Fraud and economic crime

Introduction

The subjects of fraud and economic crime are extensive. This page does  not purport to be comprehensive but seeks to provide the reader with selected material which might be of relevance to accountants.

What is the difference between fraud and money laundering?

Fraud involves deception and misrepresentation to make money. It can be one of many crimes, such as forgery or a credit scam, cheque and invoice redirection fraud and CEO Fraud.

Money laundering is the process by which the ownership and control of the proceeds of criminal activities are disguised (or laundered) so that these appear to have come from a legitimate source.  It is most often addressed as a compliance issue within an organisation. Financial institutions and other designated persons engage in anti–money laundering activities in order to comply with law.

Criminal activity related to fraud generates money that needs to be laundered, so where there is fraud there is money laundering. Fraud is a crime and a predicate offence to money laundering, meaning that money laundering is a derivative crime. A crime such as a fraud must take place before the proceeds of the fraud are then laundered.

Some relevant legislation on fraud and economic crime

Irish law

In Irish law under the Criminal Justice (Theft and Fraud Offences) Act 2001 (2001 Act) a person who dishonestly, with the intention of making a gain for himself or herself or another, or of causing loss to another, by any deception induces another to do or refrain from doing an act is guilty of an offence.

Auditors or advisors to a firm  as relevant persons have a reporting obligation to An Garda Siochana under section 59 of the 2001 Act where accounts of a firm or any declaration, /return/account/other document used or likely to be used to keep or audit the accounts indicate that an offence under the 2001 Act (with certain exceptions in the Act) may have been committed by the firm or in the case of an incorporated or unincorporated body by a director, manager, secretary, other employee or self-employed individual .

Please also refer to the Red Flag training material for further information on reporting under section 59 of the 2001 Act.

UK Law

The UK has in recent years introduced legislation to strengthen its response to economic crime including strengthening corporate transparency and Companies House reform.

The Economic Crime (Anti-Money Laundering) Levy Regulations 2022

These regulations (as amended)  came into force in the UK on 1st April 2022. The levy is intended to fund government action and initiatives to tackle money laundering. The amount charged is on persons carrying on business under money laundering legislation is to be based on UK revenue and depends on whether the entity is considered “medium”,” large” or “very large” as defined in the Finance Act 2022.

Economic Crime (Transparency and Enforcement) Act 2022 (2022 Act)

This Act was passed on 15 March 2022 to tackle foreign criminals using UK property to launder money and to enhance sanctions enforcement.   It is stated to be an Act to set up a register of overseas entities (ROE) and their beneficial owners and require overseas entities which own land to register in certain circumstances; to make provision about unexplained wealth orders; and to make provision about sanctions. For more details on the sanctions provisions in the 2022 Act please click our United Kingdom sanctions page.

The Register of Overseas Entities came into force in the UK on 1 August 2022 . The Economic Crime (Transparency and Enforcement) Act 2022 (Commencement No. 3) Regulations 2022 commenced section 3 of the 2022 Act. The Register is held by Companies House. Overseas entities who want to buy, sell or transfer property or land in the UK, must register with Companies House and provide information on who their registrable beneficial owners or managing officers are. Companies House has some guidance here on the register and how you can add an overseas entity and its registrable beneficial owners or managing officers to the Register of Overseas Entities.

Please click the link for a news item from Professional Standards Dept. of the Institute on the register of overseas entities verification work. The article warns that firms should carefully consider whether they should provide this verification work. The work required for verification under the ROE is not the same as the risk-based approach to client due diligence under Money Laundering Regulations 2017 and firms should familiarise themselves with the differences.

Click to read the AML Alert published by Accountancy AML Supervisors Group (AASG) highlighting key risks associated with this work.

The UK Government Dept for Business & Trade has produced technical guidance for registration and verification on the ROE .

Please click here for a fact sheet on the Register of Overseas Entities and here for Companies House guidance on how to register an overseas entity and its beneficial owners.

The Economic Crime and Corporate Transparency Act 2023

This Act was passed by the UK government in October 2023. The legislation is stated to be an Act to make provision about economic crime and corporate transparency; to make further provision about companies, limited partnerships and other kinds of corporate entity and to make provision about the registration of overseas entities. It includes new enhanced powers for UK Companies House and a new much-debated failure to prevent fraud offences.

In May 2024 the Home office in the UK  issued the Economic Crime and Corporate Transparency Act 2023: progress report. This is a report on the first 6 months of implementation and operation of the Economic Crime and Corporate Transparency Act 2023. It gives a useful summary of statutory instruments laid to date and the further regulations planned before summer 2024 .(These plans have probably been affected by the calling of a general election in the UK).

Readers may be interested in some Government publications prior to the passing of the legislation. Click to read the UK House of Commons research briefing entitled “Corporate criminal liability in England and Wales” published in June  2022. It discusses the circumstances in which corporates can commit crimes in England and Wales and sets out recent developments and reform and the future of corporate criminal liability.

See the publication "Economic crime in the UK: a multi-billion pound problem" and the publication from the House of Lords of February 2023 on the legislation.
 
Following the enactment of the legislation the Institute has produced some information. Click for a short guide on the UK’s Economic Crime and Corporate Transparency Act 2023.The guide details some of the changes which will be brought about by the Act.

Please also see the Institute news item and information booklet entitled The Economic Crime and Corporate Transparency Act 2023 – Changes in Companies House outlining the first set of changes introduced by Companies House on 4 March 2024.

Click the link for a news item on the commencement of new Information Sharing Measures in the Economic Crime and Corporate Transparency Act 2023 (section 188-193)  as of the 15th of January 2024 and here for a news item of March 2024 entitled Companies House Webinar: Changes to UK Company Law.   

Click here for an article by Maeve Hunt, Grant Thornton (NI) LLP of February 2024 entitled Economic Crime and Corporate Transparency Act 2023 – the next steps.

Other reference material/bodies 

Ireland

The Irish Central Bank encourages the public to be alert to scams which are on the rise; it is important to be able to recognise a potential scam and know how to protect yourself. They have issued a video and explainer on how to spot a scam using the SAFE test: Stop, Assess, Fact check, Expose and Report. You can read more and access the video here.

Click to read the remarks of the Irish Central Bank’s Director General, Financial Conduct at an international fraud prevention conference  in April 2021. She spoke about the intersection between fraud prevention and the national and international Anti-Money Laundering/Countering the Financing of Terrorism frameworks.

Click to access a series of press releases issued by GNECB FIU Ireland during Fraud Awareness Week 2022. The press releases deal with what is and how to avoid business e mail compromise fraud, bribery and corruption, investment fraud, accommodation fraud and account takeover fraud. 

In  2020 the Hamilton Review Group made its recommendations to combat economic crime to the Minister for Justice. The Department of justice action plan 2021 published in March 2021 refers to the DOJ beginning  to implement, in collaboration with other agencies, plans to tackle economic crime and corruption, following the publication of the Hamilton review. The Advisory Council against Economic Crime and Corruption recommended in the review was established in 2022. The Council’s role is to advise and make proposals on strategic and policy responses and to be responsible for developing a multi-annual strategy to combat economic crime and corruption.Click here for a press release on the Advisory Council.

United Kingdom

In October 2021, the UK Government published a fraud sector charter containing an assessment of fraud threats in the accountancy sector. It is a voluntary charter between law enforcement, professional supervisory bodies and government to better understand and tackle fraud. It sets out actions to tackle fraud in the accountancy sector including improving information regarding fraud and enhancing Companies House data.

In February 2022 the Treasury Committee of UK Parliament  published a report on fraud, scams and economic crime. It has called for additional Government action to combat fraud and scammers. The report urges legislation against online fraudulent adverts and for the government to seriously consider whether online giants should reimburse those who fall victim to scams on their platforms. It makes recommendations such as appropriate resourcing and whether a single law enforcement agency would be more effective. Readers can access the report, a summary and conclusions and recommendations by following the links on this page.

Click here for the UK Serious Fraud Office business plan 2023/2024. It outlines its objectives and strategy and states that it sets out the steps the SFO needs to take to rise to the challenge of investigating and prosecuting serious fraud, bribery and corruption .

The Fraud Advisory Panel is a UK charitable company limited by guarantee. It works to give universal  access to knowledge, skills and resources to protect against fraud. Please click here to access their website and get information on their latest resources and upcoming events and here for their helpsheets and guides.

The European Payments Council issues an annual update of  the “Payment Threats and Fraud Trends Report” .It provides an overview of the most important threats on the payments landscape , including social engineering  phishing and  malware. The report tries to increase awareness and suggests some measures for control and mitigation of threats.

These pages are provided as resources and information only and nothing in these pages purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.