UK ‘overstretched’ and ‘outgunned’ in economic crime fight, says report

Economic crime costs the UK hundreds of times more than the government spends fighting it each year, according to a report which calls for a new fund to mitigate enforcement agency budget cuts.

Spotlight on Corruption, an anti-graft charity, said in a report published on Monday that the government spends £852m each year on the budgets of national level agencies that fight economic crime. Meanwhile, the National Crime Agency estimates that money laundering costs the UK some £100bn while separate losses to fraud amount to around £190bn.

The Spotlight report said the authorities were being “overstretched and outgunned” by the criminals.

“We’re calling for the UK government to create a central economic crime fighting fund by reinvesting some of the revenue law enforcement agencies generate back into their work,” said Susan Hawley, Spotlight’s executive director. “With law enforcement so under resourced and the costs of economic crime so high, this should be a no-brainer.”

Spotlight estimated that the amount allocated to agency budgets amounted to 0.09 per cent of government expenditure while the amount lost through money laundering and other economic crime was about 14.5 per cent of gross domestic product.

The police, which the government says will receive £12bn this year, was not included in the report.

The UK has long been a haven for dirty money from corrupt sources all over the world. In 2020, parliament’s intelligence and security committee’s Russia report found illicit finance was being cycled through a “London laundromat”.

In 2019, the NCA’s then director-general, Dame Lynne Owens, said she needed a 54 per cent budget increase to be able to fight economic and organised crime effectively. But between 2016 and 2021 it suffered a 4.2 per cent decrease in its core budget, according to Spotlight.

The NCA said: “We have seen those with questionable funds choosing not to invest in assets under UK jurisdiction, and some with assets here trying to divest to pre-empt any law enforcement action.”

An individual at the NCA said it was currently in the middle of a government spending review where agencies present their priorities and bid for funding.

Spotlight has called for a new economic crime fund, using ill-gotten gains.

The Serious Fraud Office generated around £1.6bn in settlements known as deferred prosecution agreements in the past five years, as well as millions more in fines and penalties. However those flow to the Exchequer, rather than being reinvested in crime prevention.

According to Spotlight, a lack of resourcing is contributing to a decline in prosecutions for money laundering and other kinds of economic crime.

Prosecutions for money laundering have fallen by 35 per cent since 2016 according to Spotlight. The NCA has obtained fewer than five prosecutions a year for economic crime offences over the past five years.

Last year the SFO secured the convictions of four people, down from 13 in 2016-17.

The SFO said: “Since 2014, the SFO has recovered the fourth highest value of proceeds of crime of over 100 law enforcement agencies in England, Wales and Northern Ireland, despite our relative small size.”

The government has introduced plans for an economic crime levy, which will apply to companies covered by anti-money laundering rules and is expected to raise £400m over the next three years that will be used to tackle money laundering.

The Home Office said: “The UK is a world leader when it comes to tackling money laundering, we will not tolerate criminals profiting on dirty money and the government will do whatever is necessary to bring these criminals to justice.”

Jonathan Fisher, a barrister at Bright Line Law, who specialises in financial crime, said: “The UK is losing the fight against fraud . . . The authorities are struggling to cope because they are grotesquely underfunded . . . Some radical new thinking is required.”

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