News 30th Mar 2023

The 2023 Economic Crime Plan - a review

Rachel Davies Teka

Advocacy Director

Rachel has worked on anti-corruption policy for over a decade, focussing on corruption in the UK and the UK’s role as a safe haven for dirty money. She is Co-Chair of the UK Anti-Corruption Coalition and leads Transparency International's UK advocacy team. She was formerly Chair of the Economic Crime Civil Society Organisations Steering Group (CSOSG) and was a founding member of the UK Open Government Network steering group.

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The UK’s second Economic Crime Plan landed today. Given the scale of the UK’s dirty money problem, you might be wondering, is it any good?

The Plan (which covers the period up until 2026) certainly gives reasons to welcome it, such as its strong framing around tackling kleptocracy, its commitment to ensuring transparency in Britain’s offshore financial centres and a commitment to ambitious reform of anti-money laundering checks in high-risk sectors. These changes are critical to tackling the scourge of corruption enabled and perpetuated by economic crime.

There is, however, room for improvement, both in the Plan itself and the government’s broader economic crime agenda, and these shortfalls should be addressed to prevent them being exploited by criminals and the corrupt.
 

THE GOOD

  • Focus on kleptocracy: The Russian invasion has focused minds on the risks that corruption and kleptocracy presents for global security as well as the UK’s own national and economic security. Expanding the National Crime Agency’s capacity through its Combatting Kleptocracy Cell (CKC) to combat corrupt elites and kleptocrats is a positive step forward.
  • Commitment to transparency in Britain’s Overseas Territories and Crown Dependencies: Illicit finance is a global problem that requires a global solution. With the Crown Dependencies and British Overseas Territories recognised as safe havens for kleptocrats, we welcome the UK’s commitment to support these jurisdictions to introduce their own public company ownership registers this year.
  • Commitment to ambitious reform of the UK’s anti-money laundering supervisory regime: There is mounting evidence that the current regime overseeing AML checks in high-risk sectors such as law and company formation is not fit for purpose:  the regime remains fragmented, inconsistent, and unable to provide a credible deterrent against poor practice. Consolidation and tackling the conflicts of interest associated with professional body supervisors would be a good start.


ROOM FOR IMPROVEMENT

  • Resources: While the commitment to an additional 475 investigators is a positive development, we are concerned this is still insufficient to tackle the problem at hand. Other than the Economic Crime Levy, no further revenue raising powers have been committed too, placing doubt on the sustainability of this funding. Measures such as increasing the price of company incorporation to enable Companies House to have a sustainable self-funding model, would have been welcome.
  • Governance: Overseeing the delivery of the plan and assessing its progress is the Economic Crime Strategic Board (ECSB), made up of senior ministers, and individuals from regulators and the private sector. The failure to appoint an independent representative to the ECSB is a missed opportunity to improve the governance of this Plan. This appointment would increase trust in the system as a whole by warding off any perceptions that those delivering the plan are marking their own homework.  
     

WHAT’S NEXT?

With legislation before Parliament, a new Economic Crime Plan, and political will across parties to confront kleptocracy, the UK has a critical window of opportunity to improve the UK’s safeguards.

Here’s where I think the Government could make the biggest difference in the coming months:

  1. Get Companies House reform right the first time by strengthening the Economic Crime and Corporate Transparency Bill currently before Parliament. We need transparency over control of UK-registered companies and partnerships, the ability for the Registrar to check verification done by third parties, better (and verified) information about shareholders, and transparency over trusts in the Register of Overseas Entities.
     
  2. Improve the Economic Crime Strategy Board by appointing an independent expert and formalising the input of civil society expertise.
     
  3. Overhaul the ineffective anti-money laundering supervisory regime and ensure adequate resourcing for law enforcement to create a credible deterrent to economic crime.

Overall, while the Economic Crime plan marks a positive step in the ongoing fight against corruption and kleptocracy, there is still more to be done. With important legislation currently before the Lords, the Government has an opportunity to seize the momentum this presents and deliver on the ambitions it has set out.