On 21 April 2016, the Home Secretary of the UK, Theresa May, announced the publication of the joint Home Office and HM Treasury Action Plan for Anti-Money Laundering (AML) and Counter-Terrorist Finance (CTF). The plan is described as representing the most significant change to the anti-money laundering and terrorist finance regime in over a decade. Three priorities are set out for tackling money-laundering and terrorist-finance and specific actions that are designed to address them are identified.
1. An enhanced law enforcement response to AML/CTF threats
The Action Plan sets out plans for aggressive new legal powers and capabilities in UK law enforcement agencies. These plans are separate and additional to the crossagency taskforce recently announced by the Prime Minister, David Cameron, to investigate evidence of illegal activity in the “Mossack Fonseca” papers (often referred to as the “Panama Papers”).
Specified actions include:
- delivering improvements in intelligence collection capability; the NRA will work with other law enforcement agencies and the private sector, as well as using a more effective suspicious activity reports (SARs) regime to build a better intelligence picture of high-end financial crime;
- ensuring an effective collective multi-agency investigation response by drawing on private sector expertise, to target the most complex high-end money laundering cases;
- creating a programme to up-skill intelligence, analytical, investigative and legal staff to take on complex money laundering cases;
- establishing a more sustainable funding model for Regional Asset Recovery Teams;
- exploring new powers to tackle money laundering more effectively where the predicate offence is committed overseas; the UK Government will consider whether unexplained wealth orders (which require individuals to explain the origin of assets), a new forfeiture power for assets whose origin cannot be satisfactorily explained, the ability to designate entities as being of ‘primary money laundering concern’ and forfeiture powers in instances where no criminal conviction has been reached should be implemented in the UK; and
- reducing vulnerabilities and closing loopholes that can be exploited by terrorists by raising the maximum sentence for financial crime from two to seven years, introducing deferred prosecution agreements, serious crime prevention orders and monetary penalties for breaches of financial sanctions prohibitions, and establishing an Office of Financial Sanctions.
2. Reform of the supervisory regime
The Government wants to encourage a proportionate risk-based approach to tackling financial crime, focusing on the highest risks without troubling low risk clients with unnecessary red-tape. The Action Plan includes a call for evidence on the reforms to the AML supervisory regime, addressing risk assessment methodologies and data sharing, supervisory accountability, penalties and enforcement and the number of supervisory bodies, amongst others (for further detail please see HM Treasury Publishes Consultation on the Aml Supervisory Regime). The feedback from this call for evidence will inform the review of the supervisory regime and the reforms that will follow.
3. Extend the international reach of law enforcement
To improve the UK’s ability to tackle AML/CTF threats overseas, the Government sets out plans to continue to work through international groups such as the G20 and Financial Action Taskforce and other international partners to encourage greater international cooperation. The following steps are to be taken:
- creating new NCA International Liaison Officer posts in jurisdictions important to money laundering and terrorist finance, the NCA will work with other UK law enforcement agencies with posts overseas to ensure a consistent approach;
- developing a new approach for cross-border information sharing between both private sector firms and Government entities;
- delivering training to, and sharing expertise with, key overseas partners to help them build their capacity and capability to investigate and combat the financing of terrorism;
- continuing to support Counter-ISIL Finance Group efforts to degrade Daesh finances alongside other EU member states and action at the UN; and
- supporting charities operating in difficult environments overseas to mitigate the risk of their funds being abused for terrorist purposes.
Engagement with the private sector
Underpinning these three key priorities is a new approach to engaging with the private sector with a view to improving information flows between law enforcement agencies, supervisors and the private sector. The Action Plan outlines that reform of the Suspicious Activity Reports (SARs) regime, and building on the work of the Joint Money Laundering Intelligence Taskforce (JMLIT) will be the key tools for bringing about the necessary changes.
Key reforms proposed to the SARs regime include:
- re-focusing the regime to focus on tackling the highest risk entities and individuals rather than targeting transactions;
- considering whether the consent regime (a defence to the obligation to report suspicious activity, available where the Financial Intelligence Unit (FIU) has consented to the transaction) could be replaced by intelligence-led information sharing by the JMLIT;
- implementing a new SARs IT system;
- developing better capabilities for analysis of SARs; and
- considering reforms to legislation to permit the sharing of information, under legal safe harbour, on money laundering and terrorist financing risks.
Further proposed actions in relation to private sector engagement include:
- expanding the capability and membership of the JMLIT and considering how the taskforce approach could be developed in other reporting sectors;
- creating a register of banks’ particular business specialisms and make it available to JMLIT to ensure relevant expertise can be brought into JMLIT when needed;
- exploring legislation for better information sharing between law enforcement agencies and the private sector and between private sector entities through the introduction of safe harbour information sharing powers; and
- developing public-private partnerships to run sector specific “Prevent” campaigns to raise awareness amongst professionals and consumers of financial crime risks.