Whilst the Government claims that the previous Serious and Organised Crime Strategy 2013 had a significant impact upon serious and organised crime in the UK, the latest Serious and Organised Crime Strategy published last week is designed to take the fight a step further, with an increased emphasis on disrupting the thousands of organised criminal networks operating in the UK through focussing upon the criminal finances that both constitutes the principal motivation for criminals lending themselves to such organisations, and also the cash flow that enables them to perpetuate their criminal enterprises.
As the Home Secretary Rt Hon Sajid Javid has expressed “…we must continue to adapt to the scale and complexity of current and future threats” and that “…our revised approach puts greater focus on the most dangerous offenders and the highest harm networks. Denying perpetrators the opportunity to do harm and going after criminal finances and assets will be key to this”.
For first time, he states, the new approach “…will align our efforts to tackle serious and organised crime as one cohesive system. This includes working closely with international partners as well as those in the private and voluntary sectors”.
What is Serious and Organised Crime?
Serious and organised crime is defined as individuals planning, coordinating and committing serious offences, whether individually, in groups and/or as part of transnational networks. The main category of serious offences covered by the term are: child sexual exploitation and abuse; illegal drugs; illegal firearms; fraud; money laundering and other economic crime; bribery and corruption; organised immigration crime; modern slavery and human trafficking; and cyber crime.
The key objectives of the strategy are identified as follows:
- Relentless disruption and target action against the highest harm serious and organised criminals and networks
- Building the highest levels of defence and resilience in vulnerable people, communities, businesses and systems
- Stopping the problem at source, identifying and supporting those at risk of engaging in criminality
- Establishing a single, whole-system approach.
Key Changes Regarding Financial Crime
Exploring them in turn, firstly data being an important aspect of dealing with serious and organised crime, the government in the new strategy has expressed plans to be the first country to enter into a bilateral agreement with the US following the 2018 Clarifying Lawful Oversees Use of Data (“CLOUD”) Act, passed by Congress. This will allow foreign nations access to the content of communications from overseas companies in serious crime and terrorism investigations, regardless of where the information is geographically stored. The implementation of this agreement will be challenging in light of the recent General Data Protection Regulation (“GDPR”) which is designed to provide full and transparent assurance to the public that their data will be protected and used lawfully by the government in a way that is proportionate to the threat posed.
The Government also aims to ensure the full and effective use of the powers created by the Criminal Finances Act 2017 such as the use of Unexplained Wealth Orders (“UWO”), the expanded availability of civil recovery powers, and the introduction of bank account forfeiture orders, in addition to the Serious Crime Act 2015 (compliance orders). The financial investigation techniques currently available to law enforcement remain under-utilised, and the aim is to increase the use of these powers and the asset recovery opportunities brought about by good financial investigations.
The full force of the UWO has already been seen in the recent case between the NCA and Zamira Hajiyeva (see our previous article for details), which has been widely publicised.
Another interesting change is the reform of the Suspicious Activity Reports (“SAR”) regime that has had it successes but has still be the subject of considerable scrutiny in recent years. The Government aims to renew, and replace, the IT system with a more sophisticated system that will help in improving the SARs regime of reporting. Further to this the Home Office aims to expand the ‘Flag It Up’ campaign to increase awareness within the accountancy and legal sectors of money laundering. A campaign held in 2016/17 showed that accountants and lawyers who recognised ‘Flag It Up’ were twice as likely to submit a SAR compared to professionals who do not have knowledge of the campaign.
Finally, with the ease of establishing companies, the new strategy also aims to improve the integrity of Companies House public register of limited companies, requiring those in the regulated sector to report where, through their due diligence, they have identified discrepancies with information held on the public register. In July 2018 the government published draft legislation for the creation of a register of beneficial owners of overseas companies owning property in the UK. The new register will be the first of its kind in the World, with the stated aim of making it more difficult for kleptocrats and serious and organised criminals to hide their illicit funds in the UK.
In summary, pursuant to the strategy, the Government has committed to focussing upon technological advancement, widening of the use of disruptive financial orders, improving the money laundering reporting regime, and obtaining access to important data through cross-border relations in criminal investigations.