Given the increasing sophistication and overall levels of economic crime affecting the UK, there is a feeling within government that more needs to be done, despite “being proud of the significant progress …. made in the UK’s response to economic crime”.
Some of this progress has been as a result of government initiatives: creation of National Economic Crime Centre and Office for Professional Body Anti-Money Laundering Supervision; introduction of Unexplained Wealth Orders and Account Freezing Orders; and the launch of Joint Money Laundering Intelligence Taskforce. But there is an acceptance that Business has invested a lot of time, effort and funds into tackling the problems on the front-line.
However, despite these best efforts, economic crime – fraud, money laundering, bribery and corruption, and terrorist financing, et al – is still on the increase and using ever more sophisticated methods to circumvent the methods employed by financial institutions to combat it. In order to keep up with the fraudsters, anti-money laundering processes have to be funded sufficiently and the governance needs to lead the way.
Pushing forward with Economic Crime Plan
The Government is determined to push forward its Economic Crime Plan, created jointly with the private sector, and which is dependent on getting better access to privately held information and data that can be used by law enforcement agencies to better tackle crime and bring to justice its perpetrators. The introduction of SARs was meant to drive better information flow, but the private sector is becoming ever more disenchanted with them, with the view that information is disappearing into a black hole, with too many lists and data sources (e.g. PEPs, Sanctions, Beneficial Owners, Directors, Adverse Media etc.).
Economic Crime Plan to bolster AML activities and improve success rates
One of the key reasons for introducing the levy, is to help finance the Economic Crime Plan and the Government believes that the private sector will benefit significantly from its introduction and should, therefore, shoulder some of the cost. Some of the improvements set out in the Economic Crime Plan will certainly bolster AML activities:
- The SARs Reform Programme is designed to support the Plan’s efforts to disrupt and prevent activity, and to increase seizures of illicit money. The reforms, to include increases in staffing and improved IT and reporting – which will aid regulated entities to meet their reporting obligations and manage their risks more efficiently – have been partially designed and overseen by users of the regime, to ensure that they meet their requirements
- The UK Financial Intelligence Unit is to be expanded and enhanced, with a view to making the processing of cases more efficient and delivering better engagement from a larger and better equipped team with better levels of morale
- The Joint Money Laundering Intelligence Taskforce is also to be expanded and enhanced, to improve information sharing, both across and within sectors, leading to better targeting of prevention and response efforts
- Funding for improved education within the sector, to further reduce and head-off threats that may otherwise develop and need to be responded to
- And finally, but by no means least, a reform of Companies House – which has been criticised as being ‘not fit for purpose’ – to ensure that regulated entities can better meet their obligations, through the provision of more robust, accurate and up-to-date information on corporate entities.
- Concerns surrounding levy
- All of these reforms will be welcomed by private sector regulated entities, but there is still going to be some concern as to how the levy is to be apportioned, to whom and how it will work in practice. The last thing that companies want is an increased administrative burden, over and above that which they already shoulder for identifying and reporting on economic crime. Hence the publishing of the Consultation Paper, to get feedback from individual companies and the industry as a whole, on a number of issues. The Consultation Paper specifically asks questions around the following categories:
- On what principles should the levy be based?
- What will it pay for?
- How can the Government ensure that there is transparency overspending?
- How liability for the levy will be established and which businesses should pay?
- How it will be collected and enforced
The Consultation is open until 13th October 2020, after which the government will analyse responses and provide a response in due course. The Government’s intention, currently, is for the first levy payments to be made in the 2022/23 Financial Year, but this is subject to the findings of the policy consultation, the time needed to develop a robust, efficient and fair collection infrastructure that is non-burdensome on those who pay it, and, of course, the time it will take to get it through the legislative process.