UK Doubles Economic Crime Levy for Big Banks After Missing Revenue Target

The UK government has doubled the amount big banks must pay under the Economic Crime Levy, after the tax fell short of a critical funding goal in its first full year. A new report from HM Treasury revealed that the charge brought in £90.7 million during the 2023/2024 financial year—missing the anticipated £100 million target.

The Economic Crime Levy was introduced to finance efforts by state agencies to combat financial crime. These agencies had planned their budgets on the expectation that the levy would generate the full £100 million.

“During the financial year 2023-24, it became clear that receipts would not meet the £100 million target, and spending plans were revised down accordingly based on expected receipts of £90 million,” HM Treasury stated in the report.

In light of the shortfall, the government has taken decisive action by increasing the levy rate paid by 'Very Large' financial institutions—those with annual revenues exceeding £1 billion. Previously charged £250,000, these institutions are now required to contribute £500,000 under the revised structure.

“By only increasing the rate paid by ‘very large’ entities, the government ensured that levy rates remained below 0.1% of revenue for all entities. And below 0.05% of revenue for ‘very large’ entities,” HM Treasury said.

Officials now estimate that the charge will raise approximately £115 million per year from April 2024 onward. The levy, according to the Treasury, “provides a sustainable, long-term source of funding for measures to tackle money laundering.”

The funds generated have already made a measurable impact. The government allocated the 2023/2024 levy revenues to a range of anti-money laundering (AML) initiatives. These included a £19.9 million investment in IT transformation as part of the Suspicious Activity Reports (SARs) Reform Programme.

Additionally, 200 AML professionals were hired across several state bodies. Among these were 30 new specialists appointed at the National Crime Agency (NCA), and 65 new financial investigators assigned to police forces.

The Treasury also noted the creation of two intelligence teams, comprising around 30 personnel, within Companies House and the Insolvency Service.

“Discussions on the second round of levy allocations, covering 2026-27 to 2028-29, are ongoing and will be announced to a Spending Review Phase 2 timeline,” HM Treasury added.

By fLEXI tEAM