UK: A New Direction In The United Kingdom's Fight Against Economic Crime?

In Short

The Situation: High-profile money laundering incidents have caught the attention of lawmakers and enforcement authorities in the United Kingdom.

The Result: A new director at the Serious Fraud Office ("SFO"), the formation of the National Economic Crime Centre ("NECC"), and the introduction of Unexplained Wealth Order ("UWOs") are indicative of the seriousness of the United Kingdom's efforts against money laundering.

Looking Ahead: Enforcement agencies are expected to collaborate more closely to fight money laundering activities, and certain parts of the economy, including the property sector, should expect closer scrutiny.

Money laundering is front-page news. A UK Parliamentary Committee report titled "Moscow's Gold" warned that UK national security was endangered as a result of turning a blind eye to Russia's "dirty money". As perceptions of the threat level posed by economic crime change, so do the response and priorities of those tasked with tackling the issue.

This Commentary looks at the changing landscape in the fight against economic crime in the United Kingdom and in particular the increasing focus on the fight against money laundering.

Changes at the SFO

David Green QC stepped down as the Director of the SFO in April 2018. During his six years in charge the SFO, he was widely regarded as having moved in a positive direction from an enforcement perspective. His tenure was characterised by a string of high-profile prosecutions and a conviction rate of over 70 percent, the highest of any SFO Director. Green's permanent replacement, Lisa Osofsky, was announced in June 2018.

Osofsky has previously worked at the FBI and Goldman Sachs. She joins the SFO from Exiger, who are the court-appointed monitor for HSBC. She inherits an organisation that has faced more than its fair share of uncertainty about its future in recent years. The Conservatives' 2017 Election Manifesto pledged to abolish the SFO and transfer its remit to the National Crime Agency ("NCA").

Commenting at the time, Osofsky expressed reservations about the status of the SFO, stating that the agency had been on a "knife edge for years" and had a "chequered history of success in its prosecutions".

The Conservatives' plans were shelved following the election, and Osofsky has been very clear in asserting her support for an independent SFO since being announced as the new Director. It remains to be seen where she will focus the SFO's efforts in the future.

The introduction of the National Economic Crime Centre

In December 2017, the UK Government announced plans to form the NECC. Its function is to bring together the knowledge and skills of the United Kingdom's law enforcement agencies in order to coordinate attempts to fight economic crime, with a particular focus on prosecuting money laundering and corruption offences.

The political impetus to take decisive action against money laundering and corruption has grown steadily. The scale of the problem became apparent following the release of the Panama Papers. Transparency International have repeatedly called upon the UK Government to tackle the "dirty money" that flows through London, which the NCA estimate could be as much as £90 billion. In 2016, the UK Government also issued its Action Plan for Anti-Money Laundering and Counter Terrorist Activity. Last month, the House of Commons declared that the influx of dirty Russian money to the United Kingdom posed a threat to UK national security.

The NECC will sit within the NCA and will work to combat economic crime in conjunction with a number of agencies, including the SFO, the Crown Prosecution Service, the City of London Police, the Financial Conduct Authority and Her Majesty's Revenue and Customs. This is a significant step toward centralisation and, according to the UK Government, brings together expertise from different agencies, which should allow for greater coordination in the fight against economic crime.

Under the current proposals, the NECC will have the power to "direct" the SFO to conduct investigations, meaning that while the SFO remains a stand-alone agency, it may now have to commence investigations at the behest of another organisation, raising questions over its ongoing independence. A similar approach was proposed when the NCA was first established back in 2013, but the plans were subsequently dropped in the face of opposition from the SFO and its supporters.

The NCA is answerable to the Home Office, and arguably the introduction of the NECC could result in the SFO being subject to, and more directly influenced by, the political agenda of the UK Government, which recently appointed a Minister for Economic Crime as part of their proposals. The Minister has since indicated that the budget for the NECC could be drawn, in part, from the SFO's existing funding, which will impact the SFO's resources.

Unexplained Wealth Orders

The UK Government's commitment to clamp down on money laundering offences is further underlined by the introduction of the UWO, which confers upon law enforcement authorities powers to require individuals or companies to explain the source of funds used to acquire defined property.

The NCA has now obtained the first UWO. Donald Toon, Director of Economic Crime at the NCA, stressed the deterrent value of such orders, stating that "UWOs have the potential to significantly reduce the appeal of the United Kingdom as a destination for illicit income".

UWOs focus on assets held in the United Kingdom. As such businesses, particularly those operating in the property sector and the financial and professional advisers who support them, will need to exercise even greater care when entering into transactions.

In the wake of the Skripal poisoning case, many commentators touted this new weapon in the arsenal of law enforcement as the remedy for the ill of dirty Russian money in the London property market.

What This Could Mean for Enforcement Activity in the United Kingdom

Under David Green QC, the SFO focused on prosecuting the most "serious and complex" fraud cases, while the NCA took the lead responsibility for tackling money laundering. There are signs that may now change.

In a world where the SFO takes direction from the NECC, the SFO may have to play a greater role in the investigation and prosecution of money laundering offences. Indeed, before Green stepped down, he had already suggested that the SFO was "combing" through its case load to detect examples of unexplained wealth.

In 2017, the incoming Director, commenting on the Conservative Party's manifesto plans for tackling economic crime, said that the Conservative Party had opted to pursue a framework designed to show the world that post-Brexit Britain was focused on tackling risks to national security, such as money laundering and terrorist financing. She noted that the classic SFO prosecution was about individual or high-profile scalps. In contrast, the scale of money laundering, while largely unknown, is much bigger and therefore presents a better opportunity for the Government to get the "biggest bang for its buck".

Since being announced as Director, Osofsky has stressed the importance she places on working across agencies to achieve results. Her experience working for law enforcement in the United States will likely lead to even closer cooperation with the United States in the fight against economic crime.

Looking Ahead

It seems certain that the fight against money laundering will assume greater importance in the future and that the agencies tasked with the job of tackling economic crime will work more closely together. In practical terms, this is likely to result in greater intelligence-sharing both domestically and internationally.

While efforts to tackle bribery and corruption will continue, a greater emphasis on combatting money laundering is likely to bring sectors that have, to date, largely avoided the close scrutiny of law enforcement into the cross hairs. In particular, the property sector must expect closer attention going forward.

Jones Day successfully acted in connection with the first Deferred Prosecution Agreement entered into with the SFO and will continue to monitor developments in this area.

Four Key Takeaways

  1. In the fight against economic crime, the UK Government will place greater emphasis on tackling money laundering.
  2. The incoming SFO Director has publically endorsed the Government's focus on an anti-money laundering agenda.
  3. Sectors, particularly the property sector, must expect closer scrutiny going forward.
  4. The SFO can now be "directed" to investigate crimes by the NECC and as a result might lose a degree of its independence.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions