White collar crime - market insights Q3/Q4 2024

The Economic Crime and Corporate Transparency Act 2023 (ECCTA)

The Department for Business and Trade (DBT) published a progress report on 24 May 2024 addressing the progress, implementation and operation of Parts 1 to 3 of the ECCTA. The report addresses the implementation of reform of the companies register and the need for developing the existing infrastructure to provide for more modern connected systems. It also notes that the Companies House Intelligence Hub is increasing the development and delivery of specialist capabilities through a recruitment drive, enabling them to proactively share intelligence with law enforcement and other partners counter economic crime threats.

The Register of Overseas Entities, which aims to increase transparency and reveal the beneficial owners of overseas entities that own property or land in the UK, is reported to have already given law enforcement a valuable new data set.

A new government: what lies ahead for tackling fraud and economic crime 

Levels of fraud doubled in the last twelve months. They currently stand at £2.3bn, with half of the high-value frauds being over £200m. When the previous government pledged extra resources to HMRC to fight COVID loan fraud, which is estimated to have cost the taxpayer over £20bn, experts and academics were expecting a flood of investigations and prosecutions arising from loan applications that were made, and seemingly handed out, with very little due diligence by the government as it sought to stave off financial distress.

To address this issue, the new government is proposing to appoint a fixed COVID Corruption Commissioner and to “use every means possible to recoup public money lost in pandemic-related fraud”. It is reported that the Commissioner will work with HMRC, the Serious Fraud Office and the National Crime Agency to examine an estimated £7.6bn worth of COVID-related fraud.

The government’s election manifesto pledged that neither fraud or waste would be tolerated anywhere. It proposed to introduce a new expanded fraud strategy to tackle the full range of threats, including online, public sector and serious fraud. Plans have been revealed whereby the government will seek to work closely with, and support tech companies, to stop their platforms being exploited by fraudsters. The Digital Information and Smart Data Bill introduced in the King’s Speech, which proposes establishing Digital Verification Services to provide for identity verification, may be the first of several approaches the government intends to introduce to mitigate risk.

Case developments

Proceeds of Crime Act 2002 - Adequate consideration and supply chains

R (on the application of World Uyghur Congress) v National Crime Agency [27.06.2024]

On 27 June 2024, the Court of Appeal dealt a blow to the National Crime Agency’s refusal to investigate cotton goods consignments that had been imported from the Xinjiang Uyghur Autonomous Region of the People's Republic of China as products of forced labour.

In overturning a 2023 High Court decision, the Court of Appeal’s judgment may prove to be a pivotal moment for the UK’s anti-money laundering regime; specifically, the ‘adequate consideration’ exemption under the Proceeds of Crime Act 2002.

Although it remains to be seen whether the judgment will result in an uptick in money laundering investigations, it underscores the importance of businesses undertaking thorough due diligence on their supply chains and who they transact with.