STEP releases report on economic crime

STEP, the global professional body for trust and estate practitioners, published its Tackling Economic Crime report. The document highlights practical recommendations aimed at improving the fight against financial crime, with a particular focus on trusts and similar financial structures.

As the world approaches a major election year in 2024, governments will be seeking to strengthen their defenses against economic crime. STEP’s report provides expert analysis of current measures and identifies gaps that need to be addressed to ensure better oversight and efficiency.

Geoff Cook TEP, Chair of STEP’s Public Policy Committee, emphasized STEP’s vital role, stating that the organization’s collective expertise can help create “workable and effective solutions.” He urged policymakers to build upon existing safeguards, tighten gaps in the system, and collaborate globally for consistent enforcement of anti-crime standards.

The report outlines six key recommendations to improve global efforts in tackling economic crime:

1. Improve the quality and processing of SARs: Suspicious Activity Reports (SARs) are a primary intelligence tool in detecting financial crime. However, the current system is burdened with an overwhelming number of unnecessary reports due to insufficient guidance. STEP recommends investing in SAR processing to enhance effectiveness and free up governmental resources.

2. Introduce a ‘compliance passport’: The current compliance environment has led to excessive duplication of effort. A ‘compliance passport,’ showing an individual’s adherence to anti-money laundering (AML) standards across jurisdictions, would reduce costs and complexity. The EU’s digital identity program is cited as a promising example.

3. Verify beneficial ownership information: In many jurisdictions, beneficial ownership data is not verified, making it easier for criminals to exploit loopholes. STEP recommends that entities verify this information before submitting it to ensure the fight against money laundering is effective.

4. Provide full explanations for non-registrable beneficial owners: Some entities may legitimately not have a registrable beneficial owner, but such gaps can be exploited. STEP urges authorities to require more detailed explanations to ensure legitimacy and avoid wasted resources.

5. Strengthen whistleblowing protections: Whistleblowing is critical to uncovering economic crimes, yet in many countries, protections remain inadequate. STEP advocates for stronger frameworks to encourage whistleblowing while ensuring the safety of those involved.

6. Adopt a single global standard: While many nations follow the recommendations of the Financial Action Task Force (FATF), disparities in enforcement create weaknesses. STEP calls for a unified global standard to prevent criminal exploitation across different jurisdictions and foster international cooperation.

The report also stresses the importance of reviewing the vast amounts of data already gathered through anti-crime efforts, ensuring it is used more efficiently to prevent future crimes.

STEP’s full Tackling Economic Crime report is available at STEP Knowledge Hub.