The Economic Crime Act isn’t enough to tackle Britain’s dirty money problem
3 min read
Economic crime is often seen as victimless, even if it does cost the United Kingdom an estimated £350bn every year. But it cannot be siloed off from the countless more sinister crimes it invariably enables.
For example, to ignore the role of money laundering in, say, people trafficking or drug smuggling, is to misunderstand these criminal enterprises altogether. If dirty cash cannot be easily cleaned and used in the regular economy, the risk suddenly starts outweighing the reward.
Many of the same wheezes used to launder the proceeds of crime – such as labyrinthine offshore structures and inscrutable layers of financial secrecy – are also used by scammers to whisk away stolen money before we have a chance to claw it back. Hardly a day goes by without a new horror story concerning pensioners robbed of their life savings or romance scams preying on vulnerable people.
Our enforcement agencies are too often hopelessly outgunned by deep-pocketed crooks with well-heeled London lawyers
Consider Russia’s barbaric invasion of Ukraine. For decades, we have been all too happy to profit from hiding the ill-gotten gains of Kremlin cronies in our financial system. But now that we are trying to sanction those same individuals by freezing their assets, it seems we may have managed to conceal many of them even from the sanctioning authorities.
Has the last Economic Crime Act made a difference? In many ways, yes. New tools for Companies House to crack down on phoney companies were long overdue but welcome. As were measures to end the use of lawfare to muzzle journalists lifting the lid on financial malfeasance, and reforms to better hold companies to account when their employees commit economic crimes.
But I’m afraid we have an awful lot of catching up still to do.
Chiefly, we should remember that any laws without proper enforcement are just good advice. And sadly, our enforcement agencies are too often hopelessly outgunned by deep-pocketed crooks with well-heeled London lawyers.
I am particularly disappointed with the government’s refusal to heed cross-party calls to protect agencies like the Serious Fraud Office and National Crime Agency in the courts. Prominent campaigners, such as Bill Browder – Vladimir Putin’s “public enemy number one” – have long called for enforcement bodies to be insulated from the threat of enormous court costs when taking on oligarchs, for example. I worry about the chilling effect this could have on their prosecutorial appetite. Perhaps the new Criminal Justice Bill proposed in the King’s Speech will provide an appropriate vehicle for this crucial measure.
And then there are whistleblowers, the cheapest and most effective way of catching economic criminals. The infamous Danske Bank laundromat – which flooded $230bn of dubious origin from the former Soviet bloc into Europe – was only uncovered when an employee raised the alarm, while the United States recovered $400bn of tax fraud as a result of whistleblowers last year alone.
Whistleblowers take huge risks to expose wrongdoing, often losing their careers. And yet, bafflingly, in this country we do precious little to protect and incentivise them, which the Economic Crime Act has done nothing to rectify. Ministers have made vague promises to review existing framework. But by kicking this particular can down the road we continue to deprive ourselves of a crucial tool to use against economic criminals.
I could go on. There is no magic bullet for the UK’s dirty money problem, and plainly more work needs to be done. But we can certainly be encouraged by the willingness of ministers to at least engage with many of these thorny issues. The Economic Crime Act must not be the end of the road, and I hope that the government finds the political will to deliver on its Economic Crime Plan and finally rid our economy of illicit finance.
Lord Agnew, Conservative peer and former treasury minister
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