To prevent the flow of dirty money from kleptocrats and criminals through its economy, the U.K. government has introduced a new crime bill. The legislation aims to combat an estimated £100 billion flow of dirty money in the country by empowering authorities to “seize, freeze and recover” crypto assets. Following Russia’s invasion of Ukraine, politicians in the U.K. are motivated to strengthen the Economic Crime Transparency and Enforcement Act with these additional measures.
Historic Crime Bill
The Bill, according to one source, represents the most significant proposed reform to the role of Companies House in 170 years. As it stands, the legislation will expand SFO “pre-investigation” powers for companies registered in the U.K. and those of the National Crime Agency (NCA). The SFO’s Chief Intelligence Officer, John Kleity, described the Bill as “a welcome step in the challenging fight against fraud, bribery, and corruption.”
Should the Bill become law, companies registering in the U.K. will be compelled to undergo enhanced identity verification and checks against fraudulent registration information. Such measures will help law enforcement “stay one step ahead” of companies and individuals who could be connected to money laundering or terror financing.
Addressing the Dark Side of Crypto
Digital currencies are infamous for being popular among organized criminals who launder money obtained through fraud, drug sales, and cybercrime. The Proceeds of Crime Act will be modernized by giving agencies the authority to keep up with the rapid advancement of technology and stop assets from being used to support new crimes.
The Metropolitan Police reported a considerable increase in cryptocurrency seizures last year, indicating that the use of this digital currency has significantly expanded in recent years. Inevitably, as cryptocurrency grows, so too will the number of scammers and malevolent actors. Australians have reportedly lost more than $200 million this year in crypto scams.
Graeme Biggar, the director general of the NCA, said, “Cryptocurrencies are being used excessively by criminals both domestically and internationally to hide the proceeds of their crimes and corruption. They have done this for a long time using British corporate structures. These much-awaited measures will help us get rid of both.”
Enhanced Verification for Registered Companies
Companies House will also be given greater authority to check, question, and reject false or fraudulent material due to the reforms. By strengthening the registration and transparency requirements for limited partnerships, including those registered in Scotland, the Bill will also aid in preventing their abuse for money laundering and other nefarious purposes.
Additionally, investigative and enforcement capabilities will be strengthened, allowing Companies House to cross-check data with public and private partners to alert security and law enforcement of potentially illegal activities.
Reducing Barriers to Crypto Adoption
Members of the crypto community online support the inherently decentralized nature of cryptocurrency. However, for digital currencies like Bitcoin and Ether to reach the masses, some centralization is inevitable and beneficial. The United States Federal Trade Commission (FTC) reported that retail investors were conned out of more than $1 billion by crypto scammers since 2021. Legislation such as those proposed in the U.K. can also help law enforcement recover stolen assets for consumers who have fallen victim to such schemes.
Conclusion
Motivation for the reforms stemmed from a renewed national interest in rooting out Russian oligarchs. Law enforcement hopes to more easily identify individuals attempting to hide illicit gains through U.K. property and to help enforce sanctions against Russia, including freezing Russian-owned UK assets. Nothing has yet been officially amended to the law. The proposed Bill will get its second reading next month as it makes its way through Parliament.
