Fighting Economic Crime

Feb 12, 2019

The UK’s efforts in combatting economic crime and safeguarding the integrity of the UK as an international financial centre hostile to illicit finances is set out in the government’s five-year strategy paper – UK Anti-Corruption Strategy 2017-2022. The subsequent introduction of various task forces committed to dealing with economic crime also highlights the UK’s drive and determination in combatting corruption, perhaps not unsurprisingly given that the current estimated loss caused to the UK economy is over £14billion a year according to the Treasury.

In January 2019, it was announced that the Home Secretary Sajid Javid and Chancellor Phillip Hammond will co-chair a new government taskforce, the Economic Crime Strategic Board (ECSB) in a bid to tackle and prevent economic crime in the UK.  The ECSB is tasked with providing ministerial direction to law enforcement agencies in coordination with private sector stakeholders such as CEOs from major financial institutions as well as representatives from the National Crime Agency (NCA), the Solicitors Regulation Authority (SRA), Accountants Affinity Group (AAG), UK Finance and the National Association of Estate Agents (NAEA).  It is envisaged that the ECSB ‘will drive the response to economic crime, agree strategic priorities and scrutinise overall performances and impact against economic crime’.

This collaborative model championed by the government seeks to promote a robust solution to threats of economic crime by encouraging an information sharing partnership between the private sector and law enforcement agencies, perhaps a welcomed departure from the usual approach of sanctions and compliance strictures that businesses often face.

In the UK anti-corruption strategy update, Ben Wallace, Minister of State for Security and Economic Crime, speaks of the launch of the Serious and Organised Crime Strategy (SOCS) backed by £48million funding in 2019 and 2020 to provide law enforcement agencies with greater impetus to combat illicit finance. Consistent with the collaborative model, through the SOCS the government intends to ‘equip the whole of government, the private sector, communities and individual citizens to play their part in a single collective endeavour to rid society of the harms of serious and organised crime’. This is further honed by the decision to make permanent the Joint Money Laundering Intelligence Task Force, now absorbed into the National Economic Crime Centre (NECC), to enhance public/private information sharing which has reportedly ‘assisted law enforcement agencies on over 500 cases and has produced over 35 alerts which have been shared across the whole financial sector to enhance awareness of financial crime risks’. 

The ECSB follows the conception of the NECC - first proposed in the government’s anti-corruption strategy. The NCA announced that ‘the NECC aims to bring together the knowledge and skills of the UK’s law enforcement agencies alongside those of the private sector’ with an aim to not only respond to criminal attacks but to also understand the emerging threats and seeking to be one step ahead. The NECC was therefore established to create a multi-agency taskforce consisting of representatives from the Serious Fraud Office (SFO), HM Revenue and Customs (HMRC), City of London Police, the Financial Conduct Authority (FCA), the Home Office and the Crown Prosecution Service.

It is understood that the intention behind the multi-agency task force of the NECC was to ensure that risks associated with offences falling outside the remit of one law enforcement agency did not prevent the authorities from bringing perpetrators to justice. However, the ESCB plays a supervisory role ensuring that strategic decision - making in the fight against economic crime is aligned with the vision envisaged by the anti-corruption strategy.

The general drive to combat illicit finance and corruption both in the UK and globally is at the forefront of the government’s agenda and given the broad remit of the ECSB, it is hoped that it will ensure economic threats faced by the UK will be dealt with in an informed and strategic way. In its first meeting, the home secretary has pledged to commit £3.5million of the Home Office funding to support works to reform suspicious activity reports (SARs), a regime which has come under increasing criticism given the increasing number of SARs submitted during 2017-2018. It is reported that 463, 938 SARs were submitted into a system designed to receive 20,000 reports. The contributing factor for the record submissions is linked to notion of criminal liability attached to Money Laundering Reporting Officers for a number of offences, including non-reporting.

The Law Commission and the Financial Action Task Force have called for reforms of the complex SAR regime which often results in more submissions than necessary, particularly in the financial sector where a non-risk culture has developed to report everything irrespective of whether there may be reasonable grounds to do so. Thus, the delivery of a reformed and more streamlined SAR regime will not only instil confidence in the private stakeholders that their compliance budget is spent correctly but will also have an effective impact on law enforcement agencies’ ability to analyse better quality SARs in a meaningful way.

While the creation of these task forces and injection of significant funds is laudable and certainly brings the UK on the frontline of the fight against economic crime, it’s implementation and effectiveness remains to be seen, particularly in light of ECSB’s supervisory role concerning the allocation of resources. At a time when government agencies have largely been affected by budget cuts, it will be interesting to follow the allocation of resources when dealing with economic crimes.

Arozo.Gajia@byrneandpartners.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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About Arozo

Arozo graduated from School of Oriental and African Studies (SOAS), University of London, in 2010 and completed her LPC at the College of Law in London. She was part of the criminal litigation team at Hodge Jones and Allen before moving to Byrne and Partners in 2018.

Arozo is a member of Defence Extraditions Lawyers Forum, The Female Fraud Forum and Women in Criminal Law.