What is the UK's second Economic Crime Plan seeking to achieve?
Published on 13th Apr 2023
Is the government's outcome-focused plan ambitious enough?
On 30 March 2023, after a nine-month delay, the UK government published the Economic Crime Plan 2: 2023-2026 (ECP2) intending to build on the first Economic Crime Plan, 2019-2022 (published in 2019) by "delivering real-world outcomes to cut crime, protect our national security, and support the UK’s legitimate economic growth and competitiveness".
ECP2, aims to recover an extra £1 billion in criminal assets over the next decade (£100 million per year). The plan will be funded from money paid for the Economic Crime Levy by anti-money laundering-regulated firms and by government investment. However, the funding for the measure has been criticised for not apparently allocating new government investment, with fears that government monies will not match those of the private sector. ECP2 will sit alongside the government's forthcoming anti-corruption strategy and above the forthcoming fraud strategy.
The first Economic Crime Plan set out a requirement for the public and private sectors to, amongst other things, "jointly deliver a holistic plan that defends the UK against economic crime". ECP2 is intended to build on this partnership and direct greater focus on impacts and outcomes in order to cut crime; protect national security and support the UK's economic growth.
ECP2 has three main, tangible outcomes:
- Reduce money laundering and recover more criminal assets.
- Combat kleptocracy and drive down sanctions evasion.
- Cut fraud.
The government has proposed six key points to help achieve these outcomes, including the appointment of 475 new financial crime investigators, a reform of the UK's supervisory regime and new state of the art technology. The outcomes are intended to address the UK's economic losses due to money laundering, illicit cryptoasset transactions, fraud and sanctions evasion.
Estimated losses in the UK
ECP2 sets out the following figures in relation to estimated losses in the UK due to money laundering, cryptoassets and fraud:
- Over £110 billion is laundered through and within the UK or UK-registered companies. A national risk assessment states that the scale of the threat of money laundering is growing and becoming more complex, with technology being used for communication, hiding crimes and hiding profits.
- At least £1.24 billion (1% of total cryptoasset transaction value) related to illicit cryptoasset transactions.
- Fraud accounted for 41% of all crime experienced by adults in England and Wales in the year ending September 2022, and 18% of UK businesses were victims on fraud in the three years prior to the 2020 Economic Crime Survey.
The government has confirmed that the plan is applicable to the entire UK, except where devolved governments hold different responses to economic crime (that is, in Scotland and Northern Ireland).
Osborne Clarke comment
ECP2, while a step in the right direction towards reducing financial crime in the UK, appears largely reactive rather than pro-active. The plan is based on previous years' figures, rather than anticipated future crime. It does not seek to pre-empt new trends or establish how the government might deal with new methods or trends of economic crime that emerge in the three years the plan will be in place.
Given the scale of losses known to result from fraud, the aim of recovering only £100 million per year in criminal assets might be considered modest. However, perhaps most worrying is the risk that, for all its worthy intentions, ECP2 may not have new government funding to assist in the fight against economic crime.