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Clifford Chance

Clifford Chance

Regulatory Investigations and Financial Crime Insights

Expectations of private sector actors in the fight against economic crime

The UK's Economic Crime Plan for 2019-22 places heavy emphasis on new requirements for the private sector in defending against economic crime.

On 12 July 2019, the UK Government, in partnership with UK Finance (a trade association for the banking and financial services sector) published its Economic Crime Plan for 2019 to 2022 (the Plan).

The Government intends to broaden expectations on the private sector in order to defend the UK against the threat of economic crime, albeit in many respects the detail of these new requirements has yet to be developed.

The Plan seeks to expand and enhance the existing public-private information sharing platform developed by the Joint Money Laundering Intelligence Taskforce (JMLIT), calling on the private sector to provide higher quality intelligence, whilst accepting that concerns exist regarding issues such as data protection, privacy and legal professional privilege.

Below we summarise the 7 strategic priority areas where collaboration with the private sector is expected:

1. Participate in collective threat assessments

The National Crime Agency, supported by UK Finance and other public and private sector partners, will undertake joint strategic assessments on economic crime, focusing on priority areas of analysis (initially the property sector and high-risk jurisdictions). This is aimed at developing a better understanding of the threat posed by economic crime and the UK's performance in combatting economic crime.

2. Share information – including potentially overseas

By July 2020, the National Economic Crime Centre (NECC), with support from HM Treasury, will lead the enhancement of the JMLIT. This will include a pilot scheme for international information-sharing to link with foreign public-private initiatives.

3. Implement new legislative developments

The Plan seeks to build on recent legislative developments – including the incorporation of the EU's 4th Money Laundering Directive and the enactment of the Criminal Finances Act 2017 – to create additional powers and tools to enable law enforcement, prosecutors, regulators and the private sector to work together to combat economic crime.
Key points of action include considering legislative changes to improve the Proceeds of Crime Act 2002 and transposition of the EU's 5th Money Laundering Directive (5MLD) into national law by January 2020.

4. Collaborate on technological solutions and skills capabilities

The Government will seek to work with the private sector to identify technological solutions and skill-transfer opportunities to increase efficiency and effectiveness in combatting economic crime.

5. Collaborate with new entrants to the regulated private sector

Legislative changes such as 5MLD and recent recommendations from the Financial Action Task Force (FATF) mean that the UK is in the process of developing a regulatory response to address the risk posed by the use of crypto assets for illicit means. The government intends to exceed the requirements of 5MLD by bringing all crypto asset businesses into AML/CTF regulation in January 2020, appointing the FCA as the supervisor of those firms and imposing new requirements on a greater number of players in the private sector.

6. Report discrepancies in beneficial ownership information

By January 2020, regulated firms within the AML/CTF-regulated sectors will be required to report discrepancies between beneficial ownership information held at Companies House and information obtained through their own compliance checks.

In the wake of recent complex money-laundering operations affecting the UK economy, the Government includes in the Plan the strategic priority to improve the accuracy of information held regarding ultimate ownership and control of UK registered legal entities. This will also act as a response to the FATF recommendation that further improvements be made to the quality of information held at Companies House.

7. Support the priority to prevent the internal flow of illicit finances from outside the UK

As part of the strategic priority of delivering an ambitious international strategy to enhance security, prosperity and the UK’s global influence, the Plan indicates that preventing the internal flow of illicit finances from outside the UK is one of the Government's top priorities. The Government accepts that it is its role to build political will to counter international economic crime, but the Plan also calls on the private sector to provide its support (although it does not detail what such support should entail).

Conclusions for the private sector

There is no doubting the extent of the UK Government's ambitions contained in the Plan and its commitment to becoming a world-leader in combatting economic crime. It is apparent, however, that many of the points of action contained in the Plan are generalised and that there is limited information about how the Government intends to fund their implementation. The support of the private sector in the various areas summarised above is called for, without providing further detail as to what that support will look like.

As the revised deadline for the UK's departure from the EU draws ever nearer and as a new Government is formed under Boris Johnson, there is significant uncertainty – both in terms of Government funding and policy priorities for the coming years. Whether the Government will increasingly look to collaborate with the private sector in order to ease the strain on its own budget and capability remains to be seen, but the Plan certainly indicates that change is in the air.