STEP outlines practical recommendations to help combat global economic crime

STEP, the global professional body for trust and estate practitioners, has today released its Tackling Economic Crime report outlining practical recommendations for preventing economic crime.

With 2024 being the biggest election year in history*, many governments will be looking at how they can progress the fight against economic crime.

Tackling Economic Crime has been released as part of STEP’s policy engagement work with governments and international bodies, to help inform discussion on this crucial topic, particularly where it pertains to trusts and similar arrangements. It provides expert analysis on the application and effectiveness of existing measures, and practical recommendations on how to address the gaps.

Geoff Cook TEP, Chair of STEP’s Public Policy Committee, said:

‘STEP has a key role to play in tackling economic crime. As lawyers, accountants, fiduciaries and other practitioners who specialise in trusts and estates, STEP members’ significant practical expertise can assist in creating workable and effective solutions.

‘We are urging policymakers to focus on strengthening existing lines of defence and building on what has come before. We would like them to close up any gaps that may be exploited by criminals and take a more joined-up approach to ensure rigorous standards are enforced globally.’

The report notes that the measures taken so far have led to a huge amount of information being reported globally, which could be highly effective in identifying and deterring financial crime. STEP believes the focus now needs to be on reviewing and improving the quality, administration and use of that information to ensure efficiency and effectiveness.

To this end, STEP provides six practical recommendations to address issues that it believes are obfuscating the fight against financial crime:

1. Invest in improving the quality and processing of SARs SARs are a vital source of intelligence in economic crime, yet a lack of detailed guidance for applicants is leading to a huge volume of incorrect and often unnecessary reports. Investing in improving the quality and processing of SARs would free up government resources and reduce the volume of applications to just those that are required, ultimately leading to greater effectiveness. 
2. Introduce a ‘compliance passport’ The industry has become dominated by compliance checks and due diligence, which is driving up costs for customers, increasing the burden on practitioners and regulators, and resulting in huge duplication of effort and resource. STEP recommends the introduction of a ‘compliance passport’ to demonstrate compliance across jurisdictions. The EU is taking steps to adopt such an approach with the Europe digital identity programme. Such a solution would reduce distortions in the transparency regime and enhance the certainty of an individual’s anti-money laundering (AML) compliance. 
3. Verify beneficial ownership information In many countries, there is no verification of beneficial ownership data submitted to company and trust registers. This means information collected may have very little practical use in the fight against money laundering and other illegal activities. STEP recommends that an obliged entity should be responsible for verifying information submitted. This would make it significantly harder for criminals to conceal their identities behind complex structures.
4. Require entities without a registrable beneficial owner to provide a fuller explanation Some entities reasonably believe they do not have any registrable beneficial owners. While the reason for not registering may be legitimate, this creates a gap that could be taken advantage of by those seeking to hide ultimate beneficial ownership. STEP recommends that authorities require entities without a registrable beneficial owner to provide a fuller explanation as to why this is the case. This would provide greater certainty and understanding so they do not waste resources investigating cases that have legitimate reasons for making such a claim. 
5. Strengthen whistleblowing frameworks globally Whistleblowing is a crucial source of evidence for authorities tackling corruption, fraud and other economic crimes. However, in some jurisdictions, whistleblowing is still not encouraged, resulting in compromised safety and potential criminal prosecution for many who engage in it. STEP recommends that those jurisdictions with deficiencies in this area review and strengthen their frameworks.
6. Agree one ‘global standard’, to which all are held While many jurisdictions have adopted FATF’s recommendations and standards, there are some notable exceptions. This leaves the systems in those jurisdictions exposed to significant criminal risks and can undermine global efforts to tackle economic crime. In addition, some countries and regions have devised their own lists and standards for rating countries’ AML and tax practices. This has led to the problem of proliferating lists based on different standards. STEP recommends that all jurisdictions agree to one global standard, to which all are held. International financial regulation must proceed on the basis of non-discrimination and a level playing field.

The full Tackling Economic Crime report can be found here https://www.step.org/knowledge-hub/tackling-economic-crime

ENDS

* https://www.undp.org/super-year-elections 
For more information, contact Liz Skinner, Communications Manager, STEP, email liz.skinner@step.org or call + 44 3752 3706, Ellen Carroll or Serj Hallam at Nellie PR. Email: ellen@nelliepr.co.uk Mob: +44 (0) 7790 631 547 serj@nelliepr.co.uk +44 (0) 7789 372 771.

Notes to editors

STEP’s Trusts Information Centre provides education and insight into the social and economic benefits of trusts. It gives an overview of the key trust regulations and compliance globally, FAQs and outline of the types and uses of trusts, and case studies. STEP provides ongoing guidance to its members on the latest measures to combat economic crime and best practice safeguards. Our members include lawyers, accountants, fiduciaries and other practitioners who specialise in trusts and estates, playing a key role tackling economic crime.

About STEP

STEP is the global professional association for practitioners who specialise in family inheritance and succession planning. We have more than 21,000 members in 96 countries. STEP works to improve public understanding of the issues families face in this area and promotes education and high professional standards among its members. STEP members help families plan for their futures, from drafting wills to issues surrounding international families, protecting the vulnerable, family businesses and philanthropic giving. Find out more at www.step.org