The new “Economic Crime (Transparency and Enforcement) Bill”: What has changed and how can Law Enforcement Agencies and economic crime investigators more effectively take advantage of these additional powers?
The Economic Crime (Transparency and Enforcement) Bill, introduced 1st March 2022, has been hurried through Parliament in light of the recent events in Ukraine and the far-reaching sanctions imposed on Russia.
Its purpose is to help the National Crime Agency “prevent foreign owners from laundering their money in UK property and to ensure more corrupt oligarchs can dealt with by “Unexplained Wealth Orders (UWOs)”.
The legislation introduces a “Register of Overseas Entities”, that requires anonymous foreign owners of UK property to reveal their real identities. Entities who do not declare their ‘beneficial ownership’ will face restrictions when seeking to sell their property and up to 5 years in prison.
This legislation includes “entities” who hold property in the UK within a trust. “Holders” will not only be prohibited from hiding behind shell companies, but also Foundations – historically used by many organised criminals to obfuscate their links to property and other assets.
Law Enforcement Agencies (“LEAs”) will have increased time available to them when considering Unexplained Wealth Orders and the costs rules applied by the courts against the LEAs are now more favourable to them in the event that they bring cases against individuals which are deemed “reasonable” even if they do not result in unexplained wealth orders being made.
The Government, through Prime Minister Boris Johnson, has said,
“there will be nowhere to hide your ill-gotten gains.”
Business Secretary, Kwasi Kwarteng, has said:
“The new register will shine a light on who owns what in the UK so we can flush out the oligarchs, criminals and kleptocrats who think they can use UK property to hide their illicitly obtained wealth.”
Through this legislation, the Treasury has enhanced the enforcement of sanctions by introducing a more wide-ranging ‘strict civil liability test’ for monetary penalties, rather than the current requirement for firms to have knowledge or a ‘reasonable cause to suspect’ sanctions are being breached. This places heightened levels of responsibility upon financial organisations and professional advisors when dealing with complex corporate structures, Foundations and any other form of commercial organisation. The levels of enhanced due diligence required now for law firms, financial services providers and even estate agents will rise dramatically as they now need to review whether individuals and their assets are linked to this new Register.
The Office for Financial Sanctions Implementation (OFSI) will impose significant fines when breaches occur. A further change will mean OFSI will be able to publicly name organisations that have breached financial sanctions but have not received a fine.
The “Register of Overseas Entities” applies retrospectively to property bought by overseas owners up to 20 years ago in England and Wales and since December 2014 in Scotland.
In conjunction with these immediate legislative changes, came the announcement that further significant improvements to the way which Companies House verifies the contents of its database will be introduced.
The changes to Companies House and how their data is compiled will have the following effects:
- anyone setting up, running, owning or controlling a company in the UK will first need to verify their identity with Companies House;
- Companies House will be given the power to challenge any information that appears dubious during this process;
- company agents from overseas will no longer be able to create companies in the UK on behalf of foreigners whose identity is not known;
- the quality of information provided by companies-to-Companies House will be improved, so that the thousands of small companies who rely on it to make business decisions can trust who they are doing business with;
- data aggregators, like Synalogik, who provide the Scout® platform to banks, insurers, police forces and law enforcement agencies, will better service their customers by providing investigators with real time access to this new and detailed repository of data so that fraud, cyber and compliance checks can be carried out more thoroughly;
- filing processes for small businesses will be streamlined and digitalised; and
- Company Directors will be better able to protect personal information published by Companies House which might put them at risk of fraud or other harm.
It would seem that the only good to have come from the recent conflict is the Government’s expedited changes to this legislation. The raft of additional proposed changes said to be coming in the next few months include:
- allowing investigators to more swiftly seize crypto assets through civil forfeiture powers to tackle the growing threat from ransomware and the use of crypto assets for money laundering,
- strengthening anti-money laundering powers to give businesses more confidence to share information on suspected money laundering, and
- reforms to bear down on the use of limited partnerships as vehicles for facilitating international money laundering (including illicit Russian finance) and illegal arms movements.
These significant legislative advances will, at long last, assist hamstrung law enforcement agencies, police forces and economic crime units to target the assets of those individuals linked to international Organised Criminality more efficiently.
Hopefully these decisions by the UK Government signify a genuine desire to combat the pervasive effects that fraud and money laundering are having globally. The perfect storm of heightened fraud levels, decreased Governmental budgets and ever growing complexity of investigations has to be broken. These Kleptocrats, organised criminals and oligarchs will already be seeking new ways to hide their identify through networks of professional enablers – The NCA and other LEAs must be ready to expose falsehoods, stooges and all other efforts to evade UWOs being made.
Only through effective use of global Open-Source intelligence concurrently with commercial, financial, consumer, consented and sensitive internal data sets can they be ready to expose the ‘corrupt needle in the haystack’.
Automation is the key, but any automation tool has to have that ability to gather, analyse and report over multiple data sources as one; to be flexible and able to respond to whatever the level of complexity required.
One such tool is the Scout® automation platform from Synalogik; the single intelligence environment built by police officers, barristers and former intelligence officers.If you are an LEA or police force that wishes to benefit from the most advanced data aggregation and risk assessment tooling; including access to the contents of the “Register of Overseas Entities”, then contact the team of specialists at Synalogik Innovative Solutions – creators of the Scout® and DataHunter platforms.
Daniel White – Barrister, Co-Founder and Chief Commercial Officer – Synalogik Innovative Solutions Ltd