The UK's Economic Crime Plan is here - what is in store for the next three years?

After a nine month delay, the Home Secretary announced the UK’s second Economic Crime Plan (2023-2026) yesterday. The three-year Plan sets out the UK’s strategy and commitments for tackling economic crime (including money laundering, fraud, kleptocracy and sanctions evasion) while protecting national security and supporting long-term competitiveness and economic growth.

The Plan highlights the eyewatering extent of the problem: every year an estimated £100 billion in criminal proceeds are laundered through the UK, with fraud costing the UK an estimated £136 billion, and illicit cryptoasset transactions linked to the UK in 2021 of at least £1.24 billion. The Government’s planned response is an “outcomes-focused approach [which] reflects a shared focus on directing public-private resource towards agreed priorities, to maximise collective, ‘whole-system’ impact.” 

There is no doubt that a unified and coordinated response from government, law enforcement and the private sector is essential, but this is redolent of aims in the first Economic Crime Plan (2019-2022). Progress under that plan was largely in the domain of policy (and some very overdue legislative reform), but converting those efforts into discernible operational change or credible deterrence through enforcement has proved elusive.

Headline points of interest include proposed actions to:

• Boost law enforcement capacity by adding 475 new financial crime investigators, who will be dedicated to tackling money laundering and asset recovery (which includes an uplift of 60 employees for the Crown Prosecution Service).
• Establish a new multi-agency ‘Crypto Cell’ (comprising regulators and law enforcement agencies) to tackle the criminal abuse of crypto assets.
• Expand the ‘Combatting Kleptocracy Cell’ created in July last year to target corrupt elites, their funds, and their enablers, amid ever-growing concern about levels of Russian-linked and kleptocratic proceeds embedded in the UK economy.
• Take a new approach to public- private prioritization, which will include joint priorities and directing public-private resources towards priority areas.
• Invest in state-of-the-art technology (e.g. advanced data analysis tools) to give law enforcement agencies the intelligence they need.
• Reform the existing supervisory regime, promoting greater information and intelligence sharing.
• Reform the criminal justice system to enhance the ability of prosecutors and the courts to deliver justice in economic crime cases, including by:

• Introducing legislation on the ‘identification doctrine’ so that it applies better to all corporate structures, including large organisations. This follows the Law Commission’s proposal of June 2022 and will no doubt be warmly welcomed by the UK’s authorities. The identification doctrine means that a corporation will generally only be liable for the conduct of a person who had the status and authority to constitute the body’s ‘directing mind and will.’ In multinational organisations and those with complex matrix reporting structures, this can be nigh impossible for prosecutors to prove, and has been a major obstacle in prosecuting corporates for criminal wrongdoing, particularly economic crime, as demonstrated repeatedly in high profile cases in recent years.
• Introducing a ‘failure to prevent fraud by an associated person’ offence into the Economic Crime and Corporate Transparency Bill, which has been making its way through Parliament since last autumn. This new offence is akin to the ‘failure to prevent bribery’ and ‘failure to prevent the facilitation of tax evasion’ corporate offences (in the UK’s Bribery Act and Criminal Finances Act respectively), but seems a small concession given widespread calls over recent years for a more general ‘failure to prevent economic crime’ offence, which would arguably have a much greater impact on economic crime. 

The elephant in the room is resourcing, which is critical to increasing the UK’s effectiveness in addressing the threat of illicit finance. The announcement and Plan made much of the fact that the Government is committing £400 million in additional investment to tackle economic crime over the period, but in truth only 50% of that is government investment – the remaining 50% will come from the private sector through the recently introduced Economic Crime (Anti-Money Laundering) Levy.

While the Government makes a vague commitment to “explore and assess options” to reinvest suspected criminal funds held frozen in suspense accounts across the private sector in order to boost resources as part of a sustainable funding model, there is little detail and arguably little comfort there.  After decades of under-resourcing economic crime enforcement, and in the face of a truly global, multi-billion pound threat that spans sectors and typologies and is evolving ever more rapidly with advances in technology, the proposed extra £400m budget and 475 financial crime investigators seems woefully inadequate. The UK is bringing an extra toothpick to the gun fight.

What you won’t find in the Plan is detail. Nor will you find the long overdue Fraud Strategy, which is expected only later this year. We will need to watch and wait for signs that more tangible impact will come out of this Plan than we saw from its predecessor.

You can find the Economic Crime Plan (2023-2026) here.

I also discussed the Plan with the Wall Street Journal for their article, here.