Economic Crime: Treasury Committee Recommendations - Govt. Response

Niall Hearty of financial crime specialists Rahman Ravelli outlines the government’s reaction to the Treasury Committee’s economic crime report.

The Treasury Committee has published the government’s response to its report on economic crime.

The report was published in February, after the Committee had opened an inquiry into economic crime in October 2020. The inquiry’s aim was to assess what progress has been made in combatting economic crime since a 2018 inquiry on the subject, which had led to two reports being produced in 2019. 

The Recommendations

The latest report contains a number of conclusions regarding aspects of economic crime and a series of recommendations.

These include:

• The government should examine whether there should be a single law enforcement agency to fight economic crime.
• The government must consider why economic crime does not seem to be a law enforcement priority and ensure law enforcement agencies have appropriate resources to tackle the problem.
• The Draft Online Safety Bill should be amended to include fraud offences, requiring online firms to be proactive rather than reactive in removing it from their platforms.
• The government needs to assess whether online companies should be required to contribute compensation when fraud is conducted using their platforms.
• The government should urgently legislate to make it mandatory for financial services firms to reimburse victims of authorised push payment fraud.
• Proper consumer protection regulation has to be ensured across the whole cryptoasset industry.
• The costs of company incorporation should be raised to deter those who look to set up large numbers of companies for dubious purposes.

Government Response

In its response to the Committee’s report, the government has said that it is in the process of creating a second Economic Crime Plan, to be published later this year. It appears open to the idea of reforming Companies House, including the raising of company formation fees.

But the government has made it clear that anti-fraud enforcement should not be the responsibility of one body or department.

Commenting on the response, Chair of the Treasury Committee, Mel Stride MP said:

“The government has stated that lots of work on combatting fraud is in train, and it places much emphasis on its upcoming Economic Crime Bill. However, it appears to dismiss our recommendation for the creation of a single law enforcement agency with responsibility for fighting fraud and a single government department tasked with overall responsibility in this area. This may be a significant missed opportunity.”

The Government’s Update 

Last week, the government published a statement of progress in tackling economic crime in the wake of its Economic Crime Plan.

The Economic Crime Plan was launched in 2019 after approval by the Economic Crime Strategic Board (ECSB), which is a government taskforce chaired by the Home Secretary and Chancellor of the Exchequer. The Plan set out how the government would combat fraud and money laundering and how the UK’s public and private sectors could work together to improve the response to economic crime.

The statement of progress was published following a meeting of the ECSB in February. It states that there is an improved understanding of the threat of economic crime, as shown through the third publication of the UK’s National Risk Assessment of Money Laundering and Terrorist Financing and the setting up of a “Fusion Cell” in the National Economic Crime Centre. It also refers to the updating of anti-money laundering requirements and an extra £63 million assigned to the Home Office to help tackle economic crime.