Lower levels of detection and weaker sentences are encouraging criminals to turn to fraud, the Attorney- General warned this week, calling on the courts to hand down appropriately severe sentences.

Opening an international symposium on economic crime at Cambridge University, Lord Goldsmith QC said: 'It is notable how often defendants receive non-custodial and suspended sentences despite committing serious economic crime.'

He highlighted a recent case where an offender, convicted of conspiracy to defraud 1.75 million, was given a 15-month suspended sentence.

Lord Goldsmith referred it to the Court of Appeal, which imposed a custodial sentence instead.

He explained that the advantages of committing economic crime, as opposed to other criminal activity, are known to terrorists.

'Other organised criminals are all too well aware of the costs and benefits vis--vis the risks when compared with other forms of crime.

To put it bluntly, the risk of detection, investigation, prosecution and conviction of an offence of fraud is small and if you are unlucky enough to be caught, the sentence is probably tolerable for the gains you have made; whereas trafficking in drugs or people or arms may result in increased risk of detection and certainly more severe penalties.'

He said the issue of sentencing embraced principles of social justice.

'It would not be justified, in my view, for example, to treat a white- collar fraudster who defrauds a company or individuals more leniently than a blue-collar one who makes a fraudulent benefit claim.

'Such messages from the courts and myself will hopefully confirm the fact that economic crime has serious consequences.'

Lord Goldsmith added: 'We should not be satisfied with accepting a business transaction simply because it technically does not infringe the regulations.

We need to ensure criminals, whether terrorists, subversives, fraudsters, drug traffickers, people traffickers or whoever, are deprived of their criminal profits.

In addition to legislation, this requires a change in attitude.'