The Serious Organised Crime Strategy: The foundation for effectively fighting financial crime?

29th January 2019 Business Crime

The Economic Crime Strategic Board (‘ECSB’)

The new Economic Crime Strategic Board (‘ECSB’) held its first meeting on 14 January 2019, and was co-chaired by The Home Secretary Sajid Javid and Chancellor of the Exchequer, Philip Hammond. It was formed to prioritise, mange effective resourcing and assess the performance of direct resources and to “scrutinise performance against the economic crime threat„.

The ECSB is a key component of the SOC Strategy (which is detailed in a November 2018 Home Office document). A recurring theme in the Strategy document is the need for a joint approach from both public and private partners.

The problem and the current regime

In a Home Office press release published on 14 January 2019, it was estimated that the scale of economic crime (encompassing fraud, bribery, corruption and money laundering) is around £14.3 billion annually.

In order to identify these potential crimes, members of the regulated sectors, including the banking, accountancy, legal and property sectors must report suspicions about potential money laundering and terrorist financing to the National Crime Agency (NCA). To report such a suspicion, they create a SAR (suspicious activity report).

The number of SARs reports rose by around 10% to 463,938 during 2017-18. It was initially estimated that the annual number of SARs would be round 20,000. The key contributing factor for the enormous number of SARs is the criminal liability attaching to Money Laundering Reporting Officers (MLROs) for a number of offences, including non-reporting. This has led to a non-risk culture within many organisations’ to report everything irrespective of whether there may be valid grounds for not doing so.

The plan

The Home Office has said it will commit £3.5 million in 2019/20 to fund essential work to reform the SAR regime. Further investment has been approved of at least £48 million in both 2019 and 2020 to ramp up law enforcement capabilities to specifically tackle illicit finance.

However, whilst injection of these funds is no doubt a laudable starting point, it is far from certain that it will address the problem in part or at all. Many commentators argue that the MLRO criminal liability should be removed. This would seem like the best viable way forward but it may also pose a risk that very serious organised crimes would go unreported.

The solution is not obvious.

The Strategy

The table below is contained in the SOC Strategy document and sets out the governmental and law enforcement bodies involved in combatting serious and organised crime.

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The ECSB have correctly recognised that this  nfrastructure is not equipped to fight the depth and scale of economic crime. Therefore, the ECSB will include a blend of the above public authorities as well as private sector CEOs and chief executives from the banking institutions Barclays, Lloyds and Santander as well as senior representatives from UK Finance, the National Crime Agency (NCA) and the Solicitors Regulation Authority, Accountants Affinity Group and National Association of Estate Agents.

This PPP (public-private partnership) approach was summarised in the press release by Sajid Javid:

The Government is already investing millions in the fight against economic crime, but it is crucial we work closely with our financial sector partners to win this battle. These criminals threaten the UK’s reputation as a world-leading place to do business and we have a joint responsibility to stop them.„

If you are facing charges of fraud, bribery, corruption and money laundering or any business criminal charges, please do not hesitate to contact me directly or complete the form on this page, and one of JMW’s expert criminal defence lawyers will be in touch.

 

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Mark Grey is a Solicitor in our Business Crime department

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