The House of Commons Treasury Select Committee ("the Committee") has published a report on economic crime in the UK ("the Report"). The Report makes recommendations in relation to what is described as "the upward trend" in economic crime, such as bribery, fraud, tax evasion and money laundering.
The Report comes amid public debate about the scale of, and response to, frauds carried out in relation to financial support provided by the UK Government during the COVID-19 pandemic. The Treasury recently disputed reports that COVID frauds were being written off, and undertook to work closely with the National Crime Agency in investigating fraud concerns. The Treasury pointed out that 13 people had already been arrested in connection with allegations of fraudulent use of the COVID-19 "Bounceback" Scheme.
Economic Crime Plan – the need to "push harder and act faster"
The Report is critical of the UK Government's existing approach to economic crime, as set out in its Economic Crime Plan. The Report suggests that the UK Government should bring forward new legislation in order to "push harder and act faster to reduce fraud and economic crime across a range of policy areas". The Report also recommends the Government considers whether responsibility for responding to economic crime should be centralised in a single department.
Law enforcement – the need to make financial crime enforcement a "priority"
The Committee considered that economic crime seemed "not to be a priority" for law enforcement. The Report describes the number of agencies responsible for fighting economic crime as "bewildering". As well as a need for appropriate resourcing for law enforcement, the Report recommends that the Government considers whether a single law enforcement agency should now be tasked with fighting economic crime, instead of the current divide of responsibility across multiple agencies.
Anti-money laundering – the need for "radical reforms"
The Committee recommended that the Government consider "radical reforms" to the anti-money laundering ("AML") system, including a move away from the self-regulatory model, under which professional bodies have principal responsibility for supervising compliance with AML obligations within their own sector.
While the Committee welcomed the decision to make cryptoasset firms the subject of AML regulations since 2020, it considered it unacceptable that so many firms remained unregistered.
Take away comments
Addressing the ongoing rise of economic crime is a key priority for the UK Government. The Report recommends a variety of initiatives to tackle the increasing instances of bribery, fraud, tax evasion and money laundering.
It will now be for the UK Government to consider the Report and to decide which recommendations to implement.
Our experience is that UK specialist regulators are currently prioritising the investigation and prosecution of financial crime. We can expect the Treasury Select Committee report to add momentum to that effort.
For further information, please contact Paul Marshall, Ramsay Hall, Tony Convery or your usual Brodies contact.
