12 Dec 2017
Britain has a huge problem at hand – how best to combat money laundering.
According to the government, the scale of money laundering impacting the United Kingdom is likely to exceed £90 billion a year.
Not least of its troubles is also how to rid London of its reputation as the world’s money laundering capital.
Various prime ministers have over the years have given it a shot, with their Treasury, Home Office and other departments giving it interesting twists and turns along the way.
On Monday it was Home Secretary Amber Rudd’s chance. She unpacked her anti-corruption ‘goody bag’ – various items geared to help win the war against money laundering and other financial crime.
Was it a big deal? Yes and no.
Yes, because some major changes are being made – the issue is, of-course, whether they will be fully implemented and to what extent they will corner the crooks.
And no, because some of the points have been raised before, and are not entirely new.
Here are some main points and the questions they raise:
1. Serious Fraud Office – saved but chained to the NCA
There was a huge uproar in legal, industry and various circles when Prime Minister Theresa May indicated that the SFO would get the chop – or be absolved into the National Crime Agency (NCA).
Since then there’s been debate, speculation and developments indicating that it would survive. As part of the new strategy, Rudd said the SFO will continue to act as an independent organisation – however there are a few ‘buts’ regarding its independence – for example, she added that it will ‘support the multi-agency response led by the NCA,’ and new laws will be created to allow the NCA to directly task the SFO to investigate the worst offenders.
Does the latter suggest that the SFO will be taking instructions from the NCA?
Is it under the NCA, afterall?
There is also the issue of the SFO’s financial and human resources – will the additional work assigned to it by the NCA come with more resources to conduct those tasks?
2. Overseas companies beneficial ownership register – sounds great, but can the UK be trusted with this?
Here’s a classic example of a great sounding policy that didn’t really take off as anticipated.
The concept of an overseas companies beneficial ownership register was announced with much fanfare, it was almost electrifying. However, not much happened.
Can we believe it will happen this time round? Yesterday Rudd’s team said the government would be doing something about it after all – Home Office called it a ‘renewed commitment.’
Basically, the idea is still to introduce a register which will state which foreign companies are the real owners of property in London, amid concerns about the links between real estate, corporate secrecy and money laundering.
However, there are already questions about how the UK is handling its fairly new and much-touted public register of beneficial owners of companies, with concerns that the huge system is being manned by a small number of staff and checks of data entered may not be as thorough.
Is the UK ready to take on another beneficial ownership register?
3. Reform of the suspicious activity reports regime (SARs) and changes to the criminal assets strategy – too many cooks in the kitchen?
For a while the UK has discussed reforming its SARs regime – there were complaints that the NCA, the government unit tasked with the SARs, was working on antiquated systems and overloaded with SARs flooding in.
Indeed efforts were made to reform this, so Rudd’s announcement on this is not exactly new.
Of interest is the UK’s efforts to seize criminal assets – a new group consisting of the NCA, HMRC, SFO and Crown Prosecution Service will use powers within the new Criminal Finances Act to seize criminal cash.
In addition to this group, another group will be formed – the National Economic Crime Centre (NECC) within the NCA, and it too will draw expertise from across law enforcement agencies as well as the private sector.
A positive aspect of this is a that the UK is encouraging a joint effort among its various teams to combat financial crime, however there is a risk that too many committees and groups could end up slowing down rather than quickening the race against London’s swift money launderers and fast crooks.
4.The appointment of a new anti-corruption tsar – will he be more visible?
Also unpacked on Monday was a new chief to handle the UK’s war on corruption.
John Penrose MP will be “challenging and supporting the government in implementing the strategy, as well as promoting the UK’s response to corruption both domestically and internationally,” the Home Office team said.
On his part, Penrose said he was “thrilled” to take on the role, and looks forward to continuing the work that has already been done in rooting out corruption.
The concept of having an anti-corruption chief sounds great, however, since the creation of this role a while ago, this office does not seem to have had a major impact on the UK’s war against financial crime.
For example, when was the last time we heard of a major breakthrough or crackdown brought about by the anti-corruption tsar? And what happened to the previous office-holder Sir Eric Pickles?
5.’New’ anti-corruption strategy published – is it any different to the many others before?
The UK is great at coming up with all sorts of new strategies and polices to tackle financial crime.
It already has many plans and commitments, including those made at its anti-corruption conference held under David Cameron. Rudd’s new strategy includes points like ‘strengthening the integrity of the UK as an international financial centre’ and ‘working with other countries to combat corruption,’ which we have heard before.
However, it’s not to be dismissed. There’s also some optimism something new may come up post-Brexit – when the UK will handle certain aspects of economic crime without the EU, such as sanctions violation and risk.
Despite the lingering questions, credit must be given to the UK government for some key accomplishments made on the legislative and enforcement fronts in combating financial crime.
This includes some interesting economic crime cases investigated by the NCA and SFO, complex tax evasion and fraud cases taken on by HMRC and new laws like the Criminal Finances Act – proof that the UK can deliver, even though it may not always win.
By Irene Madongo
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