Do states need a separate law to combat economic crime?

In this era of time, the need for legislation combating economic crime has become an urgent matter. This urgent need means that independent legislation that criminalises each economic crime separately “such as the anti-money laundering system or the anti-bribery system etc” is not sufficient to protect the national financial system. International standards also do not have a mandatory status, and therefore mandatory implementation does not exist. And since wars between states are no longer limited to a military attack, but rather extend to an economic attack that breaks the backs of states, because with the collapse of the economy, the pillars of the state collapse and its foundations collapse. undermine all aspects. The need for legislation focused on combating economic crime has therefore become a very important issue. In this regard, Britain is the first country to realize this, as it issued the “Economic Crimes (Transparency and Law Enforcement) Act” last March 2022.

The idea of ​​this law has been working on it since Britain’s exit from the European Union, but there was a priority for other regimes due to its secession, but when Russia invaded Ukraine, this law became a top priority, especially in the light of the economic war waged by European countries against Russia. Therefore, this system is based on three main pillars aimed at strengthening Britain’s fight against economic crime. These new pillars include the following: Compulsory registration of the data of the beneficial owners of properties purchased on British land in the name of foreign companies, as it is considered to allow the purchase of assets in the name of companies to be registered Externally without knowing the identity of the original buyer a big loophole in the legislative system. In other words, money laundering is often hidden behind opaque and complex foreign corporate structures, making it difficult to track down illegal sources of money laundered by the UK real estate market. Finding out who owns these properties therefore becomes more difficult if they are registered in the name of a foreign company where the real beneficiaries are hidden from view. The new system requires the company’s ownership record, and who the real owners of the company are in order to determine the real owners of the property, and thus follow up on what the purchase of the property was for money laundering or for actual investment.

The second pillar adopted by the new British system is the economy on sources of wealth. This pillar is not new to the UK financial system as it was launched in 2017, but law enforcement agencies did not have the authority to implement it, and the response to the request for disclosure was weak. In the system, law enforcement authorities have been given the authority to enforce this system by imposing penalties on those who do not comply. Particular emphasis is placed on addressing the source of wealth, especially for those abroad who want to invest in Britain. The focus is, for example, on people living in areas with a high rate of potential tax evasion, money laundering or any other crime related to money, drugs or any illegal trade. The history of capital formation for the investor is also a matter that needs to be made known to the UK government before any money is allowed to flow into its territory.

The question here remains, what about UK companies entering into partnerships with foreign companies? This is what was addressed by the third pillar of the economic crime control system, where the system imposed civil penalties on companies that did not verify the background of foreign companies before entering into any partnership with them. It is not limited to commercial companies, but also includes financial institutions in all its forms, and therefore companies and financial institutions will face civil liability and high fines if they do not show the necessary care to partnerships and foreign to investigate funds that want to join. the British market. British law enforcement agencies thus gained the power to verify the sources of funds and data of owners living outside Britain’s borders directly by the intelligence services, and indirectly by enforcing standards on companies and financial institutions to verify their foreign partners. If it is proved that these standards have not been applied, or it is suspected that the necessary care has not been taken, he is liable to impose financial fines, sometimes up to imprisonment.

The question remains, this system addresses in general and from a personal point of view some aspects related to the fight against money laundering and economic crime within the UK. How will the funds discovered to be owned by suspicious entities be handled? The rapid cancellation of these partnerships could lead to other problems, such as the high unemployment rate in the face of the economic inflation facing the world, and this will be reflected in the low level of confidence in the UK financial system. On the other hand, companies need to build a new compliance system and risk assessment that is different from what is in place now. And the last problem is, what about US companies and financial institutions, for example, given the amount of economic affairs on U.S. soil, the rate of tax evasion is high, and therefore how this matter will be handled.

Regardless of the problems raised by the British economic crime control system, I see it as a qualitative leap in the fight against economic crime, especially money laundering. The question remains, how can the Kingdom of Saudi Arabia work to build an integrated legislative system to combat economic crime that avoids the loopholes I read at first glance when I look at the British system?

* Quoted from “Mad” newspaper.

All published articles represent only the opinion of its authors.

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