UK to tax financial services firms to pay for economic crime fight
UK Chancellor Rishi Sunak has confirmed that the government would bring forward a levy on financial services firms to fund action against economic crime.
All groups that are subject to UK Money Laundering Regulations, which include banks, accountants, estate agents and solicitors, will be liable to pay. The Treasury said it will consult on the levy later this spring.
"These reforms will help safeguard the UK's global reputation as a safe and transparent place to conduct business," the government said.
This funding will hopefully make a positive difference in detecting the proceeds of crime which either pass through or result in the acquisition of assets in the UK"
The levy will be used to supplement public sector funding and will equip law enforcement agencies with the funds to hire additional financial investigators and supply them with new technology and will help the National Crime Agency enforce the Economic Crime Plan.
The annual levy, expected to raise £100m, is on top of the current NCA budget of £478m.
Whilst the investment in AML measures highlights the government's intent to crack down on economic crime, the additional expense for law firms could be an added expense at an already difficult time.
The NCA puts the cost of money laundering to the UK economy at £100bn a year, which has led to fears the country is falling behind in the fight to curb illicit financial flows.
Susan Hawley, director of campaign group Spotlight on Corruption, said: "Given the role that banks and other professions in the City of London play in making the UK such an attractive hub for illicit finance, it's right that they should all contribute financially to the fight against economic crime."
Another action point is to strengthen the consistency of supervision by the professional bodies that handle anti-money laundering compliance and counter-terrorist financing (AML/CTF) work, such as the Solicitors Regulation Authority.
Edward Sparrow, chair of the City of London Law Society, said: "City law firms have, with other professionals, been at the forefront of the fight against economic crime.
"They support the government's commitment to that fight and commit significant resources to it.
"However, a levy on one section of the private sector to help fund a public function, such as fighting crime, which has previously been funded by government out of general taxation, is a highly unusual and surprising development.
"We await the promised consultation with interest."
Howard Cooper, managing director in the business intelligence and investigations practice at Kroll, said: "This funding will hopefully make a positive difference in detecting the proceeds of crime which either pass through or result in the acquisition of assets in the UK."
Alun Milford, formerly the Serious Fraud Office's general counsel and now a partner at law firm Kingsley Napley, said the priority should be a "proper functioning court service to deal with money laundering and fraud cases effectively". He warned that spending on technology and investigators would only address "one piece of the puzzle".
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