Government consults on further action in fight against organised crime and terrorist financing

The Government today began a consultation examining ways in which greater disclosure of beneficial ownership of companies could help law enforcement agencies tackle financial crime.

Potential benefits of greater disclosure are:

enhanced deterrence and prevention of financial crime
reduced credit costs for business
higher recovery rates of criminal assets
higher business confidence

In a joint statement, Ruth Kelly, Financial Secretary to the Treasury and Melanie Johnson, Parliamentary Under Secretary of State for Competition, Consumers and Markets, said:

"The Government is determined to ensure that the UK stays at the forefront of the international fight against organised crime and terrorist funding. The consultation will examine ways of further strangling the flow of funding for crime and terrorism and demonstrates the UK's continuing commitment to the highest international standards in preventing money laundering and combating terrorist funding.

"We need to ensure that UK companies are not subject to disproportionate new burdens. Any new regulations should be proportionate and careful attention will be paid to the impact of any potential changes, in particular on small companies.

"We hope this Assessment will offer the opportunity for the key issues to be widely discussed and are keen to hear the views of industry, law enforcers and policy makers in this field."

NOTES FOR EDITORS

The Government is today issuing a Consultation Document seeking views on a Regulatory Impact Assessment [RIA] on Disclosure of Beneficial Ownership of Unlisted Companies. Comments are invited by 14 November 2002 and should be sent to: David Faulkner, HM Treasury, 1 Horse Guards Road, LONDON SW1A 2HQ.
The RIA (which accompanies the Consultation Document) was prompted by the Cabinet Office Performance and Innovation Unit Report [June 2000] on "Recovering the Proceeds of Crime". The Report studied how the UK money laundering regime might be tightened as part of the fight against serious and organised crime. A key conclusion was the need for measures to improve use of disclosure in helping law enforcement authorities attack criminal finances. In particular, the PIU was concerned that criminals use companies for complex money laundering operations while concealing their identities as controllers of the companies. On the other hand, the PIU noted that "ease of incorporation is seen as one of the strengths of the UK's competitive regulatory environment", and recommended that an RIA be conducted to assess the balance of benefits and costs before further action was considered.
The RIA published today seeks to weigh what the PIU Report saw as the clear law enforcement benefits of publicly registering beneficial owners against the burden that it may place on companies, as well as the relative benefits of a lesser burden by, for example, making details of beneficial owners available to law enforcement officers.
The RIA was conducted by Compliance Chain Limited (Firs House, Firs Lane, Shamley Green, Surrey, GU5 0UU).
The Government published a White Paper Modernising Company Law on 16 July. This contains the first part of its response to the independent Company Law review, and sets out its proposals to modernise company law. Key objectives of these reforms are to reduce burdens on business and improve competitiveness.
The RIA is available online at this site and on the DTI website. The White Paper Modernising Company Law is available at the DTI website.
Media enquiries should be directed to either HM Treasury press office, tel. 020 7270 4420 or DTI press office, tel. 020 7215 5969.

Internal links

Beneficial Ownership of Unlisted Companies: Consultation document