Recommendation 5

HM Government · verbatim extract Rejected

Disagree 20. The UK has one of the world’s largest and most open economies, and London is one of the world’s most attractive destinations for overseas investors. These factors make the UK attractive for legitimate business, but also expose the UK to money laundering risk. The proceeds of corruption and kleptocracy are not welcome in the UK. Following the full-scale Russian invasion of Ukraine, the Government has accelerated its pre-existing efforts to tackle illicit finance. In particular, we have: Passed the Economic Crime (Transparency and Enforcement) Act 2022. These reforms included a new register of Overseas Entities to require those behind foreign companies that own UK property to reveal their identities; Passed its successor, the Economic Crime and Corporate Transparency Act, in October 2023. This Act introduces world-leading powers which will allow UK authorities to proactively target organised criminals, the biggest reform to Companies House in its 180-year history, and new powers to deal with strategic lawsuits against public protection, known as SLAPPS, involving economic crime; Created a new unit within the National Crime Agency, the Combatting Kleptocracy Cell, which is focused on targeting corrupt elites and their wealth in the UK. 21. These measures will harden the UK against all forms of illicit finance entering this country. The Government’s wider crackdown on money laundering is detailed in full in the 2023 Economic Crime Plan 2. 22. Separately, the FCDO is working with the Home Office to undertake an internal analysis of Serious and Organised Crime (including drugs) and illicit finance risks in Central Asia to inform HMG’s future response. Conclusion/recommendation 6: While there has been progress in developing laws and regulations to curb money laundering in the UK in recent years, enforcement has been inadequate, not least because of a lack of enforcement capacity. State agencies have been under-resourced in comparison with the wealthy individuals they are investigating. We reiterate the recommendation in our 2022 report, ‘The cost of complacency: illicit finance and the war in Ukraine’, that the Government increase resources available to law enforcement authorities, including the National Crime Agency and the Serious Fraud Office, to ensure that they have the capacity to conduct effective actions against those engaged in illicit finance. Partially Agree 23. The Government has developed a sustainable funding model that demonstrates our commitment to tackling economic crime. We are investing in the National Crime Agency and have increased their budget year on year since 2019. This includes a new unit within the NCA, the Combatting Kleptocracy Cell, which is focused on targeting corrupt elites and their wealth in the UK. 24. The combination of the most recent Spending Review settlement and private sector contributions through the new Economic Crime Levy will provide funding of £400 million to Government bodies over the next three years. This includes £63m for Companies House Reform. HMG’s economic crime related investments will be guided by the Economic Crime Plan 2 (ECP2), published in March 2022. Through 43 actions, ECP2 sets out how activity across the system will help to reduce money laundering and recover more criminal assets; combat kleptocracy and drive down sanctions evasion; and cut fraud. Our ambitious reforms include: i. Recruiting an additional 475 financial crime investigators, ii. Establishing a new Crypto Cell to combat criminal abuse of cryptoassets, and iii. Expanding the Combatting Kleptocracy Cell to target corrupt elites, their money, and their enablers. Conclusion/recommendation 7: We recommend that the Government: a) Offers assistance to each of the Central Asian countries in building their domestic capacity to tackle corruption and money laundering as a contribution to their economic development. Partially Agree 25. As the report highlights, tackling corruption and illicit finance is an important element for developing economic resilience and political independence. The report also notes the challenging geopolitical context. In the Department’s oral evidence to the Committee, the FCDO outlined the capacity building support we are providing via law enforcement cooperation. The FCDO will continue to respond to new opportunities in Central Asia to apply the approach to illicit finance outlined in the White Paper on International Development. 26. We also recognise there is significant scope in some Central Asian countries to support governance reforms which strengthen checks and balances (e.g. work on public financial management; procurement reforms; reforms of State Owned Enterprises (SOEs); and working with oversight institutions such as supreme audit bodies). We are considering the next generation of interventions for a future governance programme - which would work at the national and sub-national levels on these issues. We are already (through the Effective Governa