No deal Brexit and financial crime: proposed regulations published

25 January 2019

The next in this series of our “no deal Brexit” blogs looks at the implications for measures tackling proceeds of crime. As politicians continue to wrangle over the future, one of the latest technical regulations designed to prepare for a no deal Brexit has been published – that which relates to policing and criminal justice - The Law Enforcement and Security (Amendment) (EU exit) Regulations 2019 (the Regulations).
 

These Regulations deal with a number of major issues relating to policing and criminal justice, including the fact that the UK will no longer be party to Europol and Eurojust, removal of the European Arrest Warrant as an extradition tool (see our related blog), the withdrawal of the European Investigation Order and proceeds of crime measures. It is worth noting that a separate instrument deals specifically with Money Laundering and Terrorist Financing.

Part 20 of the Regulations makes amendments to deal with deficiencies arising in relation to proceeds of crime legislation, primarily the Proceeds of Crime Act 2002 (POCA) as amended by the Criminal Finances Act 2017.

As set out in the Explanatory Memorandum, the amendments are required to remove the provisions introduced under EU legislation on mutual recognition of asset freezing and confiscation orders. Provisions under EU law also cover the definition of a financial intelligence unit (FIU) and the sharing of financial information to tackle money laundering between FIUs. The EU measures also provide for the Asset Recovery Offices, which trace and identify property that is the proceeds of crime. Certain provisions in POCA also rely on definitions which are contained in EU law, such as the definition of groups of companies and references to EEA banks.   

Should the UK withdraw from the EU without a deal in March 2019, the UK will no longer be bound by these EU measures. Part 20 of the Regulations contain a series of detailed amendments to UK legislation to deal with the fact that the UK will no longer be party to specific EU instruments and deals with terms and definitions. They also provide for transitional provisions to ensure that cooperation can continue where a request was sent or received prior to exit day.

Consequences

The exclusion of the UK from measures that allow for the quicker transmission and recognition of asset freezing and confiscation orders, between Member States, will arguably have a detrimental impact on the UK’s stated priority (Serious and Organised Crime Strategy) that: “this Government is committed to denying the most dangerous and determined criminals access to their money and assets”. Indeed, tackling illicit finance is one of the key priorities of law enforcement and government with the opening of the National Economic Crime Centre (November 2018) (see our related blog) and the launch of the Economic Crime Strategic Board (see our related blog). Whether this sits with losing operational mechanisms to tackle economic crime with our nearest neighbours remains to be seen.

Further information

For further information on the issues raised in this blog post, please contact a member of our criminal litigation team.

You may also be interesting in reading our previous blog in this series, No deal Brexit: what this would mean for extradition, or visiting our Brexit hub for comment on these and other legal issues.

About the author

Jonathan Grimes is a criminal lawyer specialising in serious and complex criminal cases. His practice includes all areas of financial services and business crime as well as health and safety and related areas. He advises in a wide variety of other criminal law matters with a particular emphasis on cases with an international aspect, including war crimes and related work. Jonathan is rated as a leading expert in Chambers UK and Legal 500 UK.

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