Best laid (economic crime) plans: the usual government rhetoric or an actual step forward?

Recognising the increasing threat to the UK’s national security and prosperity, on 30 March, HM Treasury and the Home Office published the Economic Crime Plan for 2023-2026 (the Plan). The Plan – officially called the Economic Crime Plan 2 – commits HM Government to:

• reducing money laundering and recovering more criminal assets;
• combatting kleptocracy and driving down sanctions evasion; and
• cutting fraud.

To achieve these three commitments, the Plan emphasises the Government’s focus on public private partnerships, noting the success of such partnerships from the first Economic Crime Plan. Working with the private sector, the Government wants to understand the threat that economic crime brings and create a framework outlining a public-private response to this threat.

Money laundering

The Plan notes the increased powers intended for Companies House as a result of the Economic Crime and Corporate Transparency Bill. This includes giving the Registrar of Companies additional powers to ascertain and verify the identities of those setting up, managing and owning companies. Where anomalous behaviour is found, Companies House will have new powers to share this information.

These new powers are intended to reduce the number of fraudulent companies in the UK used for money laundering purposes and whilst this is to be welcomed, it remains unclear how the Plan intends to undertake the seemingly Sisyphean task of verifying the existing information for the roughly 4.5 million registered companies.

Kleptocracy

Much of the Plan’s discussion on Kleptocracy focuses on mitigating sanctions evasion. The Plan’s main focus in this regard is to increase cooperation both internally in the UK between the public and private sectors, and internationally. On the latter point, by Q2 2023, the Government intends to have facilitated formal information exchange with the US, EU and other jurisdictions to increase the effectiveness and implementation of financial sanctions.

Fraud

Noting that fraud accounted for 41% of all crime experienced by adults in England and Wales, the Government immediately commits £100m to tackle fraud. This new investment intends to:

• pursue fraudsters by disrupting their ability to commit fraud and bringing them to justice more quickly;
• block frauds by reducing the number of fraudulent communications that get through to the public; and
• empower people to recognise frauds and report them when fraudulent communications are not blocked.

Whilst there is much to be welcomed in the new Plan, ultimately many of these goals will only be achievable with significant financial backing. In this regard, the Plan is big on promises but sparse on detail. Even in respect of the funding which is referred to in the Plan, it is unclear whether any of this will represent new investment; much seems to be previously allocated or ear-marked funds repackaged for the Plan. With delivery of the Plan being “essential” to many of the UK’s main industries, the absence of sufficient funding undermines many of its overall aims.

The Plan also suffers from being reactive in nature – seeking to solve threats in relation to economic crime which have already left the country on the back-foot. Until the response to economic crime is proactive, seeking to pre-empt new trends and typologies, and well-resourced, there will always be a struggle to deal with it effectively.