Economic crime in the UK: A multi-billion pound problem

The precise scale of economic crime in the UK is unknown, but it could run to tens or hundreds of billions of pounds per year. The extent of these crimes – which include money laundering, fraud and corruption – led the Intelligence and Security Select Committee in its July 2020 report on Russia to note that London is considered a ‘laundromat’ for corrupt money.

In December 2019 the Treasury Committee found various regulatory and legislative failings in the way in which these crimes are being tackled. It urged the Government to make improvements to the supervisory system and to introduce new powers to combat economic crime. A February 2022 Treasury Committee follow-up report concluded that the Government was still not prioritising economic crime sufficiently.

In 2019 The Financial Action Task Force (the global money laundering and terrorist financing watchdog) praised the UK’s efforts on the issue, but also found failings and identified a lack of resources for investigating these crimes.

The Economic Crime Plan

The Government agrees about the need to tackle economic crime, which it says causes “much harm to individuals and communities, and damage to legitimate business and the UK’s reputation.” It set out its overall approach to tackling the issue in its July 2019 Economic Crime Plan. The Plan covers the years 2019-2022 and draws together all the work being conducted by the public and private sector.

A number of the 52 actions contained in the plan may involve future legislative reforms, including changes to:

• the Proceeds of Crime Act to improve the way in which the proceeds of crime can be confiscated;
• corporate criminal liability, to punish and prevent economic crimes when committed on behalf of or in the name of companies;
• block company stock exchange listings on national security grounds;
• improve transparency over UK property ownership; and
• Companies House powers to enable it strike off from its register dissolved or inactive limited partnerships.

Progress with the Plan

In February 2022, the Royal United Services Institute said that 40% of actions in the Plan had been completed, 17% were in progress, 23% were overdue, and 19% of actions had no due date. The Government says it is “on course to deliver 49 of the 52 actions” in the Plan. The Treasury Committee has recommended that the Plan be adapted and renewed for a further three years.

Other action

The September 2020 leak of the FinCEN papers, the October 2021 leak of the Pandora Papers, and the February 2022 Russian invasion of Ukraine put a spotlight on the scale of economic crime in the UK (and especially London).

In response to the Russian invasion of Ukraine, the Government fast-tracked the passage of the Economic Crime (Transparency and Enforcement) Act 2022 to combat the flow of illicit finance into London with three main measures (including establish a Register of Overseas Entities owning UK property – see our briefing on the Act for more detail). The Government also announced the formation of a new dedicated ‘kleptocracy’ cell in the National Crime Agency to target sanctions evasion.

The Government has committed to introduce a further economic crime bill in the upcoming (2022-23) parliamentary session. Home Secretary Priti Patel said it would be a “very substantial piece of legislation” including reform of Companies House (following publication of a recent White Paper) and limited partnerships, powers to seize crypto-assets from criminals, and information sharing on money laundering.