Wine as an investment – the wine merchant’s risk
On 11 December 2017, the UK government published its five year Anti-Corruption strategy with the aims of preserving the UK’s status as “one of the safest and cleanest places in the world to do business", and “building a strong, confident Global Britain”. Since 2010 the UK has taken significant steps to fight bribery and corruption, and is now ranked, according to Transparency International, as one of the ten least corrupt countries in the world. Notwithstanding this, money laundering and corruption remain a growing threat: the National Crime Agency estimates that over £90bn are laundered through the UK economy each year.
To address this threat, the Anti-Corruption strategy identifies six key priorities, which include the strengthening of the UK’s integrity as a global economic centre. The strategy plans to achieve this through, inter alia, an increased “strategic oversight from across the government that enables... agencies to prioritise activity better, drives performance and aligns funding and capability” as well as through “stronger law enforcement, prosecutorial and criminal justice action”. To support these efforts, the Home Office created the National Economic Crime Centre (“NECC”), which started operating on 31 October 2018.
This was swiftly followed by the publication of the Serious and Organised Crime Strategy 2018 which confirmed the NECC as the national authority for the UK’s operational response to economic crime.
The NECC is an overarching body whose function is to coordinate the UK’s national response to economic crime by tasking and co-ordinating the UK’s different prosecuting bodies, supported by “enhanced analytic capabilities and intelligence”. Its aim is to improve the UK’s ability to fight economic crime, with a particular focus on money laundering and corruption offences, by enhancing cooperation between different law enforcement agencies, but also with the Government and the private sector.
The NECC is based at the Head Quarters of the NCA and operates with a staff of around 55, recruited mainly from the NCA, the Serious Fraud Office (“SFO”), HM Revenue & Customs, the City of London Police and the Financial Conduct Authority. Its first annual budget is in the region of £6m.
The reaction of the legal community to the creation of the NECC on Halloween has been mixed – observers have identified both tricks and treats as it were.
By coordinating work and improving cooperation, the NECC seems to enable prosecuting agencies, the government and private sector to pool their complementary skills, knowledge and expertise and therefore improve the UK’s efficiency in fighting economic crime. In addition, the NECC’s responsibility to direct and coordinate different law enforcement agencies, will reduce the risk of offences not being duly prosecuted as a result of falling through the cracks which exist between the various agencies’ remits. It may also be that, under the direction of the NECC, the SFO will become more active in investigating and prosecuting money laundering offences as well as serious fraud.
There are doubts, however, as to whether the NECC will prove significant in improving UK’s ability to fight economic crime. One of the main concerns is how far the improvements intended to be brought by the NECC really extend: inter-agency cooperation is not a new characteristic of the fight against crime in the UK and many of the powers conferred to the NECC are already held by the NCA. Concerns have also been expressed over whether the NECC will have any effect in increasing prosecutions in cases which fall outside the SFO’s remit but also outside the police and CPS’ usual purview.
Further, because the NECC has the power to direct the SFO to carry out investigations, there is a risk that the creation of the NECC could undermine the SFO’s carefully guarded independence. This risk is particularly significant because the NECC is a governmental body – part of the Home Office - while the SFO answers to the Attorney General’s Office and so is non-governmental, a structure designed to ensure that its prosecutorial decisions remain independent of political influence.
The proposed funding of the NECC gives further cause for concern. The Minister of State for Security and Economic Crime has indicated that the NECC’s resources could, in part, be drawn from existing agencies such as the NCA and SFO: potentially impacting not only their independence but also their available resources.
The SFO has not officially addressed these concerns. On the contrary, the newly appointed director of the SFO, Lisa Osofsky, has stated that it is “exciting to participate in [the NECC’s] development” and that the SFO “look forward to playing a vital role in continuing to bring UK law enforcement efforts together”.
The creation of the NECC was also a topic of discussion at a recent appearance by the SFO before the House of Lords committee enquiring into the effectiveness of the Bribery Act 2010. During the session Hannah von Dadelszen, Head of the SFO’s Fraud Division, welcomed the NECC as “providing a whole new mechanism for multi-agency collaboration”.
We will have to wait and see whether the NECC effectively fulfils the role and responsibilities which the Anti-Corruption strategy has conferred upon it, and what the real impact of the NECC on Britain’s ability to fight economic crime will be.
What is clear however is that the UK Government is taking active steps to strengthen its security and to hedge against the threats posed by corruption and other economic criminal offending, in order to protect its reputation as one of the world’s safest places to do business. This is of particular importance in light of the uncertainties surrounding the UK’s exit from the EU and as part of the UK’s efforts to continue attracting business and capital from abroad following Brexit.
This blog was co-authored with Virginia Tournon in the Criminal Litigation Team.
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