Addressing the Effects of Economic Crime: Turning Vision into Strategy

Courtesy of Images_of_Money / Creative Commons / CC BY 2.0

Dirty money undermines trust and confidence in democracy and damages the UK’s reputation. How should the government respond?

Fighting economic crime should not be a political issue, nor something that divides political opinion. Economic crime – from fraud against an individual, to professional service providers that abuse their trusted position to launder the proceeds of corruption, kleptocracy and money used to subvert democracy – should be a unifying foe.

Yet in the UK, despite repeated reports revealing the country’s role in facilitating global money laundering, and despite the work of policymakers, civil society, investigative journalists and concerned citizens, the steps needed to strengthen the country’s response to economic crime – and to demonstrate that its leadership is serious about tackling the entirely warranted reputation that ‘Britain is Great’ for economic crime – elude the current political leadership. Take, for example, the stance of Chancellor Rishi Sunak on the BBC’s flagship Radio 4 Today programme the morning after the release of the Pandora Papers, the latest leak to reveal the parlous state of the response to global money laundering. He reminded listeners that ‘the independent global body FATF (the Financial Action Task Force) said, when they last looked at [the UK’s response to money laundering] in 2018, that we were probably one of the world’s best places to tackle money laundering’. Is ‘probably the best’ sufficient in a field where the UK’s fingerprints are so regularly found on money laundering schemes? As David Lewis, the outgoing executive secretary of the FATF, has acknowledged, ‘everyone is doing badly, but some are doing less badly than others’. There is no place for complacency.

But don’t just take our word for it. Over the past two months, RUSI’s Centre for Financial Crime and Security Studies has produced a series of videos featuring the perspectives of politicians, journalists and lawyers. For example, this is the view of journalist and author Edward Lucas, who has recently announced that he will be standing for the Liberal Democrats in the next UK general election in a constituency that covers the City of London, of the economic crime challenge the UK faces.

So, what’s to be done? Across the spectrum, the consensus is clear. Firstly, we need better transparency and accountability to ensure the UK does not lose (if it has not done so already) its reputation as a trusted jurisdiction. Dame Margaret Hodge MP, a long-time campaigner for reform of the UK system for fighting economic crime, shares her views and makes the case for corporate transparency reform.

A critical element of ensuring accountability is guaranteeing that both supervision and enforcement match the scale of the challenge. Alison Thewliss MP argues that if we are going to stop people getting away with money laundering, then we must fill the holes in the UK’s patchwork of supervisors and empower Companies House to verify the information it receives when companies are registered.

The private sector also has a role to play in boosting the UK’s response to economic crime. This means not just ensuring all elements of the regulated community meet their obligations to prevent money laundering, but also actively supporting the law enforcement response by exploiting the information it holds. This approach is not without its challenges, but, as Karen Baxter of UK Finance argues, if the UK government wants to deliver its economic crime vision then it needs to implement a transformational plan based on a strong legislative framework, cutting-edge technologies, and public collaboration.

Yet even with better transparency, more accountability and an ambitious plan of action, the UK’s response to economic crime will be judged on results, best measured by the extent to which criminal assets are frozen, seized and returned to victims, or invested in further enhancing the UK’s response.

As Michael Bowes QC observes, many of the necessary structures are already in place, yet the visionary leadership necessary to drive forward progress and turn policy into action is absent.

As the UK looks ahead to the renewal of its Economic Crime Plan in 2022, the path forward seems clear: a strategy built on advancing transparency and accountability, that leverages the significant information held in both the public and private sectors, and that focuses on asset recovery and action by both law enforcement and supervisors. What is lacking is the ‘tone from the top’ to make this happen. Is it too much to ask of the prime minister for him to deliver the leadership that is needed?

The views expressed in this Commentary are the authors’, and do not represent those of RUSI or any other institution.

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Tom Keatinge

Director, CFCS

Centre for Financial Crime and Security Studies

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Dr Maria Nizzero

Research Fellow

Centre for Financial Crime and Security Studies

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