UK's new Economic Crime Bill: more power to seize cryptocurrency and sanction Russian oligarchs
Updated: Sep 26, 2022
UK Law Enforcement will be given more powers to combat illicit finance, including the ability to seize cryptocurrency assets and tighter sanctions on Russian oligarchs.
The new powers were outlined in the "Queen's Speech," delivered in her absence by her son, Prince Charles, in the UK parliament today.
The speech lays out the government's legislative agenda, which is led by Prime Minister Boris Johnson (pictured).
The bill also grants authorities new powers to seize Bitcoin and other crypto assets, which are commonly used to fund ransomware attacks, more quickly and easily.
The legislation, according to the British government, will ensure that "Putin's cronies" do not benefit from the UK's open economy, following increased scrutiny of Russian money in the UK following the invasion of Ukraine.
"A Bill will be brought forward to further strengthen powers to tackle illicit finance, reduce economic crime and help businesses grow," said Prince Charles.
In March, the government passed the Economic Crime Act, which gives authorities the authority to sanction hundreds of Russian individuals and entities, similar to what the European Union and the United States have done.
The Bill, according to Home Secretary Priti Patel, is a "very substantial piece of legislation" that includes sweeping reforms to Companies House and limited partnerships, as well as powers to seize crypto-assets from criminals and information-sharing on money laundering.
The bill aims to combat economic crime, such as fraud and money laundering, by strengthening consumer and business protections.
In order to prevent people from registering companies fraudulently, this includes identity verification for people who manage, own, and control companies and other UK-registered entities.
Infants and unborn children could previously be registered as company owners or directors under the system.
This comes after a public consultation on how Companies House could be improved "to improve business transactions and tackle economic crime."
It will also look at how limited partnerships can be abused, including the use of Scottish Limited Partnerships, which are a popular way for criminals to launder money. However, these plans were first announced in 2018.
The Bill's provisions to combat fraud and scams, which he described as the "most prevalent type of crime" in the country, were welcomed by David Postings, chief executive of industry body UK Finance.
"This Bill should focus on measures that prevent fraud happening in the first place and provide greater enforcement powers to tackle those who commit economic crime," he added.
A new civil forfeiture process will be implemented to reduce the risk posed by those who are unable to be prosecuted but use their funds to "further criminality."
Authorities have been grappling with how to seize cryptocurrencies for several years, and despite new regulations, they are still relying on old laws to do so.
HMRC was the first UK law enforcement agency to seize three Non-Fungible Tokens (NFT) in February, as part of a larger investigation into a suspected VAT fraud involving 250 alleged fake companies.
Suspects are accused of using "sophisticated methods" to conceal their identities, including false and stolen identities, false addresses, pre-paid unregistered mobile phones, false invoices, and posing as legitimate business owners, according to HMRC.
The seizure "serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC," said Nick Sharp, deputy director of economic crime, at the time.
Authorities were still relying on money-laundering laws drafted in 2002, according to Andrew Sackey of Pinsent Masons, "when cryptocurrency was clearly not at the forefront of lawmakers’ minds."
By fLEXI tEAM