The UK Government has published its three year plan for fighting economic crime with an ambitious list of work to be done.
On 12 July 2019 the UK Government published its three year Economic Crime Plan, in conjunction with UK Finance, the trade association of the banking and finance industry. The plan recognises that economic crime of almost all types is rising in frequency and value and that Brexit may introduce further threats, as criminals seek to take advantages of changes in trading arrangements and UK companies aim to trade more with countries with greater bribery risk.
A holistic approach
The plan emphasises the need for the public and private sectors to work together to combat all forms of economic crime, including fraud, terrorist financing, sanctions contraventions, market abuse, corruption and money laundering. It highlights the work of existing public-private partnerships, such as the Joint Money Laundering Intelligence Taskforce, Joint Fraud Taskforce and Dedicated Card and Payment Crime Unit, citing the “real results” of these. Greater cooperation is proposed in assessing the collective threat posed by economic crime and monitoring the effectiveness of steps taken to disrupt and prevent it. A long-term research strategy is to be created by December 2019.
The plan proposes a review of barriers to information-sharing by March 2020, led by the Home Office but involving UK Finance and the Information Commissioner’s Office, amongst other agencies. Sharing of information within corporate groups, and between private and public sectors via JMLIT, is to be promoted over the next year. One important aspect of this will be a public statement as to the expectations on information-sharing in corporate groups, similar to those issued by the Monetary Authority of Singapore. The SARs regime will be reformed to improve the quality of data received by the National Crime Agency and how it is shared, but changes to the gateways for information sharing between players in the private sector could be just as significant.
Several actions set out in the plan involve the possibility of new legislation. The criminal market abuse regime is to be reviewed by June 2020 and changes made to the Proceeds of Crime Act, in response to ongoing work by the Law Commission (see our article here for more on this). Other initiatives include developing a framework for repatriating funds to victims of fraud, clarifying sanctions supervision powers and steps to improve the transparency of overseas ownership of UK property and reform limited partnerships. As part of the implementation of 5MLD, regulated firms will be subject to a new obligation to report discrepancies between ownership information available at Companies House and information obtained through compliance checks.
As well as implementing 5MLD, the Government intends to go further in the regulation of cryptoasset businesses, bringing all such businesses within AML/CTF supervision in January 2020. The FCA will be the relevant supervisory body and it may be granted additional powers in order to carry out this role. Overall however, the plan contains few references to this fast-developing area of financial services and its impact on serious and organised crime. For more on EU-wide efforts to regulate cryptoassets, see our article here.
Corporate criminal liability
One of the most striking elements of the plan is undoubtedly what is not in it. Despite recent comments from the Solicitor General and Director of the SFO in support of a uniform approach to corporate criminal liability, based on the “failure to prevent” model now covering offences of bribery and facilitating tax evasion, the plan gives no hint of Government support for this. The plan merely states that a response to the Call for Evidence on Corporate Criminal Liability that closed on 31 March 2017 will be published “shortly”. The plan may deliberately avoid the subject due to this forthcoming response from the Government, but it is a striking omission.
Strong on ambition but weak on detail?
The plan is very broad in its scope and includes an ambitious list of areas for improvement in the fight against economic crime. In many places it is short on detail and, given the amount the UK Government will have to do in the coming year relating to the UK’s exit from the European Union, it is difficult not to be sceptical as to how much real progress will be made in the timescales set out. Any scepticism can only be increased by the absence of any significant funding commitment in the plan, which comes with just a £48m pledge for the National Crime Agency, whose Director-General recently requested £2.7bn with which to fight serious and organised crime over the next three years. There is an action to develop a sustainable long-term resourcing model for economic crime reform, but the emphasis is on efficiency rather than extra funding.
The involvement of the private sector shows in the plan’s approach to areas such as the SARs regime, which demonstrates an understanding of the challenges facing banks, however, it has led to criticism from some Non-Governmental Organisations, including Corruption Watch, which has claimed that the lack of impetus in the report for a new offence of failing to prevent economic crime is due to the involvement of “the UK’s big banks and their lobbying body”. There is concern that the banks’ voice will be unduly loud in any discussion as to new requirements to be imposed upon the financial sector in a revised SARs regime. Private sector involvement in formulating an economic crime strategy is likely to remain contentious, but for financial institutions there will be relief that they have a seat at the table to help shape policy.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.