Detective Inspector Graham Enright said the law makes it easy for criminals to off-load stolen goods and for buyers to not ask any questions.
The head of the borough's acquisitive crime CID said: "The law needs to be stricter in terms of enforcement.
"Dealers should have to see sellers ID such as a passport or credit card and keep a record of it.
"That would stop a lot of people."
The force does spot checks on dealers once or twice a week but Detective Inspector Enright said dealers can easily plead ignorance if any stolen goods are found.
The Government is looking at regulating the industry by requiring sellers to register and face identity checks. Cash payments could also be banned.
British Metals Recycling Association (BMRA) director general Ian Hetherington said regulations did need to be tightened to clamp down on crime but that banning cash sales for legitimate traders was a step too far and would 'fuel the black market'.
The Royal Borough licences scrap metal dealers and its trading standards department has the power to prosecute them if they do not keep proper records.
Waste and environmental protection manager Craig Miller said: "Our officers will be undertaking checks of all registered sites in the borough in the coming months."
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