London won’t throw out fraud until we put transparency at the core of finance
Today the Queen’s annual speech will be delivered to parliament. Amid all the pomp and ceremony that surrounds this event, one very important piece of legislation to be expected is a second Economic Crime Bill.
The first bill had to be fast-tracked through parliament as part of the government’s immediate response to Russia’s invasion of Ukraine.
Naturally that meant not everything could be included given the need to focus on sanctions. Home Secretary Priti Patel has said this one will be a “very substantial piece of legislation”.
This is welcome news: we need substantial change to help tackle money laundering and the growth in fraud and scams, which are now the most prevalent type of crime in the UK.
There are three principal things that would make a real difference if included: Companies House reform, tackling illicit finance involving crypto assets and greater information sharing to prevent fraud and money laundering happening in the first place.
When it comes to Companies House, it’s clear that the ease by which a company can be set up is open to abuse. The government has admitted the company registration process needs reform. Abuse of the system is a significant enabler of high-volume fraud and money laundering by corrupt oligarchs and organised criminals. Companies House should be given more powers, beyond those in the recent White Paper, to proactively look into suspicious registered companies, alongside putting in place much better verification processes to know who sits behind corporate structures.
Meanwhile, in the world of crypto, these assets are being used in ransomware attacks and to launder money. The public sector needs additional powers here. Crypto-based assets should be brought within the scope of anti-money laundering rules and law enforcement bodies should be given the ability to seize them and prevent them being used to evade detection.
Ultimately the growth in fraud and scams can only be tackled by all sectors working together. Any individual firm can only do so much, which is why we need a greater ability to share information and intelligence across all parts of the economy. This will enable us to prevent fraud happening in the first place and to follow stolen money as it moves beyond the financial services sector. This approach has been successful in Australia, where intelligence sharing between banks and mobile networks led to a near ten-fold improvement in blocking spam and smishing attempts.
Fraud in the UK is now at an alarming level – so much so that it poses a threat to national security. Criminals are targeting people with increasingly sophisticated scams that often prey on the vulnerable. The stolen money goes on to fund other serious and organised crimes such as terrorism and people trafficking, devastating the lives of the victims in the process.
The financial services industry is at the forefront of the effort to tackle this problem, but it needs greater help. This bill provides the opportunity to enhance our collective abilities to rise to the challenge and for the government to demonstrate its real commitment to seriously reducing the levels of economic crime.