Money laundering campaigners hail £100m ‘economic crime’ levy

Money will be used for law enforcement technology and hiring investigators

A £100m levy on companies to combat money laundering has been backed by campaigners concerned Britain is falling behind in the fight against illicit financing. Chancellor Rishi Sunak confirmed plans in the Budget to supplement public sector funding with a charge paid by all groups that are subject to UK Money Laundering Regulations, which include banks, accountants, estate agents and solicitors.

The levy, which will be used for new technology for law enforcement and hiring more financial investigators, will help enact measures in the latest Economic Crime Plan unveiled by the National Crime Agency in July. The agency’s crime plan aims to crack down on illicit financial flows by coordinating efforts between the public and private sector. The NCA puts the cost of money laundering to the UK economy at £100bn a year, which has led to fears the country is falling behind in the fight to curb illicit financial flows. Michael Harris, director of financial crime compliance at consultant LexisNexis Risk Solutions, said the “economic crime levy is very welcome”. The Financial Intelligence Unit, which gathers information about suspicious activity, and the NCA had, until now, been “left behind”, he said. Susan Hawley, director of campaign group Spotlight on Corruption, said: “Given the role that banks and other professions in the City of London play in making the UK such an attractive hub for illicit finance, it’s right that they should all contribute financially to the fight against economic crime.” The annual levy, expected to raise £100m, is on top of the current NCA budget of £478m.

The Economic Crime Plan included measures to bring cryptoasset businesses under anti-money laundering rules and improving the sharing of information between agencies. However, the plan stops short of overhauling corporate criminal liability to make it easier to prosecute companies for economic crimes. NCA director-general Graeme Biggar suggested the proceeds could fund additional investigations. “It should enable us to build on the ever closer joint work with the private sector and regulators to improve the way we identify and stop illicit finance and investigate and prosecute those behind it,” he said. But some stressed that the money from the levy should be spent on hiring prosecutors.

Alun Milford, criminal litigation partner at Kingsley Napley, said the priority should be a “proper functioning court service to deal with money laundering and fraud cases effectively”. He warned that spending on technology and investigators would only address “one piece of the puzzle”. Other critics warned the levy would heap more pressure on business on top of existing and recently updated regulations targeted towards tackling illicit financial flows, such as the UK’s adoption of fresh EU money laundering rules in January. Lawyers at WilmerHale said: “The government must be careful to ensure that this is not just another tax on the financial services sector and law firms, the proceeds of which are distributed in an opaque and unfocused manner.” Under the Economic Crime Plan, an extra £48m was already due to be spent on better use of data to target fraudsters and those laundering money. Banks had also committed to invest more in improving the reporting of suspicious activity, with Barclays, HSBC, Lloyds Banking Group, Nationwide, Royal Bank of Scotland and Santander UK committing £6.5m in 2019-20 and the Home Office adding £3.5m. The Treasury will consult further on the levy later in the spring.

Source: FT