On 11 March 2020 the chancellor Rishi Sunak issued his first budget for 2020. Whilst it was overshadowed with focus on the global outbreak of COVID-19 there was a ray of light for campaigners seeking reform to combat the fight against money laundering.
The government announced its intention to introduce a levy to be paid by firms subject to the Money Laundering Regulations. According to the government this new income will allow it to tackle money laundering and meet the reforms detailed in the Economic Crime Plan issued in September 2019.
Whilst we await the published consultation on the levy, due for release in the spring, it is now clear, from the budget, that this will be directed at particular businesses within the private sector. We note that those who are certain to be affected are credit and financial institutions, external accountants, lawyers, tax advisers, insolvency practitioners, trust or company service providers, estate agents, high value dealers and casinos to name a few.
Funding to tackle economic crime has historically been taken from general taxation and the move to now require the private sector to fund the public sector is a key development in government policy. This additional investment could top up the budget by up to £100 million, allowing for enforcement agencies to increase staff and implement new technology.
However, given the current economic landscape one may argue that an additional levy will apply unnecessary pressure to businesses already struggling to meet recent changes to the regulations, including the EU’s fifth anti-money laundering directive imposed in January of this year.
Whilst this levy may appease some critics who have long questioned whether enough is being invested to tackle economic crime, those in the private sector may be suspicious about whether this levy will be put to good use and not just represent another tax on the private sector with no clear planning or structure as to how it will be spent. We wait to see how the treasury will address this later this year.
'...Funding to tackle economic crime has historically been taken from general taxation and the move to now require the private sector to fund the public sector is a key development in government policy...'
