be significant. The complexity and specificities of such crimes require specialist, professional responses, which can only be built up through education, training, experience, and mentorship. Mentorship will better ensure that education and skills are being applied appropriately and if not, then mentorship will enable tailored adjustments where needed. Mentorship also ensure that officers are learning “on the job” in an effective manner.
It is worth highlighting the topic of training in the interviews garnered contrasting discussions. When interviewees were asked directly about their experience with training, the responses were much more positive than noted above. Interviewees reported a lot of positive examples of learning opportunities for the police, prosecutors, and interagency66. These opportunities were highly regarded, valued, and participated in widely, with many acknowledging significant improvements in this area over the last few years in frequency, reach, and quality67. The State Audit Report 2017, for example, the Police College have sought to work closer with the State Police and Prosecutors to garner their input into their programme and content, developing an action plan with the State Police to update methodologies and accreditation68. Many reported positive examples of joint training opportunities that facilitate and encourage the exchange of practices (nationally and internationally), through online training or in-person training given by other experts within the force69 and from the prosecutors, for example.
Other units, such as the criminal investigations unit, were also noted for giving useful training70. Training opportunities were also highlighted that involve international bodies, such as CEPOL, the Federal Bureau of Investigation (FBI), and EUROPOL. These, too, were all highly regarded and valued71. It was noted, however, that sometimes the teachings from international partners were not easily implemented because of differing context72. Nonetheless, they were deemed useful in seeing how others deal with certain issues or to raise awareness about emerging trends. In these areas, the overarching opinion from the interviewees was that their training, or probably more appropriately described ‘professional development’, was good but could always be better73.
In exploring these differing opinions, a deeper underlying insight emerged that despite this positive opinion about the training offered, it is not sufficient for inexperienced police officers or prosecutors who often lack the very basic operational knowledge, thus resulting in a knowledge gap. As a result, where high quality investigators exist, they are often highly prized, and units do not want to part with them. In the conversations about education and training, another issue also emerged relating to attracting and retaining suitable personnel. Regarding the police specifically, it was acknowledged that attracting new staff can be difficult, given that the benefits of working in this area are often hard to see in the short term, the work is complex, time consuming and stressful, responsibility is very big, and deadlines are tight. Furthermore, the pay is deemed low (especially in comparison with the lifestyle costs in Riga)74. As a result, this type of work is not popular75. It is hard to stimulate interest in such investigations and to attract new talent or retain talent76. It was reported that 18 places were empty in the ECED77. Others highlighted working conditions were not always great78, with limited investment in structural assets. This echoes discussions before this study, in which the lack of infrastructure capacity was acknowledged as potentially having a negative impact on the improvements in this area. Specific topics highlighted in that discussion included not enough office space and outdated infrastructure, which was reportedly leading to less secure and less effective investigative work. It was also highlighted that over the last number of years the State Police has gone through significant changes, resulting in many officers feeling they are in a constant phase of transition, which is not conducive to good practices being established and embedded79. Moreover, given the current demands on capacity, the State Police have few if any additional or extra staff to direct or transfer to support such change, which prevents or hinders proper implementation. See Box 4.1 for a summary of the findings in relation to education and training, from the very positive to the negative.
When these opinions were analysed more closely, however, a number of consistent themes emerged; (i) entry level training for police and prosecutors does not equip new members with the skills that are required for the investigation and prosecution of complex economic crime cases; (ii) there is a lack of formal specialist operational training for police officers to access, develop and mature their knowledge and skills in this area, since the closure of the Police Academy; (iii) professional development training is available internally, externally and interagency, which is very highly thought of, accessible and of good quality; (iv) many officers undertake academic qualifications for self-improvement and knowledge gathering. Thus, the key area where a gap remains relates to specialist operational role and problem-oriented training, which is believed to affect the quality of the investigations and subsequent prosecution of economic cases.
Source: Author.
Another area which negatively affects the quality and effectiveness of investigations of economic crime cases relate to delays. Delay in cases coming before the courts is widely acknowledged within the reports reviewed and the interviews, with many interviewees reporting that a lot of cases in their books are over 2 years old. While this represents an improvement in claims that a high proportion of cases are over 5 years old, as noted in the State Audit Office Report 2020, some think there is still room for improvement80. The time it takes for cases to move from initial report to prosecution, however, is often case specific. One interviewee noted uncomplicated cases are commonly dealt with within a year81, whilst noting that a typical embezzlement case, for example, takes 2.5 years, on average82. Others noted, however, that some of their cases were 5-7 years old, albeit reported that the number of such cases had reduced83. Interviews explained that cases often remained open for years, because there was no legal capacity to close or terminate them if they could not be finalised84. This raised a conversation about the applicability of the law regarding the investigation and prosecution of economic crime cases. Despite an overwhelming recognition that the laws in place were sufficient85, some highlighted that greater legislation was needed to ensure cases could be formally closed86. One interview noted that not only is this affecting the figures negatively, but alleged that where certain units cannot solve cases, they send them to other units for investigation saying it falls within their remit hence passing it on, but it is thought that this is done to move cases on that cannot be solved87.
Probing why such cases often face delay and building on issues raised in the reports discussed earlier, it emerged the underlying reasons are often over-simplified or dealt with at too high a level to fully understand the specific issues at play influencing these delays. To declutter this area, interviewees were asked to provide insights into how and why certain delays appear to continue to occur despite noticeable improvements. One issue highlighted related to the complex nature of economic cases. They require a lot of material and evidence, gathering this takes time. This, it was noted, was a practical implication of the complexity, and while it presents a challenge, was not an issue that could be alleviated easily, at least by the police or prosecutors. For example, once a request is made for mutual assistance, little can be done to influence the timeframe in which the responses are given88, especially if made to a country outside the EU. Two key areas highlighted in the interviews will be discussed in more detail, the role of support services and international cooperation, as these were noted as severely affecting the level of delay in many, and often the most complicated, cases.
Because of the nature and complexity of economic crime cases, and the amount of data and evidence required, and while technology has increasingly been used in investigations, it is still a very manual process, requiring time and resources89. The range of activities often conducted during initial investigation phases include, but are not limited to, working with the victim(s), the prosecutor, identifying and gathering evidence, sending requests for certain evidence or support service, corresponding with lawyers, analysing the evidence as it comes in, coordinating the case, interrogating the subject(s), preparing the case in collaboration with the prosecutors, and making a joint decision on a prosecution90. Internal regulations and processes are designed and available to coordinate these activities, but cases often contain peculiarities that require a different approach, so they are guidelines rather than mandatory91. Moreover, because of the materials often required, the State Police (like other police bodies) commonly require the support and services from a range of other units and institutions.
Expert services are imperative for the investigation of economic crimes (Europol, 2021). It was noted, however, that accessing such services can take a lot of time depending on the service92. Interviewees reported good access to the services they require but did acknowledge the timeframe for receiving reports back can be lengthy, often contributing to a delay in case preparation93. The example of forensic accounting was given in this regard, with some explaining that assessments can take up to 6 months or longer to be completed94. An interviewee reported one case requiring services for the latter took a year to get looked at, and then the report was produced within a month. When asked to speculate as to why these delays were so prominent, interviewees acknowledged that many of the specialist services were also experiencing heavy workloads because of a limited number of experts and the scale of demands on the services95, especially given the current context in which a lot of change is taking place, requiring more of officers and investigators.96
The interviewees were careful to acknowledge that despite the delays, the quality of reports received are very good97, but one interviewee did question if all those working in this area were properly certified98. It was clarified that there is a certification process for court experts which is adhered to, but there had been some concerns with certification for crime scene investigators. However, this is being overcome, and any experts can be challenged in court.99 Moreover, all educational programmes provided by the Police College are certified and accredited100. They, nonetheless, conceded that delays in accessing service often negatively affects cases101. The responses conform with Anderson, et al. research, which found that the long turnaround times were a problem (Anderson et al., 2018[8]). They further noted that the full potential of forensic science in criminal investigations remains unrealised, explaining that such evidence was largely used for case building as opposed to than using it as a means of identifying the offender (Anderson et al., 2018[8]).
Another organisation both prosecutors and the police depend on significantly in relation to the investigation and prosecution of economic crime cases is the FIU. Financial institutions (FIs) are legally obliged to report suspicious transactions to the FIU102. Mechanisms to exchange this information have improved, with greater trust and increased reporting103. Based on this information, and other available material, the FIU prepares intelligence reports, which are circulated to the police and are then used by them to initiate investigations. This information is also used in relation to the seizure of funds. The unit deals with over 800 requests made per annum and is the leading partner in dealing with financial institutions104. Moreover, the FIU has been enhanced recently in response to issues raised in the Money Val and FAFT reports. The unit has been increased from 30 staff members in 2016 to 66 in 2021105. The Money Laundering (ML) directive of 2018 has been ratified and there are also future plans for developing an Anti-Money Laundering (AML) Innovation centre, which is under discussion at the moment. The FIU was also responsible for conducting the National Risk Assessment for 2017-2019. 106 A lot of stakeholders were involved, as were the police. The unit also conducts and develops thematic reports, and provides early intelligence reports on money laundering, trends, and profiles, also in relation to asset recovery. The interviews noted that cooperation between the FIU and other authorities appears to be improving, however, others claimed that this still needs to be more clearly established at the operational and policy level107. Positive developments were also reported in relation to public-private partnerships, both at the strategic and operational level108.
A second area which was identified both in the reports and the interviews that can significantly affect a delay in cases moving from investigation to prosecution related to international cooperation, an increasing element of economic crime cases in Latvia109. See Box 4.2 for a positive example of International Cooperation the ECED were involved in. This reflects a global trend in economic crime cases, as highlighted by Europol (2021), with both interviewees and Europol acknowledging that cases that do not involve an international dimension are easier to solve110.
In 2020, the Economic Crime Enforcement Department (ECED) and International Cooperation Department (ICD) were involved in an international law enforcement operation involving 16 countries, which resulted in the arrest of 20 people suspected of belonging to the QQAAZZ criminal network. It was suspected that this group had tried to launder tens of millions of euros around the world since 2016 (News Today, 2021). In coordinated activities, at least 40 locations were searched, in Bulgaria, the United Kingdom, Spain, Italy, and Latvia. The operation in Latvia was led by the Latvian State Police, more specifically the ECED, and accounted for the most searches in one country (22).
Six people were detained in Latvia and forged identity documents, discs, and other evidence was seized. On foot of these activities, criminal proceedings were initiated in the United States, Portugal, the United Kingdom and Spain. Not only does this case illustrate the growing and complex need for cross border cooperation, but it also involved the use of “shuffling” services, which are designed to disguise the original origin of the funds. Riga Legal Attaché John Bivona of the FBI was reported in the news as stating, “Working together is the only way we’re going to stay ahead of these complex threats. I commend the work of our Latvian partners receiving today’s award and thank them for their diligence and persistence in helping us dismantle an organized criminal group that laundered millions of dollars for cybercriminals.” "This is an exceptional example of the daily cooperation we have with our Latvian counterparts” (News Today, 2021; np). While the Deputy Chief of the Economic Crimes Enforcement Department of the State Police of Latvia, Dmitrijs Homenko proclaimed that: “This was a unique case that showed that by coming together and setting up a joint investigation and strategic planning team, it was possible to work successfully and detect a crime. Even more, it was done while abroad. It was the first time of this kind of operation that involved so many searches and arrests in several countries at the same time. The main thing was to act at the same time, because the members of this organized criminal group communicated with each other, and we could not allow the information to leak between them, so they didn’t delete all the electronic evidence” (News Today, 2021; np).
Source: Author.
Similar to other areas discussed above, there were two very contrasting views about international cooperation on economic crime cases. First, similar too many of the reports, the initial observations were positive. Interviewees reported good cooperation on active files between the police and prosecutors and other bodies, both home and abroad. Successful cases confirm this, with a recent case involving the FBI and other police forces, in which the State Police of Latvia played a key active role (highlighted above) a case in point. These positive cases and examples, however, provide a veil to more deep rooted issues with cooperation, especially as they relate to length of time and case delay.
Like the dependency on support services, economic crime cases are often dependent on international cooperation, especially in Latvia - 1241 cases in Latvia requiring international cooperation were reported in 2020, 80% of which had an economic crime dimension111. The International Cooperation Department (ICD) reported that they receive approximately 500 foreign mutual legal assistance (MLAs) for execution and validation, and 1000 are sent out by the state police to foreign countries. Despite an ever-increasing workload and requests for increased staff, it was noted by an interviewee there has been no increase in staff in the ICD since 2010. 112 Interviewees further noted that such cooperation can be time consuming, depending on what countries are involved, which was also confirmed by the ICD. Cooperation with international partners is coordinated through the ICD113. While many of the applications are the same, the ICD helps determine if an approach needs to be tweaked according to the law or context and reviews all the documents prior to making the formal request114. Sending the requests is rarely the problem, it is getting a reply that is often hard115. Some reply quickly, some never reply, and others take lengthy periods to respond116. For example, one interviewee noted a request made of a 3rd party country in 2007 and explained that eight years later a response was received117.
It was noted that it is important to differentiate between request to/from the EU and other countries118. Many of the former problems encountered with EU nations have been overcome with the introduction of the Directive. As a result, specific requests involving the EU regularly relate to European arrest warrants and requests for mutual assistance. These are usually responded to quickly, because of the proscribed processes, but not always119. On average, requests to/from EU countries could be 3 months, while the average execution time can take between six and twelve months for 3rd party countries. 120 In cases where requests are made of third-party countries, some don’t answer, or are reluctant to provide the information requested121 and they can be technically difficult.122. Furthermore, if the information is given, it is often given in the form of intelligence, which cannot be used as evidence123. If this information is needed as evidence, a special request can be made, but approval is not always given124. Others highlighted the burden of translating all documents from the language received to Latvian, which is required by the courts125. It was also noted that the level of cooperation can depend on the specifics of the case. For example, sometimes there is good cooperation with certain countries in some type of cases, but for others, money laundering for example, there is not126. One interviewee speculated that cooperation is often limited, where there is no incentive to do so127. In short, these issues often lead to considerable delay with little or no alternative on the part of the State Police but to wait128. More recently, however, the situation is slightly improving with Eurojust and Europol assisting with 3rd countries129. Moreover, from a quality perspective, requests are getting better, and are for the most part, good, which is likely reflecting a changed methodology to training in the police college130.
There is little dispute that delays, despite where they emanate from, have a significant impact on cases. In addition to a case possibly becoming statute barred, delays can have other negative effects. It is worth noting, however, that some interviewees explained that a delay alone may not be sufficient to render a case less likely to secure a conviction, rather this was because of the specific reason for the delay. Even where investigations move quickly and cases go before the court, there can still be delays. For example, lawyers for the accused often do not turn up to delay the proceedings or make demands for additional information just to prolong the case131.
A number of interesting observations, therefore, emerged in respect to the timeframes in which cases are brought before the court, (i) the majority of complex cases are over 2 years old (an improvement on five); (ii) less complicated cases can and are usually dealt with in a year; (iii) improvements are desired and progress has been made to reduce the timeframe; (iv) a lot of elements of complex investigations are beyond the control of the investigators. Collectively, these observations provide a deeper and more nuanced insight into delays, raising an important question: what is a sufficient timeframe for complicated cases of economic crime to be dealt with? While one may hope to bring all cases before the court within a year, is this actually feasible in more complicated cases? These cases have a lot of elements that need to be addressed within an investigation, many outside the immediate control of the investigators, which cannot be rushed or influenced. In this context, two years may in fact be quite good. To assess this, however, a more detailed case specific analysis would be required, which is beyond the scope of this study, an analysis that would aim to assess what an average acceptable timeframe might look like. Without this, criticism about delays is somewhat arbitrary. That said, this study does highlight important and specific areas that contribute to delays that warrant attention, which will be discussed further in the next chapter, but acknowledges that some are unlikely to be solved by Latvia alone given the nature of economic crime more broadly. Thus, requiring Latvian authorities to continue to work closely with agencies such as Europol to collectively learn about new and innovative responses.
Discussion about what is or is not an acceptable timeframe for cases to be processed is not without merit, despite the myriad of moving parts that are likely to affect it. It especially gains value when discussed in conjunction with another criticism made in the investigation and prosecution of economic crime cases, relating to how the police and/or prosecutors measure success. During the interviews, this issue also emerged, not only the absence of such measurements but also the lack of same on the ability to measure whether specific recommendations made in previous reports had a positive impact. It was acknowledged that the Audit Office conduct a review to see if the recommendations made have been implemented, but many of these take time, and there appears to be an absence of longitudinal studies to see if the recommendations implemented are actually having an impact. While the majority of the recommendations have been implemented, it was noted that some may not have been implemented as effectively as envisaged. A number of reasons why this may be the case were offered; lack of political will, lack of resources of police to prioritise them, limited inter-institutional buy in. 132
While many noted that true success is when a file sent to the Prosecutor’s Office is sent onward to court and a prosecution achieved133, others noted that waiting for that as the sole indicator of success is too long, as it does not allow for specific teachings that are important during the life cycle of a case134. The police and prosecutors acknowledge the value and importance of monitoring how cases are handled, how evidence is gathered, during the life cycle of the investigation. Moreover, others highlighted that while such statistics were considered a lot135, such as cases going to trial, numbers of seizures, this does not really reflect the complexity of the investigations and work involved. Several prosecutors noted that measuring success comes with some complicated questions, and recognised the need, like the police, to look beyond numbers and ask questions about the quality of investigations, the management around cases, plans and strategies, cooperation, etc.136. A number of these areas were also mentioned in the EU Commission Report (2021). This report stated that the State Audit Office in its performance review on the effectiveness of investigations and trials of the criminal offences in the economic and financial area in the Prosecutor’s Office noted that “while there is no shortage of resources in the Prosecutor’s Office, there is room for improvement in terms of management, governance structure, division of responsibilities between different offices specialisation of prosecutors” (8).
Finishing a successful investigation and securing a conviction is good, but that is only one part of the process137. This is reflective of the literature in this area, which notes that focusing on clearance or conviction rates can lead to quantity over quality, and or a focus on case specifics rather than looking at patterns and trends (Eck and Rossmo, 2019[3]). When asked to explain how the police and prosecutors measure success, interviewees reported regular meetings are held, weekly, monthly, and yearly to oversee work conducted, where investigators and prosecutors give an update on their cases138. Few went further than this in explaining how individual units use this information in conjunction with metrics to analyse success and impact.
As noted by Interpol (2021), interviewees reported a sharp increase in economic crime cases having a cyber-dimension, as did other units interviewed139. Others noted that the role of cyber in economic crime cases was increasingly becoming a problem and traditional experience and knowledge is not always sufficient to deal with these evolving areas140. For example, the Darknet. The extra-territorial dimension makes it more complicated, which takes a significant amount of skill to investigate141. While many of the police units said they have a dedicated individual in their teams, or at least the position for a dedicated officer, for cases that require access to such specialists, some noted a lack of complex understanding in the remainder of the team. They also noted that if more complex requirements are present in the case, they often have to seek support from Riga or Europol142. It was recognised that it can be hard to get IT specialists’ proficient to work in these areas, but noted that it was imperative in order to keep pace, if not ahead, with the criminals143. At present, both police and prosecutors are educating themselves144, with some reporting that the prosecutors often depend on the police in this area because their knowledge is often better145. Others noted the use of private sector experts, where in-house experts were not available146.
This growing presence of cyber in economic crimes, coupled with the increased need for technological advancement, resulted in discussions about the presence and level of technological support within the Police147. It was noted that there are considerable problems for those investigating economic crimes to perform their duties because of a lack of modern IT solutions and lack of appropriate modern equipment. An EU Commission Report (2021), for example, noted that in 2020 a large amount of digital data was seized and, despite the in-house expertise in the prosecutors' office, the data decryption and analysis required represented a challenge for the office.
In relation to IT infrastructure within the State Police and supporting institutions, interviewees noted that they could be improved upon, but acknowledged ongoing developments in this area148. For example, limitations were expressed about the KRASS system. It was reported that some fields were not required/not mandatory in relation to case details, which investigators did not complete because of heavy workloads, which meant only basic information was available on cases149. It was noted, however, a new system is currently being developed which will make it easier to monitor cases150. This will also have new analytical tools within it, which will further enhance its utility. IT developments have also been noted in the courts system. A recent European Commission (2021) report assessed the level of digitalisation of courts and the prosecution services as high and noted ongoing efforts to develop it further. They acknowledged that “the deployment of ICT by the Latvian justice system is among the most advanced in the EU, especially for case management and court activity statistics, communication with court parties and online publication of judgments, most of which are machine-readable” (European Commission, 2021[5]). Nonetheless, the lack of a suitable IT solution for tracking cases was expressed by the IDC, resulting in further delays because all requests have to be entered into the system manually. However, they do assert that a new system is in the pipeline. It might be premature, however, to believe that technology alone will have a significant impact on the quality and quantity of investigations in this area, which although often viewed as the answer to the problem, should only be viewed as playing a supportive role.
This chapter summarises the insights gleaned from the interviews conducted. It is evident from material that a lot of the recommendations made in the aforementioned reports have been addressed to some degree. For example, in relation to improved supervision by prosecutors on serious cases; amendments to the Criminal Procedure Law, 2005 (specifically relating to the ability to terminate cases under certain conditions); an enhanced FIU; and a dedicated Economic Crime Court. Issues and challenges remain, however. For example, lack of experience of new police and prosecutions, delays in cases due to lack of resources in support services and challenges with international cooperation, and continued complexity of cases. Additional issues were also noted, for example, those relating to measuring success, the increase cyber dimension. An observation worth noting, however, that is largely omitted for the reports examined, but is important to acknowledge is that many of the challenges emanating from the very nature of complicated cases (they are commonly complex, labour intensive and can require a multiplicity of stakeholder involvement, coupled with an increase in cross border dimension) are not unique to Latvia. These factors, in fact, are similar to Horvath, Meesig, and Hyeock (2003) findings as the common explanations as to why significant improvements are not seen (Horvath, Meesig and Hyeock Lee, 2001[9]). It is, therefore, important to determine what challenges can be addressed, cognisant of the underlying dynamics of economic crime investigations generally, which the next chapter aims to do (Brisach, Ullmann and Sasse, 2000[10]).
References
[8] Anderson, J. et al. (2018), “The Unrealized Promise of Forensic Science -- An Empirical Study of its Production and Use”, SSRN Electronic Journal, https://doi.org/10.2139/SSRN.3178156.
[4] Bocaniala, T. et al. (2012), “Considerations on the economic and financial crime investigation phenomenon peculiar to European judicial scope”, Contemporary Readings in Law and Social Justice, Vol. 4/1, https://scholar.google.com/citations?view_op=view_citation&hl=en&user=0MWjQnQAAAAJ&citation_for_view=0MWjQnQAAAAJ:UebtZRa9Y70C (accessed on 27 April 2022).
[10] Brisach, C., R. Ullmann and G. Sasse (2000), Planung der Kriminalitätskontrolle : Kriminalstrategie am Beispiel der Alltagskriminalität, der Rauschgiftkriminalität und der Organisierten Kriminalität, Boorberg.
[3] Eck, J. and D. Rossmo (2019), “The new detective - Rethinking criminal investigations”, Criminology & Public Policy, Vol. 18/3, pp. 601-622, https://doi.org/10.1111/1745-9133.12450.
[5] European Commission (2021), Rule of Law Report Country Chapter on the rule of law situation in Latvia, https://op.europa.eu/en/publication-detail/-/publication/22d05caa-eb9f-11eb-93a8-01aa75ed71a1/language-en/format-PDF/source-255960452 (accessed on 27 April 2022).
[11] European Commission (2018), Proposal for a Directive of the European Parliament and of the Council, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018PC0213&from=ES.
[1] Europol (2020), Economic Crime, https://www.europol.europa.eu/crime-areas-and-statistics/crime-areas/economic-crime (accessed on 25 April 2022).
[9] Horvath, F., R. Meesig and Y. Hyeock Lee (2001), National Survey of Police Policies and Practices Regarding the Criminal Investigations Process: Twenty-Five Years After Rand | Office of Justice Programs, https://www.ojp.gov/ncjrs/virtual-library/abstracts/national-survey-police-policies-and-practices-regarding-criminal (accessed on 25 April 2022).
[2] Interpol (2021), Financial crime, https://www.interpol.int/en/Crimes/Financial-crime (accessed on 25 April 2022).
[12] LSM (2019), Latvia abandons “regional financial hub” aspiration, https://eng.lsm.lv/article/economy/banks/latvia-abandons-regional-financial-hub-aspiration.a309655/.
[13] News Today (2021), Latvian law enforcement officers receive FBI awards for work in international anti-money laundering operation - Latvia, https://www.newsy-today.com/latvian-law-enforcement-officers-receive-fbi-awards-for-work-in-international-anti-money-laundering-operation-latvia-news/.
[7] OECD (2021), Performance of the Prosecution Services in Latvia: A Comparative Study, OECD Publishing, Paris, https://doi.org/10.1787/c0113907-en.
[6] State Audit Office of Latvia (2020), Summary of Key Audit Findings and Recommendations. Does the operation of the Prosecutor’s Office of the Republic of Latvia require any improvements?.
[14] Vaisla E. and Petrov, S. (2020), “16 December 2020”, in AML cases in Latvia: fragile balance between facilitation of the proceedings and the rights of the person.
Notes
← 1. Although this is less borne out in the State Police crime figures provided.
← 2. This may change give the recent amendments to the Criminal Procedure Law 2005, which now allows for cases to be terminated if certain conditions are met (Vaisla and Petrov, 2021).
← 3. Interview No. 17.
← 4. Interview No. 3.
← 5. Interview No. 16.
← 6. State Police Statistics provided for this study.
← 7. Interview No. 11.
← 8. Interview No. 3, 5 & 6.
← 9. Interview No. 4.
← 10. Interview No. 4 & 13.
← 11. Interview No. 5.
← 12. Interview No. 4.
← 13. Interview No. 10.
← 14. Interview No. 6.
← 15. Interview No. 11 & 12.
← 16. Interview No. 5.
← 17. Interview No. 6.
← 18. Interview No. 18.
← 19. Interview No. 4.
← 20. Interview No. 18.
← 21. Interview No. 4.
← 22. Interview No. 3 & 7 & 11.
← 23. Interview No. 20.
← 24. Interview No. 5.
← 25. Interview No. 3.
← 26. Interview No. 5.
← 27. Interview No. 11.
← 28. Interview No. 11, 12 & 15.
← 29. Interview No. 11.
← 30. Interview No. 5 & 12.
← 31. Interview No. 10 & 18.
← 32. Interview No. 3.
← 33. Interview No. 10
← 34. Interview No. 6 & 10.
← 35. Interview No. 6.
← 36. Interview No. 5.
← 37. Interview No. 6.
← 38. Interview No. 7.
← 39. Interview No. 4.
← 40. It was highlighted across a number of interviews that former police officers had moved to positions outside the force, for example, to other government departments and to the prosecutors office, bringing with them valuable experience.
← 41. Interview No. 12.
← 42. Interview No. 1.
← 43. Interview No. 7.
← 44. Interview No. 3.
← 45. Interview No. 7.
← 46. Interview No. 1.
← 47. Interview No. 1.
← 48. Interview No. 10 & 18.
← 49. Interview No. 4.
← 50. Interview No. 11.
← 51. Interview No. 21.
← 52. Interview No. 11.
← 53. Interview No. 7.
← 54. Interview No. 7.
← 55. Interview No. 3.
← 56. Interview No. 12
← 57. Interview No. 4.
← 58. Interview No. 4.
← 59. Interview No. 21.
← 60. Interview No. 4.
← 61. Interview No. 4 & 10.
← 62. Interview No. 5.
← 63. Interview No. 6.
← 64. Interview No. 12.
← 65. Interview No. 7.
← 66. Interview No. 18.
← 67. Interview No. 5 & 17.
← 68. Interview No. 21.
← 69. Interview No. 1.
← 70. Interview No. 5.
← 71. Interview No. 4.
← 72. Interview No. 12.
← 73. Interview No. 5.
← 74. Interview No. 3.
← 75. Interview No. 6.
← 76. Interview No. 6.
← 77. As of July 2021.
← 78. Interview No. 5.
← 79. Interview No. 20.
← 80. Interview No. 3 & 18.
← 81. Interview No. 5.
← 82. Interview No. 5 & 12.
← 83. Interview No. 7.
← 84. Interview No. 12.
← 85. Interview No. 12.
← 86. This has now changed with the amendments made to the Criminal Procedures Law, 2005 (Vaisla and Petrov, 2021).
← 87. Interview No. 4.
← 88. Interview No. 3.
← 89. Interview No. 5.
← 90. Interview No. 5.
← 91. Interview No. 5.
← 92. Interview No. 6.
← 93. Interview No. 5.
← 94. Interview No. 5.
← 95. Interview No. 10.
← 96. Interview No. 20.
← 97. Interview No. 6.
← 98. Interview No. 12.
← 99. Interview No. 20.
← 100. Interview No. 21.
← 101. Interview No. 6.
← 102. Interview No. 1 & 16.
← 103. Interview No. 16.
← 104. Interview No. 16.
← 105. Interview No. 16.
← 106. The State Police of Latvia are also currently undergoing a review of the organisational structure, with a view to restructure in the near future.
← 107. Interview No. 4, 10, 13.
← 108. Interview No. 13 & 16.
← 109. Interview No. 4, 6, & 12.
← 110. Interview No. 7.
← 111. State Police Statistics provided for this study.
← 112. Interview No. 19.
← 113. Interview No. 5.
← 114. Interview No. 5.
← 115. Interview No. 15.
← 116. Interview No. 4.
← 117. Interview No. 6.
← 118. Interview No. 19.
← 119. Interview No. 5, 12, 13.
← 120. Interview No. 19.
← 121. Interview No. 17.
← 122. Interview No. 19.
← 123. Interview No. 6.
← 124. Interview No. 5.
← 125. Interview No. 13 & 19.
← 126. Interview No. 7.
← 127. Interview No. 17.
← 128. Interview No. 10.
← 129. Interview No. 19.
← 130. Interview No. 19.
← 131. Interview No. 5.
← 132. Interview No. 20.
← 133. Interview No. 4.
← 134. Interview No. 12.
← 135. Interview No. 5 & 17.
← 136. Interview No. 11.
← 137. Interview No. 11.
← 138. Interview No. 18.
← 139. Interview No. 7, 8, 10, 12, 13, 14.
← 140. Interview No. 7.
← 141. Interview No. 11.
← 142. Interview No. 5.
← 143. Interview No. 15.
← 144. Interview No. 6.
← 145. Interview No. 10.
← 146. Interview No. 13.
← 147. Interview No. 15.
← 148. Interview No. 10 & 17.
← 149. Interview No. 8.
← 150. Interview No. 8.