Economic Crime: Law Enforcement — House of Commons, 2022-07-07
Topic: Law and Crime
Kevin Paul Hollinrake (Conservative, Centre-right): I beg to move, That this House notes that economic crime costs the UK economy at least £290 billion per year; recognises that law enforcement agencies are significantly under-resourced to deal with the scale of the problem and can be unwilling to properly enforce existing laws; is concerned at the fragmented nature of the enforcement landscape; and calls on the Government to bring forward an economic crime enforcement strategy that allows for a significant increase in resource to expand and restructure the fight against economic crime, including money laundering and fraud I thank the Backbench Business Committee for granting this important debate and the right hon. Member for Barking (Dame Margaret Hodge), who has worked closely with me on this issue. Too often in this place, we talk about legislation and not implementation. As the motion says, "economic crime costs the UK economy at least £290 billion per year"— probably a lot more than that—and our agencies are "significantly under-resourced" and "fragmented" I would like to say that things will get better, but actually they will get much worse. That is not a criticism of the Government or any of our agencies, although there are criticisms to be levelled; the reality is that things are moving so quickly in this space and in the ability of organised criminals—people who deal drugs, traffic people across continents, fund terrorism, and steal assets from foreign jurisdictions and foreign nations —to move money around Let me set out an example of how easy this is becoming—these are all instances running through one platform. There is a hackers group called Lazarus, which is in effect a state-funded agency for North Korea that funds the North Korean weapons programme. There is also Hydra, a dark net drug dealing network, as well as Grandefex, which is run by organised criminals, and Russian Government agencies. The thing they all have in common is that they use a crypto-exchange platform called Binance, set up by a guy called Changpeng Zhao Reuters has investigated how those organisations used Binance to move money around totally anonymously between 2017 and 2021. Until 2021, this was regulated by the Financial Conduct Authority, but still for this crypto -exchange, which moved bitcoins and lots of other currencies totally anonymously for those enterprises —for those funding terrorism and other nefarious enterprises —all people needed to do in order to register an account was to enter an email address. That was all people needed to do. There were no "know your customer" checks, no "know your client" checks and no ID requirements. People just had to enter an email address, which could easily be a fake one, and the money was moved around totally anonymously The owner of the organisation, Mr Zhao, said as recently as 2020, when speaking to his own staff, that he was driven by one thing and one thing only: growing his enterprise. This platform has now been banned in the UK as a regulated activity, but that does not stop UK people actually using it, because that is obviously how the internet works. He told his staff to "do everything" to increase market share, and spoke about "know your client" checks as being "unfortunately a requirement" The investigation by Reuters found that £2.35 billion was moved around in this way for nefarious ends, but a couple of billion pounds is just scratching the surface when we know that the amount of money washing through the UK is in the hundreds of billions of pounds. The UK plays a key role in this, and it is a role that we must acknowledge, and we must take responsibility for clamping down on this. We are getting nowhere near doing so at the moment We know that roughly 40% of our crime is economic crime, yet only 0.8% of our resources in man hours are dedicated to tackling economic crime, so there is a huge disparity. I think it is fair to say that the figure of £290 billion a year is a conservative estimate. It represents about 14.5% of our GDP as a cost to the UK economy, yet the application of resources to it adds up to 0.04% of GDP. There is a massive gulf in the cost to society and to this nation, as well as in many other ways. It is not just a financial cost, of course. As I say, there is drug dealing, people trafficking and all the things we are trying to tackle, yet money goes out through the backdoor to all these illegal enterprises Action Fraud reports on the impact on individuals, and I think that all of us, as constituency MPs, deal with individuals who have had money stolen from their accounts through things such as authorised push payment fraud. Action Fraud is not the most fit for purpose organisation on the planet. Anybody who has used it knows that the information just goes into a black hole, which is what Action Fraud is. It is going to be reformed, but just changing something’s name does not make it work. However, according to Action Fraud’s figures, £2.35 billion a year goes in that kind of small-scale fraud, which damages our constituents and small businesses directly.