As long ago as 8 December 2017, the then Home Secretary announced the rebranding of the Minister of State for Security as ‘Minister of State for Security and Economic Crime’. Stating the obvious that ‘economic crime and corruption do great harm to individuals, businesses, the integrity of our financial system and the UK’s international reputation’ and that more must be done on economic crime to safeguard the UK’s reputation as a world-leading place to do business, she promised, amongst other things, that that the government would:
- Establish a new Ministerial Economic Crime Strategic Board (ECSB) chaired by the Home Secretary, to agree strategic priorities across government; ensure resources are allocated to deliver those priorities; and scrutinise performance and impact against the economic crime threat.
- Create a new multi-agency National Economic Crime Centre (NECC) hosted in the National Crime Agency to task and coordinate the law enforcement response, working in the closest possible partnership with the private sector.
It was not until 1 November 2018, when the government announced its new Serious and Organised Crime Strategy (the Strategy), that further details emerged around the NECC. Ben Wallace, the Minister for Security and Economic Crime, explained that preventing criminals from laundering money made from illegal operations such as human and drug trafficking was to be a key element of the new strategy, as part of the government’s focus on cracking down on such illicit finance and the professionals that facilitate it. The publication of the Strategy was timely, in view of the alarming statistic that accompanied it: serious and organised crime is costing the UK economy GBP 37BN per year, and affects more people than all other national security threats combined, including terrorism.
The Strategy contained details setting out the establishment of the NECC, pledging £4.6m funding in support, and explained that the NECC would act as the national authority for the UK’s law enforcement response to economic crime, drawing its operational capabilities from both the public and private sector, with officers from the NCA, HM Revenue and Customers, City of London Police, the Serious Fraud Office, the Financial Conduct Authority and the Home Office. The government has said that it expects that this body of expertise will ensure that the UK’s local, regional, national and international work is driven by a single set of priorities across government, law enforcement, civil society, regulators and the private sector.
Interestingly, the Strategy did not refer to the ESCB and so details surrounding its inception are less clear, but it was announced on Monday that the ESCB would convene for the first time this week. With similar ambitions to the NECC, the ESCB was apparently set up with a view to tackling money laundering, corruption, bribery and wider financial crime. It will meet twice a year under the chair of the current Home Secretary (Sajid Javid) and current Chancellor to the Exchequer (Philip Hammond). Wider participants in the strategy group will include many senior figures across the financial services industry, including those from Lloyds Banking Group, Barclays Bank, Santander Group, the National Crime Agency, Solicitors Regulation Authority, Accountants Affinity Group and National Association of Estate Agents, and representatives from UK Finance.
It seems that one particular focus for the ESCB will be Suspicious Activity Reports (SARs) reform, as presaged in the December 2017 announcement. At the Board’s first meeting, the Home Office pledged £3.5M in funding over the next year to support the review and improvement of the SARs regime. Significant increases in the number of SARs reports received by the NCA in 2017-2018 have been noted with a 10% increase year-on-year to 463,936. There was also a significant increase in requests for a defence against money laundering (so-called ‘consent’ SARs), totalling 22,196 requests, a rise of 20% from the previous year. It was highlighted that government officials are particularly focused on cracking down on money laundering from Russia and other Eastern European countries, Nigeria and Asia.
These two public/private partnership (PPP) initiatives follow the model of previous working groups such as the Joint Money Laundering Intelligence Taskforce (JMLIT) set up in 2015 and are part of a wider global trend towards such arrangements.
The question is whether or not anything will actually change as a result of the establishment of these new bodies. With its high-profile cabinet minister co-chairs, it will be interesting to see whether the ECSB prompts the government to take more ownership for tackling financial crime. In working with a wide range of top-tier industry participants, each of which is facing the daily reality of systemic attempts by criminals to harness their services to facilitate money laundering, fraud, and financial crime, the messaging from the coalface around the challenges in confronting these problems will be harder to ignore. These PPPs no doubt create opportunities for the government to be held, publically, to account. Interestingly, the Board is to be tasked with scrutinising those who are responsible for tackling crime, which may create more of a general culture of accountability. Other of the ESCB’s duties, for example, include creating a strategy to tackle financial crime in the UK and allocating resources in order to deal with financial crime, although what this will mean in practice remains rather opaque. The suggestion these PPPs, with their diverse membership and wide range of participants, will be able to come up with a ‘single set of priorities’ which are anything other than very high-level, feels ambitious.
In all, however, these new developments are to be welcomed; particularly the pledge to achieve SARs reform which is long overdue. But, whilst the creation of these new bodies is a positive step, it will do little to improve the resourcing of the underlying investigations work, without which any strategic planning is bound to be less effective. It may, therefore, be some time before we can measure whether the NECC and the bi-annual meetings of the ESCB are useful tools in the government’s stated aim of ‘cracking down on illicit finance’.