How is the UK’s 5 year anti-corruption strategy progressing?

Overview

The government has published a report detailing its progress in 'year two' of the implementation of its 2017-2022 anti-corruption strategy (the Report). This update explores some points of note from the Report and looks to the future as various government agencies navigate the challenges created by the COVID-19 pandemic and Brexit.

In summary, the Report highlights the successful employment of various new anti-corruption measures that the government has added to its armoury. Parliamentary gridlock has, however, contributed to an increased number of anti-corruption deadlines being missed; a pressure that does not look set to subside in 2020 given the upcoming legislative burden of Brexit.

Performance analysis

The Report emphasises the "great deal" of success that the UK has enjoyed in its progress against its anti-corruption strategy commitments (the Commitments) during the year ending 31 December 2019, preserving its place at the forefront of the global fight against corruption. Some particular highlights include:

• the increased use of Unexplained Wealth Orders (UWOs) and Account Freezing Orders, to identify and seize property and bank accounts from those suspected of having obtained them corruptly; and

• a growth in activity by the Office of Financial Sanctions Implementation (OFSI), which issued its first penalties against three companies for breaching financial sanctions and published updated guidance on the post-Brexit financial sanctions regime in February. For further information on OFSI's priorities enforcement in 2020, see our insights article here.

However, the highest profile UWOs obtained so far are currently awaiting an appeal against a High Court decision to discharge them, a decision which left the NCA with a large legal bill and a less than ringing endorsement, when the judge found that the UWOs were 'flawed by inadequate investigation into some obvious lines of enquiry'. The Report also identifies a number of Commitments in respect of which deadlines set in 2017 have been missed. These include Commitments to:

• increase transparency and improve accountability in policing by overhauling police complaints and discipline systems, reforming the Independent Office for Police Conduct and strengthening protections for police whistle-blowers;

• improve protections for whistle-blowers including by reviewing the effectiveness of the Department for Business Energy and Industrial Strategy's Whistleblowing Guidance for Employers and Code of Practice and recent changes to the whistleblowing framework introduced by the Enterprise and Regulatory Reform Act 2013; and

• establish a public register of beneficial ownership of overseas legal entities.

Although not a specific Commitment, a further notable area that has not seen any progress is the government's examination of the case for reform of the law on corporate liability for economic crime. The Report simply states that "this is a complex area with diverse and often conflicting views emerging out of the Call for Evidence which raised several important factors that need careful consideration."

The number of Commitments that have not been implemented within the specified timeline has increased since the last update from the government on its progress. One reoccurring theme in its explanation for this is "pressures on securing Parliamentary time", presumably attributable to the legislative burden created by Brexit and emergency legislation in response to the COVID-19 pandemic. These pressures are unlikely to subside in the short term.

Public-private sector partnership investment

The Report also addresses the National Crime Agency's (NCA) increase in investment in improving the UK's response to serious and organised crime, including corruption. For more detail on the NCA's recent activity, see our article. One of the focuses of this investment has been the multi-agency National Economic Crime Centre (NECC) and in particular its work with banks, law and accountancy firms in the private sector.

The Report also highlights a number of other public-private sector partnerships that have been the subject of government focus over the last 12 months including:

• the Joint Fraud Taskforce, which was relaunched in October 2019 with a broader membership reaching beyond the financial sector to address vulnerabilities in other sectors including telecommunications;

• the Joint Money Laundering Intelligence Taskforce (JMLIT), which has:

  • assisted in over 750 law enforcement cases and in the production of 48 Alert reports, which have been shared widely across the financial sector to increase awareness of financial crime risk indicators and improve mitigation strategies;

  • expanded its banking sector operations group to include two money service businesses and three additional retail and corporate banks and the creation of an additional expert working group covering tax evasion; and

  • set up intelligence sharing expert working groups for both the legal and accountancy professional body supervisors, in conjunction with the Office for Professional Body Anti-Money Laundering Supervision and the NECC.

Priorities for 2020

Despite the continuing challenges arising from the COVID-19 pandemic and the roll-out of Brexit, the Report suggests that the next twelve months will see renewed focus on:

• opportunities to include co-operative international anti-corruption measures in the UK's future trade deals. The Report indicates that as the UK becomes an independent trading nation in 2020, there will be "new opportunities to tackle corruption" through the forming of new partnerships with "old allies and new friends";

• further development of the capabilities of the NCA and the NECC to tackle economic crime;

• the proposed reform of the Suspicious Activity Reporting (SAR) regime;

• improved protections for whistleblowers; and

• campaigning for a new global norm of open registers to show who owns and controls UK companies.