A Primer on Crime and Punishment

Crime is all too popular a hobby in the Valley. Not because it's too difficult to catch and prosecute people, but because the costs required to do so nearly always eclipse the cost of the crime. For every one bandit group hunted down by adventurers, four more slip quietly into the woods.
The defenders of a settlement are divided into the Guard and the Watch. The Watch are much like the police, trained in investigation, diplomacy and the minutia of law. The Guard are trained fighters, who are occasionally used by the Watch as a blunt force instrument, such as raiding a warehouse or being sent to arrest a particularly powerful and violent criminal.
The main purpose of the Guard are to patrol local roads, and keep the area clear of aggressive wildlife and similar threats. Both sides will often employ adventurers when dealing with particularly powerful foes.
==== Whose Crime Is It Anyway? ====
If a thief takes something in Skor, sells it in Tsar, and then flees to a remote border town of Aberdeen, whose problem is it? If the item stolen was of particular value, an adventuring group, or detachment from the Skor watch would be issued a writ to track down the thief and stolen goods, and return them to Skor. The writ is just a fancy piece of paper granting the group to do exactly that. The Valley Council is able to grant such a group jurisdiction over the entirety of the Valley, and co-operation between the Watches in different towns if the norm.
A more expensive item would likely result in a more powerful group being assembled, with magic being used to communicate between the different cities and to magically locate the items in question.
==== Freedom is never free ====
The problem is that solving crimes is really difficult and really expensive, especially in the mostly lawless Valley. An intelligent Watch Captain (such as Captain Icy of Dejune) knows how to match her force against those who would harm the town or its inhabitants. She also knows when to call on the aid of the Dejune Adventurers guild, or occasionally an Engineer to deal with something that would pose an overwhelming threat to her men.
For most small towns and villages, the watch is only capable of dealing with crimes committed by angry farmers or drunken traders, and is forced to hire adventurers for anything larger.
Fortunately, adventurers are an enthusiastic bunch, who're often willing to work for free. Missing a shipment of furs? Most adventurers would be happy to return it to you if they're able, on the understanding they're allowed to keep anything they find in the bandit's lair that doesn't have a clear owner.
==== Detect Evil ====
For detect evil to work, the accused must be of above-average power. Even so, if someone does flag as evil, it's not proof that they've committed the crime in question, or even committed any crime at all. Being evil itself is not a crime, and it is relatively easy for someone to hide their alignment. That said, detect lies is used in most interrogations. 
==== If it's so easy to commit a crime, why hasn't the entire Valley been looted and burned to the ground by now? ====
Because the death penalty is a really common punishment. Even among the more Good-aligned places, if you willingly kill or steal, you're likely to end up on an adventurer's blade or a guardsman's pike. As a result, the only people who commit crimes are the mad, stupid, or those who think they can get away with it. Often a criminal is all three at once.
If you're not killed while resisting arrest, then you're often left hanging from a noose anyway. Prisons are usually only used to hold someone until they're to stand trial or receive punishment. In a world with magic, prisons aren't secure enough to hold someone long term.
When capital punishment is too extreme, different places will try to find a middle ground. Often this involves some terrifying ordeal is enough to make most people think twice before breaking the law, but is also non-fatal. 
* In Tsuen, slicing off body parts from criminals is common, on the grounds that it's likely they will not be able to afford magical healing. 
* In Greyton, you're expected to do hard labor to repay your debt to society. 
* In Dejune, you're often recruited into the army, in a mix of punishment and attempted rehabilitation. 
* In some of the wilder places in the North-West of the Valley, you may find yourself stripped of your possessions, and given only a knife and an hour's head start. 
* In Tsar, you may be turned to a statue for some number of decades.
* In Skor, you will be magically transformed into some harmless creature, and locked in a menagerie for the duration of your sentence.
Ultimately, crime is suppressed by a fear of the consequences. Having a police-force, even a well-funded one doesn't protect a town from heroes and villains, who are literally above it all.