Economic Crime Strategic Board July 2019 agenda and minutes
Published 4 November 2019
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Agenda
Date: 10 July 2019
Time: 9am to 10am
Location:
11 Downing Street,
Westminster,
London,
SW1A 2AA
1. Welcome and introduction
- minutes and actions from ECSB 14 January 2019
2. Public-Private Threat Update
3. Public-Private Economic Crime Plan
4. AOB
- transparency and accountability of the Economic Crime Strategic Board (ECSB)
- asset recovery action plan
Minutes
Date: 10 July 2019
Time: 9am to 10am
Location:
11 Downing Street,
Westminster,
London,
SW1A 2AA
Participants: See Annex A
Welcome and introductions
1. The Chancellor and Home Secretary thanked participants for attending the ECSB’s second meeting. Ministers noted that tackling economic crime has a dual purpose in supporting the UK’s security and prosperity agendas in both the domestic and international arenas. Government’s view remained that improving the country’s response to economic crime was best achieved through increased levels of collaboration between the public and private sectors. The ECSB in January agreed that two major pieces of work should be developed collaboratively between the public and private sectors – an assessment of the threat from economic crime, and a plan to tackle it. Both were to be discussed at the meeting. The minutes from the ECSB in January 2019 were agreed.
Item 1 – Public-Private Threat Update
2. The economic crime threat update was presented by the National Economic Crime Centre (NECC). The ECSB membership was thanked for the support their organisations had given to the development of this first joint public-private update which focused on money laundering, fraud and international bribery. In general, law enforcement’s view of the threat resonated with the private sector view, with no major new threats identified. It was recognised that this was a first effort in creating a joint assessment and would be built upon. The next version would need to draw on more data and evidence from the private sector and it should seek to better quantify the different types and overall levels of money laundering and fraud.
3. The ECSB heard the key conclusions from the joint threat update including the extent to which fraud in the UK was now cyber enabled. The abuse of corporate structures and risk from corrupt or complicit lawyers, accountants and trust and company service providers to facilitate money laundering was recognised. This reinforced the need to focus on reducing vulnerabilities in these areas, with the ECSB noting the current BEIS consultation on reforming Companies House. The key judgements from the threat update would be published shortly. The threat update process would be built on to expand the breadth and depth of the assessment, with supporting data.
4. Particular concerns were raised about the abuse of Money Service Businesses (MSBs) and the use of money mule accounts. The ECSB heard about recent action targeting illicit activity in the MSB sector, which was recognised as a high-risk sector. HMRC had recently raised its AML-supervision fees by 130% and undertaken a week of action focusing on MSBs. It was agreed that a more in-depth assessment of the risks around MSBs should be undertaken to inform further intensified law enforcement and private sector action to reduce those risks.
Action: NECC and HMRC to work with public and private sector stakeholders to consider how to reduce further the extent to which Money Service Businesses are used to facilitate serious and organised crime.
5. A recent report by HM Inspectorate of Constabulary and Fire and Rescue Services highlighted the need for improvements in the police response to fraud. The City of London Police and the NECC are working with the Home Office to develop a strategy to improve the response to fraud across policing. Criminals were developing greater cyber capabilities and the extent of cyber-enabled fraud was recognised as a key theme. The stretch and challenges for investigators and prosecutors in this area was highlighted. The current low level of prosecutions was a particular aspect of the overall response to fraud which needed to be addressed. In addition to prosecution, the importance of asset recovery activity was also noted. More than £100 million in criminal assets were recovered in the last financial year, but the estimates on the scale of fraud indicate there is more work to be done.
Item 2 – Public-Private Economic Crime Plan
6. ECSB members were again thanked for their organisations’ input into the development of the Economic Crime Plan, a draft of which had been circulated for the meeting. This ambitious plan was designed around the seven strategic priorities agreed by the ECSB in January. A prioritisation exercise had been undertaken with partners to determine a range of deliverable actions across those seven areas. The result was a plan with 52 specific commitments. Clear priorities were identified as: delivering the reform of the Suspicious Activity Reporting (SARs) regime; improving law enforcement capabilities, including for tackling fraud; improving the UK’s supervisory regime for anti-money laundering and counter-terrorism financing (AML/CTF); and reforming Companies House. It was also recognised that the regulator and law enforcement could play an important role in supporting reprioritisation of activity by the private sector, where the ambition should be to reduce low utility activity and refocus collective resource towards tackling higher harm threats. Delivery relied upon a number of factors including good governance, which would be reviewed ahead of the next ECSB.
7. The six contributing financial institutions were thanked for their contribution to SARs reform for 19/20, which underlined a shared endeavour. It was recognised that realising the ambition for the Economic Crime Plan required a sustainable resourcing model for economic crime reform and a move away from uncoordinated asks of the private sector. The Sustainable Resourcing Model Working Group should consider a full range of sources including a look at maximising how recovered criminal assets could be better used to fight economic crime.
8. Two of the principles for sustainable resourcing should be that new or existing generators of economic crime risk should be financial contributors to mitigating those risks, and that there should be a relationship between the cost and benefit of what is being done. It was made clear that the scope of sustainable resourcing should capture the wider AML-regulated sector.
9. Any Government funding would need to be considered as part of the forthcoming Spending Review. It was identified there was an opportunity for the departments with relevant responsibilities (e.g. Home Office, Ministry of Justice, Attorney General’s Office) to coordinate their bids to ensure a holistic criminal justice system response. Action: Home Office to lead the Sustainable Resourcing Model Working Group to develop a model for discussion at January’s ECSB.
10. ECSB members gave their full support for taking forward the Economic Crime Plan, and the approach and commitments outlined within it. In giving that backing, members highlighted the need to make further and faster progress on the question of information sharing to better tackle economic crime, both within the private sector and between the private and public sectors. It was recognised that a number of legal, regulatory, efficiency and civil liberties came into play in this area.
11. The ECSB also discussed new and emerging risks and opportunities. These included cryptocurrencies, faster payments systems, and the UK’s sanctions regime post-departure from the EU.
12. The ECSB agreed to the publication of the Economic Crime Plan and for the ECSB to monitor its implementation going forward.
Item 3 – AOB
13. The ECSB agreed that the agendas and minutes of its meetings should be published.
14. The ECSB were also given an overview of the Home Office’s Asset Recovery Action Plan. The proposal was for it to be published alongside the Economic Crime Plan. The ambition set out in the Plan was to return to year on year increases in asset recovery. It was recognised the private sector could provide a valuable role in ensuring this ambition is met.
15. The meeting was closed and attendees were thanked for their time. The next ECSB would take place in January 2020.
Annex A – List of attendees
| Attendee | Organisation/title |
|---|---|
| Andrew Bailey | Financial Conduct Authority – Chief Executive |
| Graeme Biggar | National Economic Crime Centre – Director General |
| Mark Carney | Bank of England – Governor |
| John Collins | Santander – Chief Legal Officer |
| Juan Colombas | Lloyds – Chief Operating Officer |
| Rt Hon Geoffrey Cox MP | Attorney General |
| Ian Dyson | City of London Police – Commissioner |
| Bruce Fletcher | RBS – Chief Risk Officer |
| Clare Francis | Standard Chartered – Head of Global Banking |
| Joe Garner | Nationwide – Chief Executive Officer |
| John Glen MP | Economic Secretary to the Treasury |
| Rt Hon Philip Hammond MP | Chancellor of the Exchequer |
| Mark Hayward | NAEA Propertymark – Chief Executive Officer |
| Max Hill | Crown Prosecution Service – Director Public Prosecutions |
| Rt Hon Sajid Javid MP | Home Secretary |
| Julia Kinniburgh | Home Office – Director General, Serious and Organised Crime Group |
| Gervase MacGregor | BDO LLP – Head of Advisory |
| Lisa Osofsky | Serious Fraud Office – Director |
| Laura Padovani | Barclays – Group Chief Compliance Officer |
| John Penrose MP | Anti-Corruption Champion |
| Paul Philip | Solicitors Regulation Authority – Chief Executive Officer |
| Charles Roxburgh | HM Treasury – 2nd Permanent Secretary |
| Ian Stuart | HSBC UK – Chief Executive Officer |
| Paul Tennant | Law Society – Chief Executive Officer |
| Kelly Tolhurst MP | Parliamentary Under-Secretary of State for Small Business, Consumers and Corporate Responsibility |
| Rt Hon Ben Wallace MP | Minister of State for Security and Economic Crime |
| Duncan Wiggetts | ICAEW – Executive Director Professional Standards |
| Bob Wigley | UK Finance – Chair |
| Clare Woodman | Morgan Stanley – Chief Executive Officer |
| Simon York | HMRC – Director, Fraud Investigation Service |