Are you ready for the new Economic Crime Levy?

Posted on: 3 May 2023

Written by: Corinna Venturi

The UK Economic Crime Levy is a new annual fixed fee, that has been introduced to tackle the rising problem of economic crime in the country. Economic crime refers to any criminal activity that is committed for financial gain, such as fraud, money laundering, and bribery. It is estimated that economic crime costs the UK economy around £14.4 billion per year, and the government is keen to take action to reduce this figure. The levy will be used to fund the work of the Economic Crime Centre, a new unit that has been set up to investigate and prosecute economic crime.

The new levy will impact firms who were subject to the UK money laundering regulations between 6 April 2022 and 5 April 2023 and it will appear on their FCA invoices from July 2023 (or the Gambling Commission or HMRC if not authorised by the FCA). 

Who is affected?

Entities regulated for anti-money laundering (AML) purposes under the Money Laundering, Terrorist Financing and Transfer of Funds Regulation 2017 that are medium, large or very large in size based on their UK revenue will need to pay the new levy

The sectors impacted are:

  • credit institutions;
  • financial institutions;
  • auditors, insolvency practitioners, external accountants and tax advisers;
  • independent legal professionals;
  • trust or company service providers;
  • estate agents and letting agents;
  • high value dealers, casinos, auction platforms and art market participants; and
  • cryptoasset exchange providers and custodian wallet providers

The levy will be paid annually as a fixed fee based on the size band an AML-regulated entity falls into based on their total UK revenue. Firms should note that this means all UK revenue, not only the portion of revenue related to regulated activity.

There will be four size bands:

  • Small (under £10.2m UK revenue)
  • Medium (£10.2m – £36m UK revenue)
  • Large (£36m - £1bn UK revenue)
  • Very large (over £1bn UK revenue)

The levy fees are as follows:

  • Small entities: exempt;
  • Medium entities:£10,000;
  • Large entities £36,000; and
  • Very large entities £250,000.

All impacted firms must submit their data via new Reg Data Report (FIN074) from 1 April 2023. A failure to submit in time may result in a £250 administrative fee.

Industry reception to the new levy

The introduction of the Economic Crime Levy has been welcomed by many in the business community, who see it as a positive step towards tackling economic crime.

However, there are some concerns. Some businesses argue that it is unfair to impose a tax on them simply because they are in a high-risk sector. They argue that they are already subject to strict regulations and oversight, and that they should not be penalised further. Others argue that the levy will simply be passed on to consumers, who will end up paying more for goods and services.

What is the purpose of the Economic Crime Centre?

The centre will be responsible for investigating and prosecuting economic crime, and it will work closely with other law enforcement agencies to bring criminals to justice. It will work with businesses to help them to identify and prevent economic crime and  provide training and guidance to help businesses protect themselves.

The Economic Crime Centre will be staffed by experts in economic crime, including investigators, lawyers, and analysts. They will use the latest technology and techniques to investigate and prosecute economic crime, and they will work closely with businesses and other organisations to share information and intelligence.

Despite the concerns put forth by businesses, the government is committed to introducing the Economic Crime Levy. It is seen as an important part of the government's strategy to tackle economic crime and it is hoped that it will make a real difference in reducing the amount of economic crime that takes place in the UK.

If your business needs advice in relation to the new Economic Crime Levy, contact our FinCrime team.

CONTACT US

Corrina

Corinna Venturi

Corinna has worked in both the financial and professional services industries since 1996, first in front line services and then moving into financial crime prevention in 2007.

Contact Corinna

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