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Government Makes Progress in Economic Crime Fight with New Initiatives

In an effort to combat economic crime and money laundering, the government is pushing ahead with a range of initiatives aimed at enhancing transparency and enforcement.

Introducing the Economic Crime (Transparency and Enforcement) Act

The latest development comes in the form of the Economic Crime (Transparency and Enforcement) Act, which introduces a new “Register of Overseas Entities Beneficial Ownership of UK Property” designed to combat foreign criminals using UK property to launder money. The legislation also reforms the Unexplained Wealth Orders regime to improve key barriers faced by law enforcement agencies.

Forthcoming Economic Crime and Corporate Transparency Bill

Additionally, the forthcoming Economic Crime and Corporate Transparency Bill is expected to bring significant reforms to Companies House, prevent abuse of limited partnerships, grant new powers to seize cryptoassets from criminals, and give businesses more confidence to share information on suspected money laundering.

Treasury Select Committee Report

In February 2022, the Treasury Select Committee published a report on its inquiry into economic crime, which reviewed the government’s progress in combating economic crime since its previous inquiry in 2020. The report made several recommendations for future reform of the UK’s anti-money laundering (AML) regime and supervisory approach.

Post-Implementation Review

The Post-Implementation Review (PIR) of the Money Laundering Regulations (MLRs) has also been published, assessing the extent to which the MLRs have been successful in meeting their policy intent. The review found that while there have been some improvements, there are still continuing deficiencies in ML/TF risk assessment and understanding across the regulated sector.

Specific Deficiencies

The PIR highlighted specific deficiencies in the application of risk mitigating measures by the private sector, with supervisors noting inadequate customer due diligence or policies, controls, and procedures as a common failing identified through their supervision.

OPBAS Regulations PIR

The PIR of the OPBAS Regulations considered the implementation and effectiveness of the regulations and the activity they require of supervisors. The review found that while there have been some improvements in the supervision regime, there is still more to be done to ensure a robust and consistently high standard of supervision by professional body AML supervisors.

The Way Forward

Informed by the Call for Evidence, the government has identified key areas for improvement, including large overarching areas such as the risk-based approach and the objectives of the MLRs, as well as specific areas such as the gatekeeping test or guidance drafting process. The report sets out the key findings on barriers and difficulties in the way of a more effective AML regime and the government’s initial views on what changes need to be made.

Conclusion

Overall, the government’s latest initiatives demonstrate its commitment to tackling economic crime and money laundering, with a focus on enhancing transparency and enforcement to prevent these illegal activities from damaging the economy.