ICAEW has submitted its response to the Economic Crime Bill to MPs, expressing its support for the Bill while raising some concerns about the details within it.

“Colleagues have moved swiftly to analyse draft legislation published last week and likely to become law this week,’ says Graham Dale, ICAEW’s Head of Public Affairs and SRP. “The expertise of Chartered Accountants in areas of ethics and economic crime will help shape and make this legislation more effective. These recommendations were received by ICAEW Members of Parliament and other front bench teams in advance of Parliamentary debates this week.”

The current draft of the Bill proposes an 18-month transition period between the Bill becoming law and the date that overseas entities must be entered on the register. ICAEW is concerned that this gives criminals ample time to restructure their affairs and continue as normal and has recommended that a much shorter transition time be imposed.

“We are also concerned that the period in which overseas entities are required to update the register appears to be 14 days from the anniversary of the entry to the register, rather than within 14 days of becoming aware of any change, as required for the PSC register,” states the document. “We urge amendments to these timings as a matter of urgency.”

The register of overseas entities could act as a deterrent when it comes to the acquisition of UK land for money laundering, which is another step in the right direction. However, it is unclear how the submission of false information onto the register can be prevented effectively. Criminals could also hide behind informal nominee arrangements. “ICAEW considers that there can be no complacency on the part of Government in ensuring that sufficient checks to verify information on the register are carried out regularly.”

ICAEW also calls for greater clarity in the Bill in relation to two areas: the conditions requiring an overseas entity to be registered, and the provisions of Schedule 2, Part 4 relating to exemptions from registration.

ICAEW notes that the draft Bill contains a power allowing the Secretary of State to exempt individuals from key provisions of the new registration scheme for overseas entities, if doing so would be in the interests of the UK’s economic well-being. ICAEW has flagged its concern at the potential for this provision to work against the intended aims of the new legislation, which is to increase transparency.

Widening the scope of unexplained wealth orders (UWOs) to bolster UK AML defences is a welcome move, ICAEW said in its briefing document to MPs. However, UWOs must be used more effectively, ICAEW urged:

“We consider that lessons can be learned from the Criminal Assets Bureau (CAB) in Ireland, which has a high success rate in the use of UWOs, including in respect of staff resourcing and training,” ICAEW said in its briefing. “We recommend that this should be considered as part of the second iteration of the Government’s Economic Crime Plan, given our understanding that high-end money laundering is to be a key area of focus in the plan.”

Introducing a strict liability test for sanctions is viewed positively. However, greater clarity is needed for when criminal prosecutions, rather than civil proceedings, should be considered in response to a breach.

ICAEW also noted an opportunity for the government to streamline reporting obligations to avoid the need for dual reporting. Currently, Suspicious Activity Reports (SARs) are reported to the NCA and breaches of sanctions legislation are reported to OFSI. A unified reporting portal would allow the government to allocate resources more efficiently, and simplify reporting obligations for reporting entities, reducing bureaucracy in line with the Better Regulation Agenda.

ICAEW regulated firms are required to follow a risk-based approach to AML client due diligence; ICAEW continues to work closely with the authorities to ensure that the UK’s AML defences are as robust as possible.

ICAEW requires its members to work in the public interest and encourages them to take appropriate actions over and above what is required by legislation.