Transparency data

18 January 2024: Anti Money Laundering and Asset Recovery (AMLAR) Programme accounting officer assessment

Updated 2 April 2024

It is normal practice for Accounting Officers to scrutinise significant policy proposals or plans to start or vary major projects, and then assess whether they measure up to the standards set out in Managing Public Money. From April 2017, the Government has committed to make a summary of the key points from these assessments available to Parliament when an Accounting Officer has conducted an assessment of a project or programme within the Government’s Major Projects Portfolio (GMPP).

This Accounting Officer Assessment considers the AMLAR Programme on joining the GMPP.

Background and Strategic Context

Money Laundering underpins a vast range of crime, creating thousands of victims each year and funding further crime. Money Laundering enables proceeds of crime to be converted into assets that appear to have a legitimate origin, which are retained permanently or recycled into further criminal enterprises.

Asset Recovery is a critical tool of law enforcement, with agencies using the Proceeds of Crime Act (POCA) 2002 powers to freeze and seize criminal assets, using these funds to compensate victims or reinvest in combatting economic crime, disrupting the business models that criminals rely on for further illicit activity.

In FY21/22, law enforcement restrained, seized, or froze £838m, of which £354m was subsequently recovered. While accurately assessing the scale of money laundering remains difficult, it is expected that these figures (and those from previous years) represent only a small proportion of the total value of money laundered in the UK. This varies between years, but accounting for inflation, has remained broadly stable since 2014.

Asset Recovery under POCA acts as a major deterrent to economic crime by depriving criminals of the assets they have acquired and by funding law enforcement activity to combat future economic crime. However, asset recovery has several challenges that must be addressed to ensure that it is fit for purpose in a changing and more sophisticated economic crime environment. The current system lacks capacity, awareness, and training on asset denial and recovery across law enforcement. The current process of confiscation and enforcement is subject to bottlenecks, and agencies are deterred from high-risk cases due to legal/resource implications. In addition, the current legacy IT system poses a threat to business continuity and causes inefficiency and limits effectiveness.

The vision of the AMLAR Programme is to uplift the law enforcement response to money laundering, by improving people capacity, skills, capability, and technology, to increase the prevention, detection, and disruption of money laundering and the recovery of criminal assets. The scope of the programme will enable better outcomes for anti-money laundering and asset recovery via a full system response, to overcome the inefficiencies and ineffectiveness within the system:

1. Increase knowledge and prevention: Money laundering is seen as a niche part of law enforcement. Lack of capacity and training hinders mainstream law enforcement’s role in recovering criminal assets.
2. Detect more money laundering: Limited intelligence capabilities hinder law enforcement’s ability to identify and pursue dirty money, particularly in identifying money laundering controllers/networks and growing threats and enablers, such as high-end money laundering and criminal use of crypto assets. .
3. Disrupt more money laundering: Limited capacity at national, regional and agency level to act on intelligence restricts the ability to seize and freeze assets, disrupt criminal gangs and the flows of criminal finance. Underpinning legislative powers and technology are not adapted to current threats and changing environment (e.g., new crypto-enabled money laundering).
4. Recover more criminal assets: Capacity challenges in investigation and prosecution inhibit high-risk cases from being pursued, leading to assets taking a long time to be recovered, often with a lower value than originally estimated and wasting specialist investigator time on storing and selling seized assets. Additionally, the underpinning case management system is obsolete, has increasing cyber risk, and has not evolved to accommodate new powers  (e.g., powers to seize crypto assets).

The AMLAR Programme will deliver improvements to the system that proactively detects and disrupts money laundering and new threats within it, such as crypto; steered by improved strategic and operational leadership and expertise; underpinned by the resources to realise the value of assets recovered, enabled by legislative frameworks and technology. It will achieve these objectives by:

1. Staff Uplifts: Uplifting c.475 staff, including Financial Investigators, Prosecutors, Lawyers, Intelligence Analysts, and support roles who will be detecting and disrupting money laundering and recovering further criminal assets across the National Economic Crime Centre (NECC), City of London Police (CoLP), Regional Organised Crime Units (ROCUs), His Majesty’s Revenue and Customs (HMRC), Crown Prosecution Service (CPS), Home Office (HO), and GCHQ.
2. Crypto: Focusing on crypto assets as an emerging threat by improving the storage solution and crypto-tracing technology used by law enforcement agencies (LEAs). This will enable increased asset recovery.
3. Technology: Building a new Asset Recovery IT (ARIT) system, improving data sharing capability between LEAs, and creating increased efficiencies for end-users, as well as system-wide efficiency savings. This will improve LEAs knowledge, enabling greater detection and disruption.
4. Legislation:  expanding Proceeds of Crime Act 2002 (POCA) powers for LEAs to increase opportunities for seizure and confiscation of assets (measures included in the Crime and Justice Bill).
5. Training and Guidance: Reforming the training and guidance for Financial Investigators.

The AMLAR Programme contributes to existing HM Government (HMG) commitments, including those set out in Economic Crime Plan 2^{[footnote 1]}, published by HMG in March 2023, a key outcome of which is to reduce money laundering and recover more criminal assets.

The Programme Business Case (PBC) was approved by the Home Office Finance & Investment Committee (F&IC) in April 2023 and subsequently by HM Treasury in July 2023.

Due to the whole life cost of the programme being in excess of £100m over 10 years, and the programme’s inclusion in the GMPP, an Accounting Officer Assessment is required.

Assessment against the Accounting Officer standards

Regularity

The plans in the AMLAR PBC are fully compliant with relevant legislation. The UK’s Anti-Money Laundering response is based in primary and secondary legislation; principally, the Proceeds of Crime Act 2002 (POCA) and Terrorism Act 2000, and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, and industry guidance, in accordance with Financial Action Task Force (FATF) international standards.

Delivery of the programme’s scope is dependent on new legislation, specifically the confiscation measures included in the Crime and Justice Bill.

The procurement route for the new Asset Recovery IT system will comply with HMG Commercial Standards and, where applicable, any delivery partner’s commercial policies. Commercial best practice will be followed when exercising procurement, using existing public sector frameworks where possible. The programme will be assessed and approved by the Cabinet Office Commercial Capability Team and HM Treasury.

Therefore, I consider the programme to conform to the Regularity Accounting Officer standard.

Propriety

The proposed course of action complies with managing public money (3.3.3 Value for Money).

The estimated cost of the programme at PBC was assessed as being affordable based on funding via the Economic Crime (Anti-Money Laundering) Levy. HM Treasury has approved the full funding request made by the department for the next three financial years (FY) from 2023/24 – 2025/26. This allocation has been incorporated into the cost model for the programme. The forecasted Whole Life Cost of this investment is £429.5m for the purposes of the PBC. This is a budgeted position spanning the 10-year lifecycle of the AMLAR Programme.

The effective management of these funds is overseen by robust governance and reporting arrangements, with clear roles and responsibilities, and clear accountability for expenditure that fully meets Home Office requirements. All governance structures are appropriately operated by a combination of representatives from the Home Office, delivery partners and other stakeholders, including law enforcement partners, ensuring appropriate representation at strategic and working group levels.

The programme funding made available to delivery partners is governed and controlled by appropriate grant agreements and bespoke Memorandums of Understanding (MOUs), including additional governance provisions for financial reporting requirements and liability for erroneous reporting to ensure the proper use of public funds given that the programme is recognised as a key mechanism for meeting Home Office and wider HMG commitments (including those within Economic Crime Plan 2).

It is anticipated that the programme will continue to remain compliant with Parliamentary control procedures and expectations. In line with these expectations, the programme’s funds are being managed with impartiality, honesty, and with the avoidance of personal gain, waste, and extravagance. The programme continues to have due regard for the Public Sector Equality Duty at section 149 of the Equality Act 2010 and is complying with Data Protection legislation, overseen by the Home Office assurance boards.

Given the programme’s robust governance framework, compliance with required standards and Parliamentary expectations, and importance to HMG commitments to protect the public, detect and disrupt money laundering, bring criminals to justice, and recover more criminal assets, I consider that the funding for the AMLAR Programme constitutes proper and effective use of public funds.

Value for Money

Money is at the centre of serious and organised crime. Disruptions and asset recovery are critical tools for law enforcement to disrupt organised crime groups and their business models, and thereby protect the public from harm. Currently, this leads to recovery between £194m and £354m criminal assets each year across over 180 agencies^{[footnote 2]}. Asset Recovery under POCA acts as a major deterrent to economic crime by depriving criminals of the assets they have acquired and by funding law enforcement activity to combat future economic crime.

Asset Recovery has several challenges that must be addressed to ensure that it is fit for purpose in a changing and more sophisticated economic crime environment.

Four options were assessed, including a ‘Do nothing’ approach. This assessment over the 10-year appraisal period showed that the preferred option (Option 2) represents the best combination of fit to strategic objectives and value for money, with benefits outweighing costs. This option will deliver benefits of £1,115.3m Present Value (PV) over 10-years, with discounted costs of £353.2m, a positive Net Present Value (NPV) of £762.0m and strong BCR of 3.2.

The programme’s benefits have been identified and validated through stakeholder interviews across the delivery partners, LEAs and POCA agencies, with the following monetised benefits delivering from FY 24/25:

• the upgrade of IT systems will result in time savings and address current inefficiencies in the collaboration between agencies and law enforcement. Time savings are estimated to deliver £92.2 million (PV) of benefits in asset recovery and disruption over 10 years, as well as £22.3 million (PV) of cost saving benefits, from reduced IT maintenance payments.
• the uplift in resources, legislative change and new IT system is expected to improve the effectiveness of asset recovery efforts as LEAs can go after more high value cases and crypto assets, which in turn is expected to result in increased asset recovery receipts.
• the estimated increase in asset recovery, including crypto assets^{[footnote 3]}, as a result of the programme over 10 years is £1077.1m (PV).

There are benefits which are non-monetised and include deterrence of criminals, enabling efficiency gains, increased dissemination of intelligence, and increased international asset recovery. Further work will be undertaken as part of annual refreshes to the business case to explore the quantification of non-monetised benefits.

Optimism bias has been assessed in line with the HMT’s Green Book guidance and applied to all options presented in the PBC. Sensitivity analysis has been conducted to evaluate key areas of uncertainty within the programme e.g., non-monetised benefits, availability of data relating to crypto assets and volatility of crypto assets’ value, to provide range estimates of costs and benefits. On presentation of this sensitivity analysis and its impact on the programme’s NPV as part of the AMLAR PBC, the Home Office F&IC was satisfied with the conclusions and confirmed that AMLAR offered sufficient value for money to proceed.

The appraisal concludes that the preferred option will deliver strong value for money and meet the strategic and SMART policy objectives with an ambitious, but achievable, scope that sits within a reasonable cost budget.

Value for money assessments will be conducted at each project level to satisfy approval requirements in line with Home Office governance arrangements.

Expenditure on the AMLAR Programme can be made under section 169 of the Criminal Justice and Public Order Act 1994.

Therefore, I consider the AMLAR programme to be robust and will deliver value for money.

Feasibility

The AMLAR Programme is not being delivered in response to legislative change, therefore there are no legal time limits that the Home Office is required to comply with around delivery.

The AMLAR Programme team is adequately resourced and has established structured delivery controls, including a detailed delivery plan which is regularly monitored (with changes managed through formal change control processes), proactive risk management supported by a regularly updated risk log and a robust governance structure which underpins the AMLAR Programme Board and Economic Crime Delivery Board. The resourcing of teams within key delivery partners is closely monitored by the AMLAR Programme team to ensure each project is delivering to time, cost, and quality constraints.

The programme is following good practice and adhering to all internal review and approval processes. The actions taken on recommendations from these regular internal assessments and assurance processes are borne out by the results of an external (Infrastructure Projects Authority) Gateway review undertaken in February 2023. The recommendations from the review which include finalising ownership of the new ARIT system, addressing challenges around recruitment and retention of financial investigators, as well as underlying elements of skills and capabilities, business readiness, dependency management and stakeholder engagement, continue to be addressed.

Therefore, I consider the feasibility standard to be satisfied.

Conclusion

The AMLAR Programme conforms to the Accounting Officer standards of regularity, propriety, value for money and feasibility. As the Accounting Officer for the Home Office, I have considered this assessment of the AMLAR Programme and approved it on 05 December 2023.

I have prepared this summary to set out the key points which informed my decision. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them.

This Accounting Officer Assessment will be published on the government’s website (GOV.UK). Copies will be deposited in the House Library and sent to the Comptroller and Auditor General, Treasury Officer of Accounts and Chair of the Public Accounts Committee.

Sir Matthew Rycroft KCMG CBE 

Permanent Secretary

1. Economic Crime Plan 2: Economic Crime Plan 2 2023-26 (publishing.service.gov.uk). Published in March 2023, the AMLAR Programme is responsible for delivering 8 of the 43 actions. ↩

2. Asset recovery statistical bulletin: financial years ending 2017 to 2022 - GOV.UK (www.gov.uk) ↩

3. It is important to note the volatile nature of the value of crypto assets and the data sensitivities surrounding these assets, hence the average assets value could be lower or higher, impacting the estimated benefits. ↩