The Committee welcomes the announcement by the Treasury that the government will legislate to bring advertising of cryptoassets advertising into line with that of other financial services and products, and that the FCA is strengthening financial promotion rules for cryptoassets.
The House of Commons Treasury Select Committee has issued a report on economic crime, some aspects of which are likely to be of interest to technology lawyers.
Economic crime is a major and rapidly growing problem in the UK. The Report looks at the effectiveness of measures taken to address economic crime since 2019 and it also reviews the UK government’s Economic Crime Plan. Since 2019, it appears that economic crime has not reduced but has instead continued on an upward trend. The Report says that the government should consider whether policy responsibility should be centralised in a single government department. In particular, the government needs to consider whether there should be a single law enforcement agency with clear responsibilities and objectives to fight economic crime. In any event, law enforcement agencies must be appropriately resourced to tackle the scale of the problem.
The Committee recommends that, in its response to the Report, the government sets out the legislation which is being worked upon across government and that is relevant to addressing economic crime, and provides an assessment of the measures that might be required to be brought in through an Economic Crime Bill, the timescales for this, and why it has chosen not to bring forward such a bill at this time.
It reiterates its strong belief that the government should include measures to address fraud via online advertising in the Online Safety Bill, in the interests of preventing further harm to customers being offered fraudulent financial products. The government should ensure that financial services advertising regulations apply also to online companies, and that the FCA has the necessary powers to effectively enforce the regulations. Online companies should not profit both from paid-for advertising for financial products and for warnings issued on their platforms by the FCA about those advertisements. The Committee encourages online companies to work constructively with government agencies and the wider public sector to fight online scams and fraud. The government should also ensure that regulators and law enforcement agencies have the powers they need to ensure that online companies provide them with information and comply with regulatory requirements.
The Committee notes the increasing risks around cryptoassets and economic crime. It welcomes the announcement by the Treasury that the government will legislate to bring advertising of cryptoassets advertising into line with that of other financial services and products, and that the FCA is strengthening financial promotion rules, including those for cryptoassets. The work being done by the Advertising Standards Authority to protect consumers from misleading advertisements for cryptoassets is also welcome. The government should ensure that there is proper consumer protection regulation across the whole cryptoasset industry. Not all cryptoasset firms have been registered for anti-money laundering purposes, and it is unacceptable that, having introduced anti-money laundering regulations for cryptoasset firms in 2020, there are so many firms which have not yet been registered.
The Committee is disappointed that the government has not yet implemented reform of corporate criminal liability. The decision taken in 2020 to ask the Law Commission to review the law on corporate criminal liability is a sensible step, given the complexity of the law in this area, but it is likely to be years before any change in the law results.
The Committee’s report also considers issues such as money laundering and the role of Companies House. The UK government has two months to respond to the Report.