The UK’s economic crime enforcement gap: the merits of a new funding proposal

The UK’s economic crime enforcement gap: the merits of a new funding proposal

Insight Blog

On 24 January 2022, the anti-corruption campaign group Spotlight on Corruption published a report on the state of economic crime enforcement in the UK (the “Report”).  The Report warns that “the UK is currently losing the fight against economic crime” because UK national level agencies responsible for enforcing economic crime (“UK Enforcement Agencies”) are “under resourced, over-stretched and out-gunned.

Its headline proposal for addressing this problem is the creation of an “economic crime fighting fund”, which would see the significant funds raised by UK Enforcement Agencies being reinvested on top of their core budgets which are allocated by the Government.

This post considers whether such a fund would help in fighting economic crime or whether simply throwing more money at the problem risks creating unwelcome incentives for UK Enforcement Agencies. 

UK enforcement difficulties

UK Enforcement Agencies have shouldered the burden of long-term government cuts.  Most agencies have seen their budgets decline in real terms since 2010 and the Report identifies a lack of funding as the key driver of weak enforcement outcomes. The evidence suggests that UK Enforcement Agencies are struggling. The SFO has faced criticism for its limited caseload and prosecution failures caused by disclosure errors and the picture is similar across other UK Enforcement Agencies, with the NCA securing fewer than five prosecutions a year for economic crime offences between 2016 and 2021 and prosecutions for money laundering falling by 35% over the same period.

Economic crime fighting fund – a flawed proposal?

The Report’s proposal for the future funding of UK Enforcement Agencies offers, on its face, an attractively simple way forward. However, the solution has two key problems:

  1. It connects UK Enforcement Agencies’ funding levels with the proceeds they recover through enforcement, for example through deferred prosecution agreements and asset recovery orders. This risks incentivizing the agencies to prioritize the most lucrative cases (i.e., targeting the companies with the deepest pockets), and favor the most financially advantageous resolutions above the less lucrative alternatives.
  2. It gives the impression that money alone is the solution. The UK Enforcement Agencies’ failures, however, cannot solely be left at the door of underfunding. In support of this proposition are recent comments made by the Director of the SFO, highlighting that the “focus on financial resources is over-simplistic” and that “our relatively modest budget doesn’t prevent us from delivering”. Culture, leadership and training all have an important role to play in making UK Enforcement Agencies effective and helping them to attract and retain talent. Before committing to any new funding, clear proposals are required to explain how further investment would be targeted to solve existing problems.

Conclusion

The Report paints an effective picture of UK Enforcement Agencies in crisis. However, simply funneling more money into the current system may not prove to be a panacea, were it to even be possible. Instead of expending energy creating a new funding mechanism, greater consideration needs to be given to how any new investment is better utilized to provide the most value for money for taxpayers, in the hope that any resolution decisions are reached in a manner that is driven by the interests of justice and not UK Enforcement Agencies’ balance sheets.

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