City of London Police seize more than £2 million in cross-border money laundering operation
Building on this, the NCA’s (newly re-appointed) Director General Lynne Owens confirms that the “threat to the UK from serious and organised crime remains chronic and corrosive” and the report itself cites a number of law enforcement outcomes through statistics with “a year in numbers” and case studies.
Whilst the annual report provides a performance overview of the NCA’s work across the whole spectrum of SOC, it confirms that it has “focused on preventing and disrupting criminal activities that threaten to undermine our economy.”
The report also details progress in relation to bribery and corruption – a theme covered in the sister report, also published in July 2020, the Anti-Corruption Strategy 2017-2020 : Year 2 Update. This topic is covered in a forthcoming blog. Our focus in this blog is on the NCA’s work to recover the proceeds of crime and its asset denial strategy.
The NCA repeats its position that “criminal enterprises undermine the UK economy, our integrity, infrastructure and institutions by, for example: laundering the proceeds of crime; defrauding businesses, the state and private individuals; and engaging in acts of bribery, corruptions and sanctions contravention.” It is reported that the National Strategic Assessment 2019 estimated the possible scale of money laundering that impacts the UK as being in the hundreds of billions of pounds annually. Fraud has over taken theft as the most prevalent type of crime, with an estimated 3.86 million incidents in England and Wales.
Critical to this, we are told, is the “system leadership role” provided by the National Economic Crime Centre (NECC), which has been funded through 2019-20. This was the NECC’s first full year of operation. See our related blog: The UK’s new National Economic Crime Centre.
The report champions the role of the NECC in successfully bringing together partners from the public and private sectors “to deliver a step change in the response to economic crime in the UK, and to better protect the public and UK economy from the effects of illicit finance.”
It confirms that at the heart of the Agency’s focus on tackling illicit finance has been “operationalizing” the NECC, and ensuring it carries out its functions effectively. The NECC has benefited in its first year from government funding targeted at tackling illicit finance, and it continues to build a business case for future investment: recognising the need to champion the value it delivers on behalf of the wider law enforcement system. Much of the report profiles inter-agency co-operation including overseas cases.
A warning note is sounded, however, with the confirmation that sustainable multi-year funding has not yet been secured, and that this is necessary to ensure the NECC’s continued effective operation.
See our related blog: Crunching the numbers: is the National Crime Agency right to seek additional funding?
The primary objective of asset denial is to disrupt criminal activity. The NCA sets out how asset denial is “an operational tactic” used to target the highest risks and to cause maximum disruption to serious and organised criminals.
New asset denial powers were introduced under the Criminal Finances Act 2017 and the NCA reports how it has been at the forefront of using these draconian powers - including the continued use of Account Freezing Orders (AFOs) and Unexplained Wealth Orders (UWOs). See our related Proceeds of Crime blogs.
Over the last year, the NCA obtained freezing orders on accounts containing in excess of £145m, and the report sets out that £9m was forfeited. Case highlights for the NCA are reported as: securing AFOs on accounts containing a total of more than £100m (the largest sum frozen using this type of order since they were introduced), and the first UWO for serious and organised crime.
In terms of tackling money laundering, the NCA claims to have improved its ability to respond to such threats primarily through the first year of the NECC’s operation and through the Joint Money Laundering Intelligence Taskforce (JMLIT). The NECC is reported as having made a “strong start” in providing system leadership in tackling the fraud threat, working close with law enforcement partners.
As a direct result of JMLIT support, 2019-20 saw: 56 arrests; 3,740 customers having their bank accounts closed; £3,398,776 restrained or seized; £9m of cash forfeitures and an additional £9m worth of cash seizures. The NCA also assisted in the seizure of a further £17.6m by other agencies.
Reference is made to the UK Financial Intelligence Unit (UKFIU), which operates the system for reporting suspicious activity and money laundering activity, and how in 2019-20 it received over 570,000 Suspicious Activity Reports (an increase of 22% from the previous year) and over 62,000 Defence Against Money Laundering applications (an increase of 94%).
The report also addresses the challenges posed by the COVID-19 “new reality”, predicting that “criminals were likely to adapt to the new circumstances with likely increases in the threats from hidden-harms, including child sexual abuse, cyber and fraud (particularly those using COVID-19 as a lure; for example, the online sale of PPE)”, and that the threat posed by the COVID-19 pandemic is a prime opportunity for enterprising criminals to play on people’s fear and anxiety.
We are told that the NECC is leading the law enforcement sector’s response to COVID-19 related fraud, working alongside its partners in the City of London Police to coordinate a whole-system response across law enforcement, government and regulators.
See our related blog on Fraud in the time of COVID-19 – the law enforcement response.
The report reflects that, during the lockdown, the NCA has “accelerated its innovative use of technology to overcome challenges in communicating with the criminal justice system”, though a note of caution is also sounded: “at the time of publication [July 2020], the full impact of the pandemic on the serious and organised crime threat is still emerging. “
Despite the obstacles posed by the pandemic, we can see from a number of recent high profile forfeiture cases that even with the police and court system facing unprecedented challenges, “asset denial” enforcement work remains very active.
For further information on the issues raised in this blog post, please contact a member of our criminal litigation team.
Jonathan Grimes is a Partner in the Criminal Litigation Department who specialises in serious and complex criminal cases. He represents individuals and organisations in all areas of financial services and business crime as well as health and safety and related areas. He has acted in numerous cases involving allegations of financial wrongdoing and has experience of investigations by SFO, FCA, HMRC, CMA, NCA and the police as well as a number of foreign investigative authorities. He has particular expertise dealing with law enforcement applications that seek to freeze or seize assets, including Account Freezing Orders and other applications made under the Proceeds of Crime Act (POCA). He frequently gives advice on money laundering issues including on the making of suspicious activity reports (SARs).
Ed Smyth is a Senior Associate in the Criminal Litigation Department and represents individuals and corporates involved across the full spectrum of criminal and quasi-criminal matters. He has considerable experience of confiscation and asset forfeiture proceedings and of challenging the exercise of search and seizure powers. He has acted in cases involving the SFO, the NCA, HMRC, the Information Commissioner, the Electoral Commission and various professional disciplinary bodies.
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