News & Insights
Legal professionals have expressed concern that the UK government’s recent proposals to combat financial crime and kleptocracy will not be effective without proper funding. The economic crime plan, announced on the 30th March 2023, has been described as “little more than a symbolic gesture” unless more funding is allocated towards the effort.
There are particular concerns about the impact this could have on the fight against economic crime and kleptocracy, both of which have been identified as significant threats to the UK’s economy. Without sufficient funding, the government’s proposals are unlikely to have a meaningful impact on the problem.
The newly released plan includes a £400 million ($494 million) funding stream over the next three years, with £200 million to be raised through an economic crime levy on the private sector, and the remaining £200 million from existing government investment announced in 2021. However, with no additional funding allocated, lawyers fear that the plan is toothless and that the proposals are unclear. Economic crime is estimated to cost the UK over £100 billion a year, with two-thirds of businesses reporting fraud, corruption or other crime since 2020.
Charles Bott KC, of Mountford Chambers, said the UK’s track record in asset recovery is weak, “These are stale proposals that have not succeeded in the past, and the extra resources are unlikely to make a real difference,” Bott said. “I’d hoped for more, I’m afraid.”
The UK government plans to hire 475 additional financial investigators to combat economic crime, recover £1 billion over the next decade, and improve intelligence-sharing capabilities between law enforcement agencies.
However, some lawyers fear that the proposals lack clarity and that the results will be uncertain.
The plan also does not provide funding for prosecutions, and there is a record backlog of cases in the legal system in England and Wales. Economic crime costs the UK over £100 billion per year, and two-thirds of businesses report experiencing fraud, corruption, or other crime since 2020. Helena Wood of the Royal United Services Institute believes that the additional 475 staff earmarked in the plan are not enough to stem a multi-jurisdictional, multibillion-pound threat to the UK’s national security.
The government plans to invest £100 million in technology to help law enforcement and establish a cryptocurrency unit that will identify and seize illicit digital assets. The new plan also includes proposals for enhanced cooperation between government, law enforcement, supervisory agencies, and the private sector to tackle money laundering.
However, the government’s specific fraud strategy, intended to deal with problems such as money mules and ways to prevent scams, is overdue.
The Economic Crime Plan 2 can be viewed in full here.
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