Author: Nicola Sharp 5 August 2020
The UK government is seeking views on its proposal for an economic crime levy as part of its efforts to tackle financial crime.
It has begun a consultation exercise on the nature and operation of the levy, including what it will pay for, how it should be calculated and collected and how it will be distributed. The levy is being introduced with the intention of raising approximately £100 million a year from organisations regulated for anti-money laundering (AML) to support efforts to tackle economic crime, as outlined in the 2019 Economic Crime Plan.
The government proposes that businesses should pay for the levy in proportion to the amount of activity they undertake that carries a risk of money laundering. Financing the suspicious activity reports (SARs) reform programme and expanding and enhancing the Joint Money Laundering Intelligence Taskforce – to improve information sharing across sectors and between private sector firms – are two of the levy’s main aims.
It is right that the responsibility for tackling financial crime should not be drawn exclusively from the public purse, as those institutions enabling the risk should be prepared to help resolve the problem. But it is hard to ignore the vast amount of unpaid work that banks and other institutions subject to the Money Laundering Regulations are already conducting. Where extra cash is sourced in order to address these crimes should not necessarily be the government’s focus – rather, it should be how the AML authorities are using the funds.
The need for this levy reflects a system which is mismanaged and fragmented. This levy is, in effect, a further tax on banks for their ineffectual AML controls. But its funding of the SARS reform programme is certainly necessary as an effective SARS regime is essential for early identification of potentially illegal activity.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.