The government announced in its latest budget plans to introduce a new £100m levy on companies to fight economic crimes. The money garnered from companies could be used to boost public financing of law enforcement technology and in hiring more prosecutors and investigators. The new levy has the potential to affect big corporates, banks, investment firms, accounting firms, estate agents, independent legal advisors, casinos, trust service providers and any financial institution subject to UK Money Laundering Regulations.

The National Crime Agency ('NCA) estimates that money laundering costs the UK economy some £100bn a year. The government is therefore concerned that the UK might be falling behind in its fight to curb illicit financial flows. This concern is further heightened with the onset of BREXIT where the protections of the EU in terms of financial regulation may no longer be available and the UK as an independent trading bloc may be more susceptible to attempts to contravene its money laundering prevention mechanisms. It is clear that one of the aims of the levy is to protect the UK's global reputation as a safe place to do business.

The so-called economic crime levy comes in the face of the continued failure of the government to make progress in its plans in regard to creating a corporate failure to prevent economic crime offence or otherwise overhauling the way the law deals with corporate criminal liability. This is despite the continued difficulties of the SFO in obtaining corporate convictions for economic crime, pointing to a need for a complete overhaul of the system.

It is arguable that the economic crime levy is another plaster on a festering sore. It fixes nothing that is wrong with the way economic crimes are currently dealt with in the UK. Instead what it means for the city and affected businesses is another tax to pay. Essentially, the levy is another financial burden on the financial services sector. It could not have come at a worse time, where international trade with the UK is in a state of flux and many financial firms are operating in a state of uncertainty.

At the moment, it is not clear what measures the government will use to determine how a financial institution will be made to pay the levy and how much it will be. The consultation on the levy is due to begin this spring and we await its outcome with much anticipation.

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