UK Working On Economic Crime Plan 2.0

May 3, 2022
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The UK government is in the process of creating a second Economic Crime Plan, which may include Companies House reform but will not consolidate anti-fraud enforcement into the hands of a single body.

The UK government is in the process of creating a second Economic Crime Plan, which may include Companies House reform but will not consolidate anti-fraud enforcement into the hands of a single body.

Earlier this month, the Treasury Committee published responses from the government, the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) to the committee’s report on economic crime.

The report, published in February, outlined five recommendations, including the mandatory reimbursement of victims of authorised push payment (APP) fraud.

In its response, HM Treasury has now confirmed that it will legislate “at the earliest opportunity” to address barriers that currently prevent the PSR from making APP fraud reimbursements mandatory.

In anticipation of legislation, the PSR said it has already developed proposals that require payment firms to reimburse APP scam victims and will publicly announce its approach in the autumn.

The committee report also urged the government to introduce coordinated crypto-asset regulation, reform the Companies House, legislate against online fraudulent adverts in the Online Safety Bill, and consider whether a single law enforcement agency could be better positioned to fight economic crime.

HM Treasury has now said the government’s new legislation, which is planned in the third session of this parliament, will deliver “fundamental reform” of Companies House, enhanced information sharing powers to give businesses more confidence to share information on suspected money laundering, and new powers to seize crypto-assets from criminals.

However, it cautioned that “[w]hile the government is preparing the Economic Crime and Corporate Transparency Bill at pace, more time is needed [for these initiatives] as it will feature substantial changes to UK company and partnership law, which we need to get right”.

It stressed that the reforms to Companies House amount to the largest change to the UK’s system of setting up and operating companies since the companies’ register was created more than 170 years ago.

In its submission, HM Treasury also revealed that the Economic Crime Plan is monitored “at the most senior levels” of government. The government is working on a second plan to tackle crime and will also publish a ten-year Fraud Strategy later this year.

“Delivery of the actions from the first Economic Crime Plan has played an important role in the UK’s fight against economic crime,” the treasury stresses.

“However, the threat posed by economic crime is constantly evolving. Therefore, at the most recent Economic Crime Strategic Board the Home Office and HM Treasury proposed a second iteration of the plan.”

At the same time, HM Treasury dismissed the proposal of a single government department with all responsibilities involving financial crime enforcement.

“A single departmental approach would, in the government’s view, undermine our efforts to tackle holistically the challenge that economic crime presents,“ it said.

Regarding fraudulent advertising, the government announced a new standalone duty in early March, requiring firms to tackle fraudulent advertising as part of the Online Safety Bill.

“For the first time, companies will have to proactively tackle these advertisements. The duty will apply to user-to-user services that have the highest reach such as Facebook, and to search functions like Google,” HM Treasury said.

The February report was part of the Treasury Committee’s inquiry into economic crime, launched in October 2020.

It determined that economic crime is on the rise, with data suggesting that there was a 43 percent increase in fraud and computer misuse crimes in 2021 compared with 2019. The importance and urgency of tackling financial crime then became even more pressing after Russia’s invasion of Ukraine.

As part of the government’s efforts to close loopholes in the UK regime, it passed the Economic Crime Act on March 15. The act establishes a register of foreign entities’ beneficial ownership of UK property and reforms to the UK’s unexplained wealth orders regime. It also strengthens the Treasury’s ability to take action against financial sanctions breaches and eases ministers’ ability to impose sanctions.

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