HM Government, Economic Crime Plan 2, 2023 – 2026

Summary

This 3 year plan focuses on achieving tangible outcomes, and commits [the Government] to:

• Reducing money laundering and recovering more criminal assets
• Combatting kleptocracy and driving down sanctions evasion
• Cutting fraud

This short article focuses on the highlights surrounding what the Plan has to say, about those 3 key outcomes.

A full copy of the Plan is available here.

The 3 Key Outcomes and How They Are to be Achieved

1. Reduce money laundering and recover more criminal assets

• Limit the abuse of UK corporate structures
  • Abuse of even a small portion of UK corporate structures is identified as, “a critical enabler of all forms of economic crime”.
  • It is intended that legislation will be introduced via the Economic Crime and Corporate Transparency Bill to reform Companies House and limited partnerships. The Bill will see Companies House become a, “more active gatekeeper over company creation and custodian of more reliable data”.
  • There is an aim to maximise the value of the reforms by integrating Companies House into the wider anti-Economic Crime Framework.
• Increase the effectiveness of the UK’s AML/CFT regulatory and supervisory regime
  • There has been noted improvements since the introduction of the Anti-Money Laundering Regulations 2017, but it is felt that more can be done.
  • It is intended to strengthen HM Treasury and OPBAS’s¹ existing oversight, alongside improving the effectiveness of the existing AML /CFT supervisory regime.
  • Supervision across the current AML²/CFT³ regime is to be tightened
  • There will be reform of the UK’s AML/CFT supervisory regime and improvement of the effectiveness of Money Laundering Regulations.
• Combat criminal use of cryptoassets
  • Cryptoassets are said to provide “a near-instant and low-cost way to transfer value across borders”.
  • Continued collaboration with the UK’s crytoasset sector is described as “vital”.
  • The aim is to “enhance law enforcement capacity and capability”.
  • Improvements are to be made to legislation and regulations, to close vulnerabilities which enable crypto abuse.
  • Technological capabilities are to be enhanced to help seize and return crypto assets to their rightful owners
• Improve intelligence, feedback and analysis through SAR’s reform
  • SAR’s⁴ are said to play a key role in provision of intelligence between the private sector and law enforcement.
  • The SAR program is to be reformed on a “continuous improvement basis” so that it serves as a disrupter in the AML and CFT arena.
• Recover more criminal assets
  • There were said to be record asset recoveries in financial year 2021/22 under POCA.⁵ The Plan is to build on this success.
  • There are aims to improve international co-operation and cross border recovery.
  • An increase in frontline policing, consistency of approach and centralised support for agencies is envisaged.
  • The Joint Asset Recovery Database will be succeeded by a new IT Platform, to support this work.
  • There is to be a response to the Law Commission Review on Confiscation and taking forward proposed changes to POCA.
• Lead the cross-system operational response to money laundering
  • The NECC⁶ will deliver a new plan to tackle money laundering. It is uniquely positioned to lead a cross-system response to money laundering, targeting the 4P’s (Prevent, Protect, Prepare, Pursue).
  • Public-Private sector collaboration is said to have been key to the success of the NECC to date. This will need to continue.
  • There will be further work to understand the threat of professional enablers (parties who provide professional services, deliberately, recklessly, improperly, dishonestly and/or negligently in breach of their professional or regulatory obligations).
  • In addition, the Government are to publish “a money mules action plan” in 2023.

¹ “OBAS”, The Office of Professional Body AML Supervision

² “AML”, Anti-Money Laundering

³ “CFT”, Counter Terrorist Financing

⁴ “SAR”, Suspicious Activity Report

⁵ “POCA”, Proceeds of Crime Act 2002

⁶ “NECC”, National Crime Agency’s National Economic Crime Centre

2. Combat kleptocracy and drive down sanctions evasion

A kleptocracy is described as, “a highly corrupt political regime where power has been consolidated for the benefit of the small elite. It is characterised by widespread theft of national wealth to subvert domestic political systems”. It is said that the UK is not unique in facing a threat by such regimes but must do more to combat these threats if the UK is to protect its reputation, particularly in the financial and professional services sectors. One weapon the UK uses against Kelptocracies is the imposition of sanctions, however, this requires “complex implementation, enforcement and operational compliance, involving both the public and private sectors working closely together”. Various steps have been taken:

• The OFSI⁷ has expanded to over 100 staff to help improve legislation and enforcement of sanctions.
• The FCA⁸ has strengthened its supervisory approach in assessing firm’s financial controls.
• The Government has created the NCA’s Combatting Klepotcracy Cell to help prevent cross border money laundering.

The Plan includes further ambitions:

• Continuously improve financial sanctions design, implementation and enforcement
  • The Government has committed to provide “all relevant sectors with the proper guidance, support and collaboration around these various sanctions regimes”.
  • The Plan aims to publish an assessment of sector threat and identify vulnerabilities relating to sanctions.
  • There is a desire to maximise the impact of sanctions and enhance the co=operation with the US, EU and other jurisdictions.
• Strengthen operational and international response to kleptocracy
  • The capacity of the CKC⁹ is to be expanded to target corrupt elites in the UK.
  • The Government is looking at, “all possible options for seizing assets in the UK that could be used to remedy the harms caused in the Ukraine”, albeit acknowledging this is novel, and fraught with legal and operational challenges.
  • Further steps will be taken to identify and disrupt enablers (i.e. professionals who allow their serves to be used for such purposes).
  • The Government will look to build new partnerships and international relations, as well as strengthen existing ones, to help, freeze, seize and return stolen assets.
  • There is to be a new Anti-Corruption Strategy to improve resilience in domestic institutions.
  • The Government will be clear in public facing communications “the UK is not a home for dirty money from corrupt elites”.

⁷ “OFSI”, The Office for Financial Sanctions Implementations

⁸ “FCA”, Financial Conduct Authority

⁹ “CKC”, Combatting Klepotcracy Cell

3. Cut fraud

The forthcoming Fraud Strategy will set out how the Government will cut fraud. The Plan says, the Fraud Strategy will:

• Pursue fraudsters, disrupting their activities and bringing them to justice more often and quicker.
• Block frauds at source by dramatically reducing the number of fraud and scam communications that get through to the public.
• Empower people to recognise, avoid and report frauds and equip them to deal easily and appropriately with frauds that do get through. Modernise the response and reduce the impact of fraud against the public sector through the Public Sector Fraud Authority.

The Plan envisages a focus on detecting, preventing and recovering losses to fraud in the public sector. This is said to be, “in line with the government’s explicit policy to encourage public bodies to do more to find and report fraud and error and the announcement of the new Public Sector Fraud Authority (PSFA)”.

The PSFA was launched on 3 August 2022 and has the task of understanding and reducing fraud against the public sector.

Tackling tax fraud is outside the remit of PSFA, but remains firmly on the Government’s agenda.

Conclusion

As the Plan itself states, “By improving information flows, removing blockers, and addressing standardisation and interoperability issues, [the Government] will be able to better use data and information across the system to combat all economic crime”.

Should you have queries relating to money laundering, recovery of assets lost to fraud, the impact of sanction or fraud, please do not hesitate to get in touch at hello@tenetlaw.co.uk

Author, Liane Atcheson