Surviving Contact with the Enemy: The UK’s Economic Crime Plan (2023–2026)

The UK government’s second Economic Crime Plan is welcome, but do enforcement agencies have the arsenal to deliver?

When the UK government’s first ever whole-of-government plan for tackling the myriad harms of economic crime to the UK wrapped up in July 2022, we gave its impact a mixed scorecard. Although the Economic Crime Plan (2019–2022) had been a useful exercise in coalescing the Whitehall machinery behind the cause and driving forward much-needed legislative and regulatory changes, its impact on the threat itself had been limited. In short, while the trenches had been dug and the troops mobilised, no enemy ground had been taken.

Last week saw the launch of the second Economic Crime Plan (2023–2026) (‘ECP2’), setting out how the troops will be deployed against the UK government’s economic crime priorities of reducing money laundering and recovering more criminal assets, combatting kleptocracy and reducing sanctions evasion, and cutting fraud. Preceding this was a much-anticipated announcement of how the Economic Crime Levy, a new £100 million annual financial charge for the regulated sector, will be allocated across different areas of the economic crime response.

With 43 actions spread across these priority areas and the deployment of a number of cross-cutting capabilities, ECP2 certainly appears comprehensive at first glance. But will the Plan, to labour the metaphor, survive contact with the enemy?

Marching in the Right Direction…

At the top level, there is much to be welcomed within ECP2, particularly its prioritisation of a small number of strategic priorities and its focus on outcome – as opposed to output – delivery. More specifically, there are a number of new commitments, which have the potential – if properly implemented – to shift the response to economic crime up a gear.

First, ECP2 recognises the importance of data and information sharing in the fight against economic crime. The Economic Crime and Corporate Transparency Bill, currently working its way through Parliament, goes some way to removing some of the perceived barriers to data sharing between organisations. However, this planned legislation stops short of a wholesale reform of the information-sharing landscape in the UK.

ECP2 places a welcome focus on the threat that the proceeds of kleptocracy and corruption pose to the UK’s national security interests in an evolving geopolitical context

Going further, ECP2 promises bolder information sharing, including in relation to Companies House data, a focus on tackling the scourge of ‘professional enablers’ through better collaboration and information sharing between the public and private sector, and – most importantly – a new Public- Private Economic Crime Data Strategy, which will consider how to ‘review and improve’ how data is used across the system. In addition, £100 million of the Economic Crime Levy over the next three years will go towards investment in ‘state of the art’ technology for law enforcement to better analyse and share data in real time.

Second, ECP2 provides a timetable for the long-promised reform of Anti-Money Laundering (AML) supervision in the UK, with a consultation on the way forward (as promised last year) due out in the summer. In the meantime, and to address some of the immediate issues, £1.2 million of the Economic Crime Levy has been earmarked for ‘surge capacity’ for improving AML supervision.

Third, ECP2 places a welcome focus on the threat that the proceeds of kleptocracy and corruption pose to the UK’s national security interests in an evolving geopolitical context. Importantly, some of the actions in the Plan denote a response that contemplates the different venues through which kleptocrats and malign actors seek to undermine democracy, civil society and the soundness of the UK financial system. Actions include a more considered strategy for tackling so-called ‘enablers’ in the accountancy and legal sectors, and a firm commitment to curbing the use of ‘Strategic Lawsuits Against Public Participation (SLAPPs)’ against journalists. This new national security framing, combined with other strategies – including the upcoming Anti-Corruption Strategy and the recently published Integrated Review Refresh 2023 – sets the tone for a new UK foreign policy stance on this issue.

Fourth, ECP2 places a welcome focus on not just the right actions, but the right people to deliver them. The announcement of the new Economic Crime ‘People and Skills Strategy’ to ‘consider the pipeline, skills and capabilities required for law enforcement to combat Economic Crime’ will play an essential role in ensuring the government can deliver the planned outcomes. In fact, the success of ECP2 will – to an extent – hinge on the ability to develop the cyber, data analytics and financial investigation expertise needed for the future, and on building in professional incentives to stem the haemorrhaging of talent from the public to the private sector following a decade of public-sector salary restraint.

…Wearing Flip-Flops

However, despite the room for optimism and the expansive breadth of ECP2, there are some clear stumbling blocks to success which cannot be disregarded.

With over 3.7 million incidents of fraud reported in the year ended September 2022, more detail is needed about how the government intends to quickly and significantly disrupt the vast criminal ecosystem

First, while ECP2 sets out big ambitions for winning the war on dirty money, the troops seem to be missing in action; with an underwhelming announcement of 475 new staff across the whole landscape of economic crime, this is more of a platoon than a battalion. It is, furthermore, unclear whether these are new positions or a recycling of old announcements, and while the forthcoming Fraud Strategy will likely announce a further (albeit limited) fraud-specific policing cohort, such staffing levels are not enough to reduce a multi-billion-pound, multi-jurisdictional threat like economic crime.

Second, the aforementioned Fraud Strategy and the planned Anti-Corruption Strategy – both of which underpin ECP2 – are also both needed urgently. ECP2 gives us a teaser of what we can anticipate from the Fraud Strategy, but with over 3.7 million incidents of fraud reported in the year ended September 2022, more detail is needed about how the government intends to quickly and significantly disrupt the vast criminal ecosystem.

Finally, the government has scrapped its standalone 29-action Asset Recovery Action Plan, but replaced it with a mere eight actions in ECP2. Quantity does not always equal quality; however, it is unclear whether these actions are a sufficient response at a time when the recovery of assets plundered by kleptocrats and other criminals is at the top of the Financial Action Task Force (FATF)’s agenda.

If the goal is, as ECP2 states, ‘to target corrupt elites primarily through their assets hidden in the UK’, then the UK needs to focus – as we have previously suggested – on moving from temporary sanctions-based asset freezes to criminal justice responses based on ambitious and creative civil and criminal recovery mechanisms, as well as increasing asset recovery resources. While the Economic Crime Levy has promised an allocation of funds to expand the Combatting Kleptocracy Cell, this unit needs to be backed by sustainable, long-term policy and legislative tools.

A War of Attrition

In conclusion, ECP2 contains some of the key building blocks to success – getting the right people in the right places, and giving them the right data and tools. If the forthcoming Fraud and Anti-Corruption strategies plug some of the gaps in resourcing and the asset recovery response, there is a chance this strategy may deliver some meaningful outcomes. However, as it stands, ECP2 might win some battles – but without more troops on the ground, the war will carry on.