Progress of the UK Economic Crime Plan

The government launched its UK Economic Crime Plan 2019 to 2022 on 12th July 2019 in partnership with the non-profit banking and financial association, UK Finance. The plan is designed to tackle crime at every level of the UK’s financial system, enabling banks and financial services institutions in the public and private sectors to work together, share information, and address money laundering and counter terrorist financing more effectively. 

Since its launch in 2019, the UK has made progress in addressing the stated objectives of the UK Economic Crime Plan. With that in mind, banks and financial institutions in the UK should be familiar with the details of the plan, and how the measures that it introduces will affect the wider AML/CFT compliance landscape.

What is the UK Economic Crime Plan?

The UK Economic Crime Plan was announced in response to the Financial Action Task Force (FATF) 2018 UK Mutual Evaluation Report (MER). The report suggested that, while the UK had a ‘well-developed and robust’ AML/CFT system, there were weaknesses in its suspicious activity report (SAR) process and in the operation of its Financial Intelligence Unit (FIU). The plan is designed to address those issues by creating a ‘holistic and joined up approach’ to economic crime, promoting a shared understanding of AML/CFT compliance across the UK financial landscape and ensuring that public and private sector institutions have the capability and resources they need to contribute to the collective fight.

The UK Economic Crime Plan sets out the following 7 strategic objectives

• Understanding the threat and performance metrics: Improve the UK’s understanding of the threat posed by economic crime, and the UK’s performance in combating it. 
• Better information sharing: Improve information sharing and the use of information between public and private sector institutions in the fight against economic crime. 
• Powers, procedures and tools: Ensure that law enforcement agencies, the justice system, and private sector institutions have the powers, procedures, and tools they need to fight economic crime effectively. 
• Enhanced capabilities: Improve the ability of law enforcement agencies, the justice system, and private sector institutions to identify, disrupt, and deter economic crimes. 
• Risk-based supervision and risk management: Enhance the risk-based AML/CFT supervision of the private sector in order to build greater resilience to criminal threats. 
• Transparency of ownership: Enhance transparency around the ownership of legal entities and the legal arrangements that govern them. 
• International strategy: Develop an international economic crime strategy to improve the UK’s security and prosperity and enhance its global influence. 

Global Impact: While the UK Economic Crime Plan promises to change the UK’s domestic financial compliance performance, it is also intended to enhance the UK’s international reputation by removing the country’s status as a sanctuary for corrupt financial practices. By, addressing financial intelligence and SAR reporting deficiencies, the UK government is hoping it can push back against the negative impact of financial scandals, such as the ‘Laundromat’ money-laundering scheme and the release of the FINCEN files in 2020, and make a strong case for ‘Global Britain’ in the post-Brexit landscape.

UK Economic Crime Plan Action Points

Each strategic objective of the Economic Crime Plan involves a series of action points that represent practical steps towards its completion. There are 52 action points in total with due dates set between 2019 and 2022: the points are grouped and numbered by strategic objective and entail measures such as conducting threat and risk assessments, reviewing barriers to information sharing, improving the SAR report system, and strengthening AML/CFT legislation. Each action point also sets out the agencies and organizations responsible for its completion (FCA, HMRC, HMT, the Home Office, and so on). 

The action points serve as a standard by which to measure progress made on the UK Economic Crime Plan – with certain steps already completed and others ongoing. As of Q1 2021, progress on the actions points can be broken down as follows: 

• Completed action points: 38%
• Ongoing action points: 46%
• Overdue action points: 9%
• Action points with no due date: 3%
• Inactive action points: 1%

The following action points (AP) were scheduled for completion in 2021:

March 2021: 

• Enhance FCA supervision and engagement (AP 34)
• Enhance HMRC supervision (AP 35)
• Strengthen the consistency of professional body AML/CTF supervision (AP 36)

April 2021:

• Build a UK Government Counter Fraud Profession (AP 29)

July 2021:

• Review the criminal market abuse regime (AP 12) 
• Continue to develop the NECC as a genuine public-private hub for combatting serious and organized economic crime (AP 20)

December 2021: 

• Consider legislative challenges to improve the Proceeds of Crime Act (AP 12)

Develop a framework to repatriate funds to victims of fraud (AP 16)

AP scheduled for completion at any point in 2021:

• Consider how the payments systems can help tackle economic crime (AP 25)
• Enhance transparency of overseas ownership of UK property (AP 44)
• Promote integrity in business internationally (AP 49, ongoing until 2021)

Suspicious Activity Reform as part of the UK Economic Crime Plan

The objectives of the UK Economic Crime Plan have consequences for every financial institution doing business in the UK but one of their key highlights is suspicious activity reform. Accordingly, several action points are dedicated to the SAR regime:

• Deliver first tranche of SARs IT transformation and design the target operating model for the future of the SARs regime (AP 30)
• Deliver greater feedback and engagement on SARs (AP 31)

Ensure the confidentiality of the SARs regime (AP 32)

In practice, the suspicious activity measures are intended to both improve the quality of SAR data submitted to the National Crime Agency (NCA) and the way that data is shared between financial institutions. A major factor in SAR reform will be improvements to the IT infrastructure that supports the reporting process and, in particular, a transformation of the NCA’s SAR Online Portal with addition of new reporting features.

Financial Inclusion

The UK Economic Crime Plan introduces a range of new compliance measures for UK banks and financial institutions – a factor that has raised financial inclusion concerns. Although contributions from the private sector are central to its development and implementation, critics suggest that the UK Economic Crime Plan emphasizes the needs and capabilities of larger banking and financial institutions over their smaller counterparts. More specifically, while larger financial institutions have the financial resources to adapt to the new compliance regime, smaller firms may struggle to implement new requirements and find themselves priced out of competition. 

Despite the perceived bias towards more established financial institutions, the success of the Economic Crime Plan has been predicated on the input and involvement of the private sector. With this in mind, it is important that smaller firms concentrate on optimizing the effectiveness of their risk-based approach to AML/CFT as a way to balance resources with regulatory obligations. One of the strategic objectives of the crime plan is to enhance risk-based AML supervision in the UK – that objective includes the provision of support for innovative new approaches to AML/CFT regulatory compliance that may benefit smaller firms.