Tax enforcers unite against international tax crime: enablers, cryptocurrencies and cybercrime are priorities
Tax authorities in the UK, the USA, Canada, Australia and the Netherlands have joined forces to launch the Joint Chiefs of Global Tax Enforcement, or “J5” alliance against transnational tax crime and money laundering.
The coalition, formed in response to a call to action from the Organisation for Economic Cooperation and Development ("OECD") for countries to do more to tackle the enablers of tax crime, will pool intelligence, expertise and resources, as well as conducting joint investigations and programmes.
The J5 has stated that its initial priorities are tackling professional enablers facilitating offshore tax crime, cybercrime and the threat of cryptocurrencies to tax administrations. It has also identified offshore structures and financial instruments as potential tools of tax crime and money laundering, and therefore as topics of particular interest for the alliance.
To read our full briefing please click here.
House of Lords Select Committee inquiry on the Bribery Act 2010
The House of Lords Select Committee, which was appointed on 17 May 2018, launched its inquiry into the Bribery Act which is examining:
- the effectiveness of the Act;
- whether there has been stricter prosecution of corrupt conduct, a higher conviction rate, and a reduction in such conduct;
- the impact of the Act on SMEs; and
- the use of Deferred Prosecution Agreements in relation to bribery.
The House of Lords published a call for evidence on 20 June 2018, with a deadline for submissions by 31 July 2018. Oral evidence from the following has been published:
- Nicola Hewer, Director of Family and Criminal Justice Policy, Ministry of Justice and Michelle Crotty, Director/Deputy Head of Office, Attorney General’s Office;
- John Penrose MP, the Government's Anti-Corruption Champion; and
- Kathryn Higgs, Director of Business Integrity Programme, Transparency International and Susan Hawley, Policy Director, Corruption Watch.
The Law Society's written response to the same has also been published. Oral evidence sessions will continue in September.
Law Commission consultation on anti-money laundering rules and suspicious activity
The Law Commission has launched a consultation on anti-money laundering legislation and suspicious activity reporting. The consultation reviews the 'consent regime' and 'failure to report' offences contained in Part 7 of the Proceeds of Crime Act 2002 and Part 3 of the Terrorism Act 2000 and proposes a number of amendments to improve the effectiveness of the regime and reduce the number of 'low quality' suspicious activity reports submitted to the National Crime Agency ("NCA"). This is an important consultation, particularly for firms in the regulated sector, with changes proposed, for example, to the 'suspicion' reporting threshold, as well as to address common issues arising from fungibility considerations. All responses to the consultation are requested by 5 October 2018.
SRA report finds increasing reports of money laundering, cyber-crime and suspicious investment schemes
The Solicitors Regulation Authority ("SRA") has published its Risk Outlook for 2018/19 which sets out what the SRA believes are the risks and challenges faced by law firms. The report also contains 10 priority risks highlighted by the SRA for all law firms and solicitors to consider.
The report highlights the following:
- data which suggests that criminals are increasingly targeting law firms as a means to steal money from businesses and the wider public;
- data which suggests that money laundering involving law firms has risen by two thirds since 2016, with 60 cases reported to the SRA in Q1 2018, in comparison to the 36 cases reported in Q4 2016; and
- reports of cybercrime increasing 50% year-on-year with a record level of 157 reports in 2017. These cases have brought the total reported client money stolen by cyber criminals to more than £20 million in just two years.
To read the full report, please click here.
NCSC issues first legal threat report to law firms
The National Cyber Security Centre ("NCSC") has published its first report into the cyber threat to the UK legal sector, which revealed that more than £11 million of client money was stolen by cyber criminals between 2016-17. The report also revealed that 60% of law firms reported an information security incident in this period, which amounted to an increase of almost 20% from the previous year. The report outlines guidance that firms can follow, such as how to defend practices against phishing, reduce the risk of malware infection and taking effective control of supply chains. To help firms further, the NCSC and industry partners have launched the ‘Legal Sector’ group on the free Cyber Information Sharing Platform ("CiSP"), which is a joint industry and government initiative set up to exchange cyber threat information in real time, in a secure, confidential and dynamic environment, increasing situational awareness and reducing the impact on UK business.
NCA awarded over £8 million in fight to tackle serious and organised crime
The NCA has been awarded more than £8 million as part of the Police Transformation Fund ("PTF") in which the Home Secretary has approved up to £70 million in 2018/19 to boost law enforcement’s capacity to deal with major threats. The NCA-led projects that will receive funding include the National Economic Crime Centre ("NECC"), the National Assessment Centre ("NAC") and the National Data Exploitation Centre ("NDEC"). The NDEC has been awarded £4 million, the NECC £1.5 million and the NAC £500,000. £2.2 million has also been awarded to tackle child sexual abuse and exploitation.
NCA publishes annual report
The NCA has published its annual report and accounts for 2017-2018 which sets out the successes the agency has enjoyed in the fight against serious and organised crime in that period. This includes, successfully restraining £301.7 million and freezing £44.4 million in assets.
In the report the NCA makes reference to its successes in tackling money launderers, including:
- A bank employee who abused his position of trust by setting up 105 sham bank accounts for two money launderers, who was jailed for six years and four months in December for his role in a conspiracy to launder over £2.5 million; and
- A group of money launderers, working for a drug trafficking gang, which paid more than £1.8 million of illicit funds into London high street banks in a period of just over two weeks. In November, a member of the gang was convicted of four counts of money laundering and imprisoned for six years and three months. A confiscation order will be pursued to strip her of her assets.
The NCA also makes reference to work related to fraud, economic and cyber crime, noting that at year-end, the value of assets restrained in the UK and overseas as a result of activity by the International Corruption Unit exceeded £683 million, while the cumulative amount of assets confiscated exceeds £55 million. For the full report, please click here.
FATF objectives for 2018/2019
The Financial Action Task Force ("FATF") has published its objectives for 2018/2019 under the US Presidency, held by Mr Marshall Billingslea as of 1 July 2018. Mr Billingslea has succeeded Mr Santiago Otamendi of Argentina and his presidency will last until June 2019. Under US leadership the FATF will:
- enhance its work on preventing the financing of the proliferation of weapons of mass destruction;
- maintain its emphasis on combating terrorist financing;
- take further action on virtual currencies, in light of their expansion and attractiveness as a payment method for illicit actors; and
- continue to focus on financial and regulatory technologies, private sector outreach, and capacity-building at FATF-style regional bodies.
FATF report on tackling professional money laundering
The FATF has published a report on the techniques and tools used by professional money launderers. The report identifies the key characteristics of an individual professional money launderer, the professional money laundering organisation and the professional money laundering network of associates and contacts that work together to facilitate money laundering. The report also identifies the various roles and functions that are necessary to operate a professional money laundering 'business' using case studies.
FATF fourth round of AML/CTF mutual evaluations
In July, the FATF conducted its mutual evaluations: peer reviews of FATF member countries to assess how effectively AML/CTF measures are working in practice and how well member countries have implemented the technical requirements of the FATF Recommendations. The procedures for the mutual evaluations can be found here. The results of the evaluations can be accessed here.