The UK's Economic Crime Plan 2: Maintaining Momentum Under New Leadership

A few months have now passed since the UK welcomed its new government – enough time for it to determine its priorities. Is tackling economic crime and illicit finance one of them? Labour's pre-election rhetoric had suggested it would be. Among the proposed initiatives were a crackdown on professional enablers, increased transparency of beneficial ownership data, and a summit of allies and international financial centres. 

There are signs the Labour government intends to follow through on these commitments. In November, the foreign secretary launched a new campaign against dirty money in the UK, finally making use of the UK’s Global Anti-Corruption (GAC) Sanctions Regime – a flagship of the UK’s post-Brexit solo sanctions career – against known foreign kleptocrats. Earlier this month, it also appointed a new Anti-Corruption Champion, a position that had been vacant for two years under the last Tory government.

Besides new initiatives, Labour is also well-placed to capitalise on the work of the previous government when it comes to tackling economic crime. The Economic Crime Plan 2 (ECP2), which sets out some essential building blocks for the UK’s response to economic crime abuses, is undoubtedly one of those initiatives that warrant continuation. Now midway through its implementation, and with the Financial Action Task Force (FATF) mutual evaluation of the UK steadily approaching, the government should not lose sight of the ECP2’s importance, and focus on those actions that still require completion. 

Steady Progress

While the new government has been getting acquainted with being in power, the Whitehall machinery has kept itself busy. For the ECP2, the numbers provided to RUSI by the government paint an encouraging picture: since the last update for the Plan’s anniversary in March 2024, completed actions have increased, and more than half of the Plan has now been implemented.

RUSI’s last update highlighted significant improvements in areas such as the UK’s company register, crypto and virtual assets, and sanctions. Seven months later, this focus has been maintained. Companies House is continuing on its journey of reinventing itself – albeit slowly. The Financial Conduct Authority has been proactive in its outreach efforts surrounding the new crypto asset regime, even though front-line officers and financial investigators are still lacking appropriate training from the National Economic Crime Centre (NECC) to go after the assets. On sanctions, the Office of Financial Sanctions Implementation (OFSI) has enhanced cooperation with international partners and has started issuing penalties, even though more work needs to be done on the sanctions enforcement front.

Other areas have seen more significant developments. The NECC has been working on its money laundering strategy to better understand the threat and areas of greater impact, engaging with industry to develop the concept of system prioritisation and identify which activities should be dialled up or down. Earlier this year, together with the Office for Professional Body Supervisors (OPBAS), it launched a cross-system strategy on tackling professional enablers. The NECC has also been working on an economic crime people and skills strategy, considering partnerships with industry and other stakeholders, such as academia. The jury is still out on whether it will lead to successful ongoing engagement, but the appetite is definitely there, from both the agency and other sectors.

Efforts to enhance skills across the system are also bearing fruit. For instance, the courts can now benefit from expert advice from the National Crime Agency (NCA) Expert Laundering Evidence team on cases involving cryptocurrencies. Some agencies have experienced a staff increase; among others, the UK Financial Intelligence Unit (FIU) has boosted staffing by more than 30%. While this increase might not fully meet experts’ demands for greater resourcing, it represents tangible progress in bolstering the UK’s capacity to combat economic crime. 

Beyond asset freezes relating to sanctions designations, there have been advancements in the broader field of asset recovery – if not in the amount of proceeds recovered, in the pipeline of assets denied, as the Home Office explores new approaches to improve performance. 2024 was poised to be a game-changer, with plans for a new database and intelligence hub on the horizon. While the hub is still a work-in-progress, the Home Office now has a fully embedded social research team to share best practices. The Treasury has also been working on FATF projects surrounding the adoption of the strengthened standards on asset recovery, completing this action (expected for Q2 2025) with six months to spare.

Remaining Challenges

Despite these positive developments, the number of overdue actions has increased compared to seven months ago. While most delays can be attributed to the change in government, some actions have been pending for too long to be excused by this transition.

Firstly, three significant elements that were missing at the ECP2's one-year anniversary still remain very much a work-in-progress: comprehensive action on Crown Dependencies and Overseas Territories, a new Economic Crime Data Strategy, and government responses to the two consultations on anti-money laundering (AML) reform. As only Montserrat has joined Gibraltar in having a public beneficial ownership register, perhaps it is time to be more realistic about what can be achieved: ensuring ‘legitimate interest’ access as an interim step towards public registers – an expectation recently set out by ministers – would at least bring the UK in line with EU partners. Meanwhile, although a holistic review of ECP2 priorities and associated datasets for the Data Strategy has been completed, the creation of a delivery roadmap to outline how and when these changes will be introduced is still pending. There is also still no response to the AML reform consultation, despite OPBAS’s latest report which found compliance with requirements but pockets of ineffectiveness so that none of the Professional Body Supervisors for the legal and accountancy sectors are ‘fully effective’. 

Secondly, beyond ECP2 actions, the Anti-Corruption Strategy – which not one, but two RUSI commentaries described as ‘upcoming’ or ‘expected by the end of the year’ in 2023 and 2024 – is still conspicuously absent. This delay undermines the seriousness of the government's intentions to tackle corruption. On this point, the lack of expanded capacity in the Combatting Kleptocracy Cell is another reason for concern. Given the new government’s commitment to ‘taking on kleptocrats and the dirty money that empowers them’, the failure to bolster this unit puts the effectiveness of actions such as the recent anti-corruption sanctions designations into question. The newly-appointed Anti-Corruption Champion Baroness Margaret Hodge – a long-standing campaigner against dirty money in the UK – will have a lot to do.

Thirdly, a closer look at the completed actions under the ECP2 casts doubt surrounding their effectiveness in addressing economic crime. Take, for example, the UK FIU; while staffing has increased, the quality and strategic direction of its efforts remain unclear. Enhanced resources are of limited value when an agency lacks a coherent vision or framework for achieving impact.

These gaps point to a broader concern: it does not matter how many actions are completed if there is little evidence they are achieving a tangible reduction in economic crime. We await a public update on Action 43 of the plan – the development of an outcomes framework to evaluate the impact of ECP2 measures. Understanding what the key measures of success are, and the data which is being gathered to support these measures, will be crucial to assessing whether the plan is achieving its intended goals or merely generating activity without meaningful change.

‘A Golden Age of Combatting Economic Crime’

When the Economic Crime Acts were passed, campaigners cheered, but reminded the government that they had been suggesting the very same reforms for the previous 20 years. The fact that this commentary has highlighted the same incomplete actions as its predecessors raises concerns that the new government may be repeating past mistakes. Let’s hope this is not the case, and that key reforms have just been delayed by the change in government.

There are reasons for optimism. The new designations under the GAC regime reportedly complement broader work by the NCA-hosted International Anti-Corruption Coordination Centre, funded by the Foreign, Commonwealth and Development Office. While discussing the new campaign, Foreign Secretary David Lammy announced that ‘The tide is turning. The golden age of money laundering is over.’ 

But tackling economic crime in the UK is not just about targeting a few kleptocrats. Moving forward, the government should support and build upon the successes that government departments have accomplished over the past year and a half. This translates into progressing with the implementation of ECP2 actions, focusing on completing those that are significantly overdue, and ensuring that reforms are fully implemented and demonstrably effective.

Perhaps more importantly, if the new government wishes to differentiate itself from its predecessor, being more vocal about the progress being made is exactly what it should be doing. Looking at the data, it is clear that the whole government has done a lot of good work to bring ECP2 actions to life. However, finding publicly available information on these efforts is not that easy. Moving forward, the new government should seize every opportunity to celebrate its successes in tackling economic crime. Doing so will not only bolster its domestic political standing, but also assert leadership on the international stage. It will signal to the world – and to criminals – that the UK is committed to restoring its reputation as a trustable international financial centre.  

© RUSI, 2024

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