The story of cryptocurrency in the United Kingdom is one of evolving scrutiny and growing recognition that regulatory and legislative change is needed. Government officials, lawmakers, and policymakers are now acknowledging the imperative for more stringent oversight of crypto-assets. On October 26th, the Economic Crime and Corporate Transparency Bill received Royal Assent to become an Act of Parliament and enter UK law. With this, UK law enforcement will significantly expand their powers over cryptoassets, which could lead to an uptick in seizures and confiscations.
In the video and blog post below, hear from Chainalysis Head of UK Policy Jordan Wain on the details of this Act and some of the other key regulatory and legislative drivers of change that have happened in the UK in the economic crime arena when it comes to cryptoassets.
The ECCT Act: The Powers
The Economic Crime and Crypto Technologies (ECCT) Act has the potential to revolutionise how law enforcement agencies combat crypto-related crime. It introduces a range of additions and amendments to strengthen the fight against economic crime. For example, it establishes a new “failure to prevent fraud” offence, which holds large firms accountable for not adequately safeguarding against fraud. The Act also grants Companies House greater powers to scrutinise and remove suspicious entries from their register, while enhancing anti-money laundering measures to break down public-private barriers around information sharing to facilitate the prevention, investigation, and detection of economic crime. And, importantly, when it comes to cryptoassets, it expands the scope of economic crime to include crypto-assets for the first time.
Under the ECCT Act, law enforcement agencies gain significant authority to seize, store, and potentially sell or destroy crypto-assets as part of investigations. This change is expected to streamline investigations and asset recovery processes while, ensuring that criminals can’t so easily use cryptoassets to move, hide, or use the proceeds of criminal activity. It will also act as a powerful deterrent that could help cut the growing number of victims of economic crime in the UK, and be used to add to current funding dedicated to the disruption of economic crime.
Second Economic Crime Plan: The Strategy
Earlier in the year, the UK government released the Second Economic Crime Plan, which outlines a comprehensive strategy to combat various forms of economic crime, including money laundering, fraud, sanctions evasion, and corruption. This plan consists of 43 different actions aimed at making legislative and regulatory changes to help agencies tackle criminals more effectively while providing necessary resources, capacity, and tools.
The plan serves as a framework for connecting various initiatives to disrupt economic crime. It enhances public and political engagement with economic crime and underscores the government’s commitment to ensuring that policies and legislation align with best practices and lessons learned.
The Economic Crime Levy: The Funding
A unique funding framework called the Economic Crime Levy went live in September. It acknowledges the financial burden of addressing economic crime and expects the private sector, including crypto firms, to contribute to the cause. The annual levy applies to all AML/CFT supervised firms in the UK and aims to raise £100 million annually. This funding will support the initiatives outlined in the Economic Crime Plan and, combined with the ECCT Act, improve asset recovery efforts.
Positive Momentum on Tackling Economic Crime
With these three drivers of change well underway, the UK is experiencing a wave of positive momentum in its efforts to combat economic crime. With the ECCT Act, the Economic Crime Levy, and the Second Economic Crime Plan, the government is taking significant steps to address the growing potential threats associated with cryptocurrencies. This proactive stance provides hope for a safer and regulated crypto environment as we head into 2024.
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