Legislation to crack down on dirty money in the UK introduced in parliament

On 1 March 2022, the UK government brought forward the Economic Crime (Transparency and Enforcement) Bill. The legislation intends to clamp down on dirty money and was described by the government as a ‘landmark step’ towards doing so.

The Economic Crime Bill has been delayed for years (it was originally promised in 2016). However, since Vladimir Putin’s invasion of Ukraine, the city of London has come under increased scrutiny for its connection to money laundering. The National Crime Agency estimates that around £100bn of illicit financing is channeled through the UK each year.

Not only will the new legislation help the National Crime Agency prevent foreign owners from laundering their money in UK property, it will also ensure more corrupt oligarchs can be handed an Unexplained Wealth Order (UWO).

Announcing the plans, UK Prime Minister Boris Johnson said: “There is no place for dirty money in the UK. We are going faster and harder to tear back the façade that those supporting Putin’s campaign of destruction have been hiding behind for so long… Those backing Putin have been put on notice: there will be nowhere to hide your ill-gotten gains.”

Key parts of the bill explained

The draft of the Economic Crime Bill, which is currently being debated in parliament, contains several main reforms. These are:

A register of overseas entities

The bill will create a new register that requires overseas companies and individuals to declare the beneficial owners of all property bought in England and Wales over the past 20 years.

The planned register is designed to prevent criminals from hiding behind “secretive chains of shell companies”.

Unexplained wealth orders (UWOs)

UWOs were originally introduced in 2017. They allow a law enforcement agency to demand an explanation for how assets worth more than £50,000 were paid for.

However, in 2020, the National Crime Agency lost one of its test cases. This not only exposed flaws in the power of a UWO, but also left the taxpayer with a £1m legal bill.

The new bill will help smooth the path for UWOs. This is because the proposals will reduce the financial liability of pursuing a case as long as the law enforcement agency has demonstrated that it behaved reasonably and honestly.

Law enforcement agencies

On top of this, the new bill also proposes the creation of a ‘kleptocracy cell’ that will sit within the National Crime Agency and will investigate the most serious cases of sanctions evasion. The government says that the cell will ensure that those seeking to bypass the severe economic sanctions announced against Russia will be caught and punished.

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The sudden reappearance of the Economic Crime Bill shows how quickly anti-money laundering regulations can change.

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