Transparency data

Economic Crime Strategic Board January 2019 agenda and minutes

Updated 12 July 2019

Agenda

Date:14 January 2019

Time: 12.30pm to 2pm

Location:

Room 3.46
Ministerial Conference Room
2 Marsham Street
London
SW1P 4DF

1. Context and terms of reference

• ambition for Economic Crime Strategic Board (ECSB)

2. Economic crime threat update

• update from the Director-General of the National Economic Crime Centre
• discussion of new and emerging threats

3. Financial Action Task Force (FAFT) mutual evaluation

• outcomes of the evaluation
• priorities emerging from the evaluation

4. Public-private plan for economic crime

• purpose of the public-private plan
• discussion of reform priorities

Minutes

Date: 14 January 2019

Time: 12.30 to 14.00

Location:

Room 3.46
Ministerial Conference Room
2 Marsham Street
London
SW1P 4DF

Participants: See Annex A

Executive Summary

1. Participants were thanked for attending the ECSB’s inaugural meeting. Economic crime was a very important issue for the public and private sectors and the high-level representation at the ECSB demonstrated the senior commitment to this agenda across both sectors. The private sector was thanked for its contribution.

2. The ECSB was established to enhance the economic crime response and members can all do more. The ECSB would provide overarching strategic direction for this agenda, which would become particularly important as the UK exited the European Union.

Item 1 – context and terms of reference

3. The ECSB heard that the government has stepped up its economic crime response, as demonstrated by the 2018 investment of £48 million in enhanced law enforcement capabilities with the new National Economic Crime Centre (NECC), National Data Exploitation Centre (NDEC) and National Assessment Centre (NAC). But there was more to do, given the threat economic crime posed to all three of the UK’s national security objectives: to protect our people; project our global influence; and promote our prosperity. The board endorsed these comments and highlighted the importance of robust governance and a sustainable funding model for economic crime.

Item 2 – Economic crime threat update

4. The background to the NECC was set out. Established as part of a broader investment in the government’s capabilities against illicit finance, its purpose was to drive collaboration on economic crime across the public and private sectors. It would be complemented by the NDEC, which will transform law enforcement’s data acquisition, exploitation and visualisation capabilities and the NAC, which will provide a single authoritative view of the threat based on policing, law enforcement, intelligence agencies and industry intelligence.

5. Current and emerging risks were set out. Trade-based money laundering and laundering through capital markets were an evolving threat. There were ongoing examples of cash-based laundering: NECC cooperation with one bank had helped identify a ring that had laundered £75 million in cash in one year. Cryptocurrencies’ use in money laundering was small but growing. Professionals (lawyers, accountants and trust and company service providers (TCSPs)) continued to play an important role in facilitating laundering, with one TCSP involved in a significant sanctions evasion case.

6. Actors in Russia and China were the biggest offshore money laundering threat. There is evidence of links between serious organised criminals engaged in economic crime and hostile state apparatus. Russia, Pakistan and Nigeria were key source countries for politically exposed persons (PEPs) involved in corruption. The board also discussed the tension in doing business with jurisdictions that were viewed as ‘safe’ but let laundered funds into the international system.

7. Other issues were discussed including insider trading, which is the greatest market abuse threat. Bank insiders were a key risk. Authorities in sectors which own community assets (such as the sports sector) were also mentioned. Capital markets and mirror trading were an evidence gap. Reform of the suspicious activity reporting (SAR) regime was needed, and the private sector was valued for identifying intelligence and cases to investigate.

8. It was advised that in future, tightened regulations would drive professional launderers to new methods and less regulated sectors. Similarly, as banks decided to not accept third party cash, launderers would target banks that did. The board also reflected on the need to sustain the pace of technology but manage risks emerging.

9. ECSB valued having public and private representatives discuss the economic crime threat and they agreed to a shared public-private assessment.

Action: NECC to lead production of a public-private threat assessment for consideration at the next ECSB in July.

Item 3 – Financial Action Task Force (FATF) mutual evaluation

10. The Board noted that FATF’s evaluation of the UK’s anti-money laundering and counter-terrorism financing regime found the UK had the most effective system of any country assessed so far. As the UAE’s mutual evaluation was coming up, it was suggested we work collaboratively with them to enhance their regime.

11. Though there was agreement that we had done well on the FATF report, it was noted that there were three main gaps identified. The first was on SARs reform, which should move from design to delivery. On the second, there was much to do to enhance professional body supervisors’ risk-based approach, and FCA should review risks regularly. The third was Companies House’s information quality. The discussion touched on the need for open de-risking discussions. Professional body supervisors might need stronger enforcement powers.

Item 4 – Public-private economic crime plan

12. An economic crime plan was proposed with an agreed vision, definitions and 7 strategic priorities. In the complex economic crime ecosystem, ECSB supported a joint plan, with the right governance. Asks of the private sector needed to be holistic, sensible and clearly prioritised to maximise effectiveness. The private sector would provide resources to develop the plan but needed clarity on where they are invested.

13. Several priorities were discussed, including the importance of data sharing capabilities for disrupting criminal activity. The focus on international cooperation and multinational institutions was welcomed. It was highlighted that NGOs support international improvements in beneficial ownership transparency. Further work was being done on how to sanction fraudsters and those criminals who fail to pay their asset confiscation orders, through lifetime offender management. Though the UK’s understanding of risk was positive and a real competitive advantage, the risk profile is not static.

14. In summary, the need for a joint resourcing plan and a strategic communications plan was noted. Prioritisation was important and there was a possible tension between cost-effective reforms and other factors. The FATF report showed exactly where the UK ought to be on transparency. We need to constantly re-evaluate to remain in the regulatory ‘sweet spot’.

Action: HM Treasury/Home Office/UK Finance to lead production of a public-private economic crime plan for consideration at next ECSB.

Annex A - list of attendees

Organisation / Role	Name
Home Secretary (co-chair)	Sajid Javid
Chancellor of the Exchequer (co-chair)	Philip Hammond
Security and Economic Crime Minister – Home Office	Ben Wallace
Economic Secretary to the Treasury – HM Treasury	John Glen
Secretary of State for Justice – Ministry of Justice	David Gauke
Parliamentary Undersecretary of State, Minister for Small Business, Consumers and Corporate Responsibility – BEIS	Kelly Tolhurst
Anti-Corruption Champion	John Penrose
Solicitor General	Robert Buckland
Home Office – Permanent Secretary	Sir Philip Rutnam
HM Treasury – 2nd Permanent Secretary	Charles Roxburgh
Department of Justice Northern Ireland – Permanent Secretary	Peter May
Scottish Government – Deputy Director of Defence, Security and Cyber Resilience Division	Linda Hamilton
Home Office – Director General, Serious and Organised Crime Group	Julia Kinniburgh
Home Office – Director of Economic Crime, Cyber and Anti-Corruption	Richard Riley
HM Treasury – Director, International	Veda Poon
HMRC – Director General of Customer Compliance	Penny Ciniewicz
Bank of England – Executive Director of Banking	Victoria Cleland
Director of Public Prosecutions	Max Hill
Serious Fraud Office – Director	Lisa Osofsky
National Economic Crime Centre – Director General	Richard Westlake
Financial Conduct Authority – Chief Executive	Andrew Bailey
National Police Chiefs’ Council – Chair	Sara Thornton
City of London Police Commissioner	Ian Dyson
Association of Police and Crime Commissioners	Clive Grunshaw
City of London – Chief Executive	John Barradell
UK Finance – Chairman	Bob Wigley
Barclays Bank – Chief Executive Officer	Jes Staley
HSBC Holdings plc – Chief Executive Officer	Ian Stuart
Lloyds Bank – Chief Executive Officer	António Horta Osório
Royal Bank of Scotland – Chief Risk Officer	Bruce Fletcher
Santander UK – Chief Legal and Regulatory Officer	John Collins
Morgan Stanley – Chief Executive Officer	Clare Woodman
Standard Chartered Bank – Group Head, Conduct, Financial Crime and Compliance	Tracey McDermott
Nationwide – Board Director	Chris Rhodes
The Law Society – Chief Executive Officer	Paul Tennant
Solicitors Regulation Authority – Chief Executive Officer	Paul Philip
Consultative Committee of Accountancy Bodies – Senior Board Member of BDO	Gervase MacGregor
National Association of Estate Agents – Managing Director	Mark Hayward
Investment Association – Chief Executive Officer	Chris Cummings