The Economic Crime Bill: How It will Affect Money Laundering in the UK
With sanctions taking centre stage in the international response to Russia's invasion of Ukraine, property ownership transparency has become a top issue for the UK government. The government has pushed through the Economic Crime Bill with the aim of making it more difficult for the proceeds of crime to be laundered through the purchase of UK property.
On 15 March 2022, the Economic Crime (Transparency and Enforcement) Act 2022 was passed into law. The bill seeks to establish a register of overseas entities and their beneficial owners, amend financial sanctions law, and reform the UK's Unexplained Wealth Orders to empower criminal investigators.
A New Register of Overseas Entities
The main provision in the Economic Crime Bill is the establishment of a register of foreign entities that own property in the UK. Companies House will be in charge of the registry. If foreign businesses or legal entities fail to declare the beneficial owner of an asset, they will be charged with a criminal offence and sentenced to five years in prison. Financial penalties are also available.
The Unexplained Wealth Order (UWO) Regime
The measure in the Economic Crime Bill will strengthen the regime of Unexplained Wealth Orders (UWOs). When it appears that the beneficial owner cannot explain the source or origin of monies used to purchase UK property, UWOs are utilised. The regime's powers will be expanded so that the National Crime Agency (NCA) can target property owned by individuals and businesses as well as opaque institutions like trusts and foundations.
Although the NCA will be the primary force behind investigations into unexplained wealth, HMRC will play a key role if there are suspicions or dangers that the monies used to purchase the property may be liable to UK taxes.
The UK’s Golden Visa Scheme
Labour former minister Dame Margaret Hodge has long campaigned for light to be cast on Londongrad, she told The National News.
The UK's infamous golden visa scheme, which was discontinued in February this year, was a crucial component in England's money laundering issues.
The Labour government introduced the plan in 2008, allowing people with a minimum of £2 million in investment capital and a UK bank account to apply for residency.
In other words, the more money an applicant had and planned to invest in the UK, the faster their visa application was processed. On the same occasion, the applicant was granted indefinite leave to reside in the UK. The scheme allowed oligarch money to pour in. The issue was that the money was often dirty.
“In theory there were checks on this but, in practice, it didn't work,” Ms Hodge said.
“Of course, it was abused by oligarchs and kleptocrats who wanted to bring their dirty money into London and use the scheme to establish legitimacy and credibility in what was seen as a trusted jurisdiction.”
According to the anti-corruption monitor Spotlight, 6,312 golden visas — nearly half of all those given — were probed by UK authorities for threats to national security.
How Can Tookitaki Help?
As an award-winning regulatory technology (RegTech) company, we are revolutionising financial crime detection and prevention for banks and fintechs with our cutting-edge solutions. A game changer in the space, we improve risk coverage by democratising AML insights via a privacy protected federated learning framework, powered by a network of AML experts.
We provide an end-to-end, AI-powered AML compliance platform, named the Anti-Money Laundering Suite (AMLS), with modular solutions that help financial institutions deal with the ever-changing financial crime landscape.
- Our Smart Screening solution provides accurate screening of names and transactions across 18+ languages and a continuous monitoring framework for comprehensive risk management.
- Our Customer Risk Scoring solution features a dynamic customer risk scoring engine which adapts to changing customer behaviour to build a 360-degree risk profile thereby providing a risk-based approach to client management.
- Meanwhile, our Transaction Monitoring solution provides comprehensive risk coverage and suspicious activity detection via a one-of-a-kind typology repository and automated threshold management.
Our modern software solution is based on artificial intelligence and machine learning, which can manage the end-to-end of AML compliance programmes. Our solution can improve the efficiency of the AML compliance team and better mitigate compliance risk.
Speak to one of our experts today to understand how our solutions help your compliance teams to ensure future-ready compliance programmes.