I have my fingers in my ears and am chanting “la la la” to myself, as I refuse to listen to any more corona-chatter.  For today’s blog I am going to pretend that nothing untoward is happening and have a think instead about the UK government’s plans for an Economic Crime Levy.  This was announced – after plenty of rumours – in the Budget on 11 March 2020: “The government intends to introduce a levy to be paid by firms subject to the Money Laundering Regulations to help fund new government action to tackle money laundering and ensure delivery of the reforms committed to in the Economic Crime Plan.  These reforms will help safeguard the UK’s global reputation as a safe and transparent place to conduct business.  The levy will be additional to ongoing public sector funding.  The government will publish a consultation on the levy later this spring.”

Interesting word, levy.  It comes to us from levis (Latin for light) via lever (Old French for raise), and by the 13th century was already being used as a verb meaning to raise or collect.  As a noun, its most common usage in the UK today – until this latest development – was in the context of heavy goods vehicles: overseas HGVs wishing to drive into the UK have to pay a levy of £10 a day or £1,000 a year.  It’s certainly not a word we have seen very often in the financial services environment.

The government has issued a short Q&A document setting out its initial thoughts (I can’t find the original link but you can download the PDF via the Law Society website), with promises of a consultation “in the spring”.  Some thoughts to distract you:

  • Have we lost confidence in the truly consultative nature of government consultations? Avid respondent that I am (try and stop me!), I have yet to see the government position change from their initial position as a result of a consultation (in the area of finance and economic crime, anyway).
  • The levy will apply to firms subject to the Money Laundering Regs – i.e. to those businesses already spending time and resources on AML. Would it actually be fairer (and more lucrative) to apply the levy to those businesses not subject to the Money Laundering Regs, so that we’re all playing a part in the fight against economic crime and doing what we can – AML checks if that’s possible given our line of business, and supporting the cause financially if it’s not?
  • If the levy is intended to raise £100 million, and in order to do that we need (to quote from the HMT Q&A) a “collection infrastructure”, the creation of a “levy formula [that is] simple to calculate, predictable, applicable across all the types of businesses in the AML-regulated sector, and designed to avoid unintended consequences [and takes risk into account]” and possibly the setting up of “a single organisation to collect the levy”, will there be any money left over?
This entry was posted in AML, Legislation, Money laundering, Supervision and tagged , , , , , , , , . Bookmark the permalink.

2 Responses to Levy-hearted

  1. Roy McCarthy says:

    So this is a new levy Susan? The FCA are already funded by the industry aren’t they?

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