The government has set out six prioities for action to tackle corruption in the UK and abroad over the next five years.
The UK government has announced its new anti-corruption strategy, which provides a framework to guide UK government action to tackle corruption over the next five years. The Prime Minister’s newly appointed Anti-Corruption Champion, John Penrose MP, will be responsible for challenging and supporting the government in implementing the strategy, as well as promoting the UK’s response to corruption both domestically and internationally.
The strategy sets out six priorities:
- reduce the insider threat in high risk domestic sectors (borders, prisons, policing and defence)
- strengthen the integrity of the UK as an international financial centre
- promote integrity across the public and private sectors
- reduce corruption in public procurement and grants
- improve the business environment globally, and
- work with other countries to combat corruption.
Below, we highlight certain goals under those priorities which are of most relevance to businesses.
Strengthening the integrity of the UK as an international financial centre
1. Greater transparency over who owns and controls companies and other legal entities:
In order to deliver on this goal, the government has committed to publish a draft bill in this session of Parliament for the establishment of a public register of beneficial ownership of overseas legal entities. It will require them to provide this information when they own or purchase property in the UK or are participating in central government contracts. By identifying the owners and controllers of overseas legal entities that own property in the UK, the Government hopes to increase transparency and trust in the UK property market as well as support law enforcement in their investigations.
Although there is no firm commitment, the Government has undertaken to work with the UK’s Overseas Territories and Crown Dependencies as they implement their commitments under the 2016 arrangements for the sharing of beneficial ownership information. It is perhaps surprising not to see a firmer commitment on this following the Paradise Papers leak and subsequent renewed calls for implementation earlier this year.
2. Stronger law enforcement, prosecutorial and criminal justice action:
This will involve establishing a new Minister for Economic Crime in the Home Office and a National Economic Crime Centre, based in the National Crime Agency, with staff from across government and the private sector, to improve the intelligence picture on economic crime; task and coordinate the overall law enforcement response; and increase the UK’s ability to investigate high-end economic crime.
The Government will consider the findings of the Call For Evidence that in January 2017 proposed extending corporate criminal liability beyond bribery and tax evasion to wider economic crimes. The strategy states that “if appropriate we will consult on how new offences might be introduced”. This is the only reference to extending corporate criminal liability in the strategy which some commentators have found disappointing.
With regard to sanctions, more ambiguous goals have been set including continuing to support the Office of Financial Sanctions Implementation (OFSI) in imposing monetary penalties for financial sanctions breaches and increasing industry and general public awareness of financial sanctions to prevent breaches; including awareness of industry’s reporting obligations to OFSI. Without specific objectives being set out it is hard to see how this will be scrutinised.
3. Enhanced anti-money laundering and counter-terrorist financing capability:
Under this goal, reference is made to working with supervisors to fully embed the new Money Laundering Regulations that were introduced in June 2017 but the strategy does not go on to mention the fifth money laundering directive.
The Government confirms that the new Office for Professional Body Anti-Money Laundering supervision (OPBAS), hosted by the Financial Conduct Authority, will be fully operational by the beginning of 2018.
4. Stronger public-private partnership, to share information and improve targeting of those who pose greatest risk:
Central to this goal are reforms to the Suspicious Activity Reports (SARs) regime to improve feedback between law enforcement and reporters, focus efforts on the highest risk and enhance the intelligence value of SARs. This will include upgrading capabilities (including IT) and making necessary legislative, operational and technical changes that are not set out in any detail in the strategy.
Improving the business environment globally
The UK government will seek to support other countries in their implementation of international anti-corruption and anti-bribery standards. This will include assisting the relevant G20 and G7 groups aiming to eliminate corruption.
One significant focus of the government’s future efforts as the UK develops its position as an independent trading nation, will be how transparency and anti-corruption can best be supported through bilateral and regional trade dialogues and trading agreements. This will include capacity building and technical assistance aimed at developing robust legislation and transparency standards, promotion of e-procurement platforms, and reducing corruption at ports and border points. This will be delivered through UK government programmes.
The government is aiming for increased investment by UK companies in challenging overseas markets. To support this goal they will provide training and resources that improve the awareness and understanding of corruption amongst UK embassy staff. This will include up-to-date guidance on how to report offences under the UK Bribery Act to law enforcement and guidance on how to promote standards of trade integrity.
At a high level these aims are laudable, however, it is unclear how much time and effort the government will be able to expend on creating transparent trading relationships when so much time will necessarily be devoted to resetting or establishing trading relationships as an independent nation.
Working with other countries to combat corruption
One of the key goals is enhanced international transparency, especially in beneficial ownership, extractives, public finance and contracting. Much of the work to deliver on this goal will be in supporting existing initiatives such as championing the Extractive Industries Transparency Initiative (EITI), supporting countries to implement their commitments on company beneficial ownership transparency - such as by establishing national beneficial ownership registers or by subscribing to the Open Ownership Register and assisting and encouraging countries to implement a requirement for beneficial ownership disclosure in their public procurement.
Implementation of the strategy
We can expect to see progress updates on the GOV UK website and, in addition to ministerial oversight of implementation, the Home Office will provide an annual written update to Parliament on progress against the strategy. This will allow Parliament to scrutinise progress, though this will not be a simple task when the strategy has deliberately taken a wide perspective in many areas. However, hopefully some of the more specific priorities highlighted above should be easier to measure success against.