Good from bad? – the use of financial crime penalties

Good from bad? – the use of financial crime penalties

BCL Partner, John Binns writes for Money Laundering Bulletin analysing a new report from Spotlight on Corruption.  

*Here is a short extract from the article:

How should we fund the fight against financial crime? John Binns, partner in the Financial Crime team at BCL Solicitors, analyses a new report which puts forward a provocative proposal.

An obvious solution?

Financial crime is a costly business, both in terms of the damage it does to victims, society, and the state, and in terms of the efforts put in to detecting, disrupting, and punishing it, which are largely funded by the taxpayer. The cases where offenders are brought to justice and pay penalties, while of course a small minority, nevertheless bring in significant sums of money to the Treasury. So, if we are looking, as we undoubtedly are, to find new ways of paying for those efforts, are we not missing an obvious solution?

A new report from Spotlight on Corruption seems to think so, suggesting that the revenue from those penalties might be added to the budgets of the various state agencies involved, as a way of injecting new fuel to the fight against financial crime. But, while it has its superficial attractions, the idea that state agencies might fund their work in this way also raises some complicated questions; indeed, it might ultimately do more harm than good.

A complicated landscape

As others have noted recently, the landscape of state agencies charged with tackling financial crime is complicated. Along with local police forces and trading standards, the national agencies involved include the Crown Prosecution Service (CPS), the Financial Conduct Authority (FCA), HM Revenue and Customs (HMRC), the National Crime Agency (NCA), and the Serious Fraud Office (SFO).

All these agencies have their own distinct roles, which (except for the SFO) go beyond financial crime. Most of these agencies are funded through general taxation, except for the FCA, which is funded by the firms it regulates. HMRC (and, in some cases, the NCA) can collect interest and penalties, on top of taxes due, where non-payment was reckless or deliberate.

*This article was first published by Money Laundering Bulletin on 10 February 2022. If you wish to read the full article, please visit Money Laundering Bulletin website.

Please note that you will need a subscription with Money Laundering Bulletin to access the article.

John Binns is a partner at BCL specialising in all aspects of business crime, with a particular interest in confiscation, civil recovery and money laundering under the Proceeds of Crime Act 2002 (“POCA”). His business crime experience includes representing suspects, defendants and witnesses in cases invoking allegations of bribery and corruption, fraud (including carbon credits, carousel/MTIC, land-banking, Ponzi and pyramid scheme frauds), insider trading, market abuse, price-fixing, sanctions-busting, and tax evasion. He has coordinated and undertaken corporate investigations and defended in cases brought by BEIS, the FCA, HMRC, NCA, OFT, SFO and others.

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