17 April 2023
At the end of March, the UK Government released an updated Economic Crime Plan with intentions and goals in the economic crime sphere for the 2023 to 2026 period, built on an investment of £400 million. The first Plan was published in 2019 and was built on a vision:
“For the public and private sectors to jointly deliver a holistic plan that defends the UK against economic crime, prevents harm to society and individuals, protects the integrity of the UK economy, and supports legitimate growth and prosperity.”
Since 2019, the UK has achieved a number of its goals from the previous periods, including an improved understanding of the country’s threat landscape, bolstered by a series of collaborative public-private threat assessments; a strengthening of law enforcement’s capacity to respond to economic crime, supported by the expansion of legislative and regulatory frameworks; and the introduction of landmark legislation, including the Economic Crime (Transparency and Enforcement) Act.
However, the threat of economic crime continues to persist across the nation. Fraud has grown at a record rate, with an estimated 1 in 15 adults falling victim in the UK, the scale of money laundering has proliferated as the techniques to channel dirty money have become more sophisticated, and ongoing geopolitical tensions have highlighted the need to address the illicit finance that flows through the country from kleptocratic regimes. It is these challenges that the UK Government has responded to in the newest Economic Crime Plan and underpins their commitments.
As a vibrant financial centre, the UK and its corporate structures are increasingly vulnerable to money laundering. It is estimated that £100 billion is laundered via high-end money laundering annually, an incredibly destructive activity that enables criminals to reap the benefits of the profits of their illicit activity at the expense of the general good. To crack down on the virulent trend, the most recent Economic Crime Plan aims to:
Limit the abuse of corporate structures, namely by further reforming the UK’s corporate registry, Companies House, which will be addressed in the Economic Crime and Corporate Transparency Bill.
Reform the anti-money laundering supervisory regime as the current regime has been judged not effective enough in overseeing high-risk sectors.
Strengthening the regulatory frameworks and law enforcement capacity to investigate and seize illicit cryptoassets given their vulnerability to abuse, with an estimated £1.24 billion having been used for illicit transactions in 2021.
The ongoing Russian aggression in Ukraine has driven the establishment of an extensive sanctions regime against targeted Russian individuals and corporations, as well as further emphasised the risk posed by kleptocrats, not just from Russia, in the UK. To address these vulnerabilities and security concerns, the most recent Plan seeks to:
Deepen sanctions compliance by providing enhanced guidance for high-risk sectors, increase engagement across supervisory agencies to address suspected sanctions breaches, and reinforce cooperation with international jurisdictions.
Strengthen the response to kleptocracy, notably by expanding the capabilities of the National Crime Agency’s Combatting Kleptocracy Cell and boosting international cooperation to hold enablers accountable.
Fraud has become an increasing risk to the UK, accounting for 41% of all crime experienced by adults in 2022. Given this, the government has committed an additional £100 million to tackle the continued threat of fraud in the UK by:
Mitigating fraud against individuals businesses by disrupting fraudsters’ activities, blocking public scam communications, and empowering the public to recognise and report fraud.
Addressing fraud in the public sector, bolstered by the work of the new Public Sector Fraud Authority.
Though the Plan was well received, there were some criticisms of its scope and commitments. The All-Parliamentary Group on Anti-Corruption & Responsible Tax, a cross-party campaign group, suggested that the “Plan kicks many policy proposals down the road, rather than committing to introducing change through the Economic Crime and Corporate Transparency Bill currently in the House of Lords.” Its Chair, Dame Margaret Hodge MP, further criticised the Plan as simply “smoke and mirrors” given the Government’s failure to pledge, what she believes to be, adequate funding for the Plan, a shortfall that will make it difficult to deliver on the expected results.
Regardless, the 2023-2026 Economic Crime Plan recognises the symbiotic roles played by the public and private sectors in tackling financial crime, which has very real harm on people, businesses, and the environment. Though the plan outlines the commitments of the government itself, it highlights the very real risks that impact the lives of everyone everyday. Therefore, it can only truly be achieved with the support of the private sector and indeed each of us, as individuals, can and must do their small bit to stop criminals from profiting from their illicit activities.
At Themis, we offer multi-faceted solutions to do just that. Our goal to democratise due diligence to the point where it becomes part of the everyday working and home lives, is a large and vital cog in the machine that is the fight against financial crime. If you would like to find out more about the financial crime landscape in the UK, which this updated Plan forms a vital part of, consult our newly released UK financial crime country risk report that provides in-depth, research-backed analysis, available here.
Written by Olivia Baker, Financial Crime Researcher, Themis