#2 UK Economic Crime Plan – Review by FCN

The UK Economic Crime Plan is finally published and sets out welcome plans to further combat economic crime over the next 3 years. In many ways it’s a remarkable achievement in public private collaboration and demonstrates the benefit of joined up thinking, from so many, which if progressed and successfully implemented, could represent meaningful change in the UK ‘s approach. 

There are no big surprises but it’s thorough and comprehensive, which indicates ambition and commitment. There are still many choices still to be made despite the inclusion of actions, which are in some cases placeholders for important decisions to come. 

The main positive highlights are that there is finally increased funding to do what could and should have been done years ago and that the focus is moving more towards increasing asset recoveries, that information sharing is at the core of the Plan as well as PPPs including on crypto and fraud is being recognised for the major threat that it poses both to the public sector and to the private sector, including against individuals.

At the same time, it has to be noted that the additional funding of £100 million a year raised from the private sector is not matched by the government (though see below as earlier funding has been committed) and that the target for asset recovery is just an additional £100 million a year, which isn’t nearly ambitious enough. Fraud in the Economic Crime Plan is limited to actions to combat public sector fraud and for other frauds we still await the Fraud Action Plan.

See below for more details and the top 5 takeaways from the #2 Economic Crime Plan. For the Plan itself see Here

For 5 immediate takeaways:

1) Tackling Economic Crime is part of a broader crime plan: The Economic Crime Plan should be seen as a part of the UK Governments overall, “Beating Crime Plan” published in 2021 and a successor to the 1st Economic Crime Plan 2019 – 2022. The Plan has been co created and is supported by the Public and the Private (regulated) sectors. It sits alongside the forthcoming anti-corruption strategy and above the forthcoming fraud strategy, which will include a money mules plan. With fraud representing an estimated 41% of criminal activity, the new Fraud Strategy can’t come soon enough, though tellingly the Home Secretary and the Chancellor, state in the introduction to this Economic Crime Plan that the new Fraud Strategy “will ensure the public are empowered to protect themselves against fraud and the harm that comes with it”, suggesting the focus may be more on self help measures, but we have to wait and see.

Ongoing important legislative action currently going through Parliament will also help include the Economic Crime and Corporate Transparency Bill, and the Online Safety Bill. Also expected is a new Anti-Money Laundering and Asset Recovery (AMLAR) programme.

2) The Economic Crime Plan is made up of 16 action areas: The Action Areas include: limiting abuse of corporate structures, increasing the effectiveness of the UK regulatory and supervisory regime, combating criminal abuse of crypto assets, SAR reform, recovering more criminal assets, leadership & coordination by the National Crime Agency’s National Economic Crime Command (NECC), actions to tackle kleptocracy & sanctions evasion, & strengthening the international response to kleptocracy, cutting fraud in the public sector, reducing illicit finance threats, cross cutting system reforms and capabilities, information sharing data and technology, law enforcement capacity and public private workforce strategy, the criminal justice system, funding & measuring progress and governance. These areas are the right ones to focus on.

They could have been supplemented further for example with action areas targeting technology, online platforms and social media, and expressly including the Information Commissioners Office in a number of these action areas and milestones, particularly regarding, information sharing and data. Another area that could have been included could have focussed on home grown anti corruption measures, to address and counter in particular the at best perception and at worst decline in the UK’s standing as represented by the UK’s worst score and rating ever in TI’s CPI for 2022, where the UK’s score fell sharply to 73 and ranked 18th – its lowest since the Index underwent a major revamp in 2012 and down from its high of 82 in 2017 when it was ranked 8th globally.

3) Reliance on the Home Office & the NCA: The 16 Action areas have 43 Actions & 145 Milestones all of which are attributed to 20 Owners / Co Owners. The Agency with the most designations as an Owner or Co Owner of an Action is the Home Office with 15, followed by the NCA with 13 (3 for the NCA itself, 9 for the NCA’s National Economic Crime Command & 1 for the the UK FIU) & 5 for HM Treasury. The Cabinet Office (1) and the Public Sector Fraud Authority (which is part of the Cabinet Office – 4) have together 5, the Department for Business & Trade (DBT) and Companies House which is part of DBT having 4, the Office for Sanctions Implementation, the City of London Police & the Foreign Office (FCDO) each having 3, UK Finance having 2, & HMCTS (Courts), Ministry of Justice, ROCS (Regional Organised Crime Squads), HMRC, CPS, OPBAS & FCA & each having 1.

Whilst the Economic Crime Plan is a co creation between the public and the private sectors all 43 actions are owned or co owned by the public sector and largely directed to improving activity in the public sector with just 2 actions co owned by UK Finance alongside a public sector agency, suggesting that system improvements are overwhelmingly focussed on and reliance on delivery will be very much on the public sector, particularly with the Home Office & the NCA.

4) Asset Recoveries: Whilst recent improvements in asset recoveries have been seen, with £354 million reported as recovered in the financial year 2021/22, which was the highest figure on record and a 61% increase compared to the previous year based on at least £100 billion in laundered funds, (referenced in the Economic Crime Plan and attributed to the NCA), this still amounts to less than 0.5% of laundered funds.

Whilst actions on asset recoveries are attributed to the Home Office, the City of London Police, and the National Crime Agency, no target is included in the Plan itself, though one is stated by the government in its accompanying announcement. It states that, “our response to economic crime will be bolstered by 475 new highly trained financial crime investigators, spread across intelligence, enforcement and asset recovery at key agencies. This increased capacity will be targeted toward the detection and disruption of money laundering, and the recovery of an additional £1 billion in criminal assets over the next 10 years.” Even if these amounts are recovered it will still represent less than 0.5% of estimated laundered funds, and isn’t nearly ambitious enough with for example a number of countries showing much higher amounts are possible, including Italy, already recovering much higher amounts in the double digit percentages.

5.1) Funding (1): The Economic Crime Plan is stated to be “underpinned by significant investment of £400 million from financial year 2022/23 to financial year 2024/25. This funding represents £200 million of government investment and £200 million from the Economic Crime (Anti-Money Laundering) Levy, which provides sustainable, long-term funding to combat economic crime”.

As already reported by Spotlight on Corruption however, “the £400 million consists of: £200 million from the new £100 million a year Economic Crime Levy on the private sector and £200 million of existing government investment announced in the 2021 Spending Review. (See Pages 99 -103). This means that there is no new government investment in economic crime being announced with the launch of the new Plan. The private sector levy can only be used for tackling money laundering. So the £200 million of existing government investment must cover the rest of economic crime. From government statements, this £200 million appears to include: £42 million for the Home Office to tackle money laundering and fraud, departmental budget increases for government legal services and prosecution consisting of £91.5 million shared between the Crown Prosecution Service (CPS), Serious Fraud Office (SFO) and the law departments; and £63 million for Companies House reform.”

Whilst the government monies are therefore not new or additional nor do they match those of the private sector and the wording in the Economic Crime Plan may to some appear somewhat self serving, it is fair to include increased commitments made albeit in 2021 for future spending through the period of the Economic Crime Plan if these are increases and enable new necessary activities to be actioned. Nevertheless it is worth reflecting that the funding underpinning the Economic Crime Plan is similar to the £500 million (£125million in 2023, £168 million in 2024 and £184 million in 2025) the UK has agreed to pay France for increased policing in Northern France focusing on migrant smuggling to the UK.

5.2 Funding (2): Nevertheless new recent funding sources will make a big difference and as announced by the UK Government earlier this week will make it possible now to:

  • “Invest over £100 million in state of the art technology which will analyse and share data on threats in real time, to give law enforcement the tools it needs to stay ahead of criminals
  • Provide funding for more skilled financial crime investigators. This includes funding to hire 475 new investigators and Economic Crime training for more than 6500 existing investigators in the National Crime Agency and across national and regional intelligence, investigation and prosecution agencies. New and better trained officers will lead to more cases investigated, more criminals prosecuted, and more assets recovered.
  • A further £60 million will fund new specialist intelligence teams in the National Crime Agency and expand the Combatting Kleptocracy Cell in order to tackle the most complex global money laundering networks.
  • Funding for c.75 officers to sustain the increased staffing of the UK Financial Intelligence Unit and provide funding for 22 new financial investigators to analyse Suspicious Activity Reports embedded in regional organised crime units. The Suspicious Activity Reporting regime is a key pillar of the UK’s Anti-Money Laundering (AML) system and is a critical tool for law enforcement to identify and disrupt money launderers.
  • Invest £20 million in Companies House and the Insolvency Service to fund the creation of two new intelligence teams. These new teams will improve our understanding of how UK companies are misused to launder the proceeds of crime and help put a stop to it. Further £600,000 funding has been allocated for the deployment of UK experts overseas to raise the global standards on Beneficial Ownership multiplying the impact of our domestic reforms to Companies House.
  • £1.2 million for a dedicated surge team to accelerate the fundamental reform of the AML supervisory supervision regime, leading to more effective risk-based supervision, more dissuasive enforcement, and greater sharing of high-value information and intelligence.”

5.3 Funding (3): Almost at the end of the Economic Crime Plan Report are Actions 41 and 42 which provide opportunities to make tackling economic crime through providing additional future funding sources more sustainable. For example:

  • Action 41 involves exploring, “a mechanism to enable suspected illicit funds held in suspense accounts to be used in tackling economic crime, while protecting customers’ access to their legitimate funds.” – This Action is owned by the Home Office and a decision is targeted for Q4 2023 which if positive may require future legislation
  • Action 42 focusses on how to “enable more assets recovered from criminals including through the Asset Recovery Incentivisation Scheme (ARIS) to be reinvested in tackling Economic Crime”, with the Home Office once more the Action owner and a decision to be made by Q4 2024.

Both these issues are not new and the can has been kicked down the road endlessly already, so a resolution on how to proceed on both issues will be a test for the Home Office and a good indicator of whether real progress is being made.

6. Note for the Private Sector / Financial Services: Whilst the Private Sector in the form of UK Finance is a co owner of just 2 of the 43 Actions, it is a supporting contributor to many more, and an interested party directly in 17 Actions and indirectly in the other 30 Actions. For those Actions the private sector and financial services in particular should focus on and will need to directly support and or influence to ensure positive outcomes, are in particular, Threat Prioritisation – Action 17, International Response to Kleptocracy – Actions 22, 28 – 32, Cross Cutting System Reforms – Action 33, Information Sharing Data & Technology – Actions 34 – 35, LE  Capacity – Action 38, Funding – Actions 41 – 42 & Measuring Progress – Action 43. For more details and commentary for the private sector and financial services – See HERE.

Final Remarks

There is a lot to do over the 3 years of this Economic Crime Plan, by many people, not all of whom have stellar track records as far as effective execution is concerned, especially in the public sector, with many other priorities facing them and a general election expected next year.

Whether the Economic Crime Plan delivers, beyond impressing future FATF reviewers & resolving some known longstanding obvious weaknesses may depend on how the final Action 43 is resolved. This is also owned by the Home Office and requires the HO with a big supporting cast to “Develop an outcomes framework for the Economic Crime Plan 2”, with initial priority indicators available by Q3 2023 and an expectation this is ready for Q4 2024.

It’s a curious thing that as we embark on the journey towards increased effectiveness in the UK’s 2nd Economic Crime Plan it is still not yet precisely known what effectiveness looks like nor how it will be measured or reported.

Financial Crime News, 31 March 2023

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