What is Economic Crime?
Economic Crime refers to a variety of activities involving money, finance or assets, that criminals use to obtain a profit or advantage or cause loss to others. This causes serious harm to society and individuals by:
- allowing criminals to benefit from the proceeds of their crimes or fund further criminality
- damaging our financial system and harming the interests of legitimate business
- undermining the integrity of the UK’s financial reputation
- poses a risk to the UK’s prosperity and national security.
The government is committed to tackling economic crime and illicit finance, and looking to the support of law enforcement, regulators, businesses, and the public in helping us all achieve this aim.
CILEx Regulation’s role in preventing and detecting economic crime
As an AML supervisor and one of the regulators who has taken steps to uphold the government’s sanctions regime, CRL has already recognised its responsibilities to work to address the known or unknown facilitation of economic crime amongst our regulated communities. This is also enshrined within the existing regulatory objectives and CRL has set out these obligations and expectations within the CILEX Code of Conduct.
Our regulated individuals and firms are required to comply with the CILEX Code of Conduct and Principle 4 requires them to:
“Comply with your legal and regulatory obligations and deal with regulators and ombudsmen openly, promptly and co-operatively.
You must understand and comply with the law and regulation applicable to you.”
Therefore, CRL has an expectation of those it regulates that they take action to both prevent and report any economic crime and comply with the relevant legislation that is in place to protect us all from economic crime. If there is evidence that you do not comply with your legal obligations, then CRL may take appropriate disciplinary action.
CRL provides guidance to assist our individuals and firms and the links on this page will help you with complying with our expectations specifically on money laundering and financial sanctions.
The Economic Crime and Corporate Transparency Act 2023 and the Ninth Regulatory Objective
The Economic Crime and Corporate Transparency Act 2023 came into effect on the 26 October 2023 and, in addition to other reforms and new powers, provided clarity on the legal regulators obligations and responsibilities by adding a new regulatory objective to the Legal Services Act 2007
The new regulatory objective relates to: “Promoting the prevention and detection of economic crime”.
Economic crime is defined as meaning an act which –
(a) constitutes an offence listed in Schedule 11 (“a listed offence”),
(b) constitutes an attempt or conspiracy to commit a listed offence,
(c) constitutes an offence –
(i) under Part 2 of the Serious Crime Act 2007 (England and Wales and Northern Ireland: encouraging or assisting crime) in relation to a listed offence, or
(ii) under the law of Scotland of inciting the commission of a listed offence,
(d) constitutes aiding, abetting, counselling or procuring the commission of a listed offence, or
(e) would constitute a listed offence or an offence specified in paragraph (b), (c) or (d) if done in the United Kingdom;
CRL is working with the Legal Services Board and the other legal regulators to establish shared principles and expectations for delivering against this new objective.
Failure to prevent fraud – new offence from September 2025
The new failure to prevent fraud offence comes into force in September 2025. It is being introduced under the Economic Crime and Corporate Transparency Act 2023 (Act) and targets large organisations to encourage a `proactive corporate-cultural shift around fraud prevention’.
The offence applies to all organisations that meet two of the following: Have more than 250 employees; have more than £36 million turnover; have more than £18 million in total assets. The criteria apply to each organisation, including its subsidiaries.
Economic Crime Objective
The Economic Crime objective came into force in October 2023 requiring legal regulators and authorised persons to promote the prevention and detection of economic crime. Guidance about the scope of this objective is on the CRL website. CRL has recently responded to the LSB’s consultation on a statement of policy to give legal regulators ‘confidence to respond to, and pursue the prevention and detection of, economic crime within the legal services regulatory framework’. The consultation proposes the following outcomes:
(a) Understand the risks and issues that may lead to the regulated sector facilitating economic crime and take appropriate actions to prevent and detect their occurrence.
(b) Ensure that authorised persons understand their duties and the risks related to economic crime in the provision of legal services and are supported to act in a manner that upholds the rule of law and adheres to the professional principles and other regulatory obligations.
(c) Monitor authorised persons’ compliance with any standards developed by regulators to support the prevention and detection of economic crime and address instances where authorised persons fail to comply.
(d) Regularly evaluate any implemented standards and procedures to ensure they continue to be fit for purpose in addressing economic crime risks over the long term.
The AML Statements which all CRL firms are required to answer last year included for the first time questions about fraud, in particular whether any firm had been a potential target or victim of fraud. The purpose is to understand the nature of risks which CRL firms are experiencing and identify what further steps CRL should take to provide support.
Who is involved in the UK’s Economic Crime Response?
The UK’s response to economic crime is a collaborative effort and it starts with our regulated individuals and firms:
Additional resources
Gov.uk Economic Crime and Corporate Transparency Act 2023 – factsheets
The threat of economic crime – CRL’s AML Feature in the CILEX Journal (Autumn 2024)
CRL’s monthly newsletter – includes regular Economic Crime updates and guidance
CRL’s Economic Crime updates
Home Office Economic Crime Quarterly Newsletter
Please contact info@cilexregulation.org.uk with any queries.
