Reviewing criminal financing legislations and ensuring adequate controls are in place

Reviewing criminal financing legislations and ensuring adequate controls are in place

By Kevin Newe, Illicit Finance Strategy Lead, HM Revenue & Customs (UK Government).

Can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?

I joined HM Revenue and Customs in 2006, initially as a Fast Track scheme entrant, which meant my roles usually lasted a maximum of 12 months before I moved elsewhere. That changed in 2008 when I went on secondment to the Serious Organised Crime Agency (now the NCA), and was involved in different strands of activity associated with criminal finances and profits.

While it is obvious that most criminality Is conducted to generate illicit wealth, the work in SOCA went beyond just thinking about asset recovery tools like confiscation. Instead, It was as important to understand crime-enabling business models so we could better prioritise our interventions. And it was that thinking I brought back to my role in HMRC when my secondment ended in 2010.

Initially I worked in a policy role, but a spell managing financial investigation teams (2014 to 2017) in London and the South-East was my first opportunity to put that thinking into action, including creating an integrated offender management function.

Since my recent change of roles, I’ve developed an ambitious strategic framework that challenges HMRC to think about the totality of illicit financial flows, and how we can use the full range of our powers to achieve maximum impact. But at the same time to recognise the value of intelligence and understanding, and what levels of resilience organised crime groups and others have built into their operating models.

What, for you, are the benefits of attending a conference like the Fraud and Financial Crime Europe Summit and what can attendees expect to learn from your session?

At its most basic, the ability to share ideas and have my views challenged is always worthwhile. It can be easy for law enforcement agencies to have their views validated by others in the same community, so engaging with a diverse and varied audience is always interesting and always thought provoking, particularly how those in the private sector understand illicit finance risks.

And financial crime and illicit finances have become such a significant topic over the past two years, both domestically and internationally. Academia is much more engaged and invested in the work and it is always really interesting to reflect on what they see are the key challenges. Sometimes their ability to engage across a broad range of stakeholders is considerably better than law enforcement or government departments.

So in terms of what to expect, I’ll be sharing insights from what we’re doing in HMRC and how we’re linking our illicit finance strategy into the diverse range of work HMRC does, including AML supervision, as well as civil and criminal investigations of tax evasion. But really, it’ll be about responding to the challenges from the panel or the floor. I find it best to take a flexible approach and allow the conversation to develop as people share their thoughts and reflections.

Could you provide our readers with insights into criminal financing?

What we’re seeing from an HMRC perspective is the interconnectedness of many of our criminals. While the saying “there’s no honour among thieves” clearly comes from experience, actually we’re seeing organised crime groups and entrenched recidivist offenders working together.

They’ll share enabling processes or use the same professional facilitators, and maybe that’s because some types of offences against HMRC are not predicated on territory in the same way as drug gangs might engage in turf wars. And that presents challenges in really dismantling the operability of these groups. They are considerably more resilient, more dispersed and more flexible than we perhaps first imagined.

We also need to look at the effectiveness of our responses through different lenses. While we are seeing an increase in asset recovery outcomes, are they really making fraudsters think twice about reoffending?

I think the UK is showing real leadership in developing and deepening public and private sector cooperation, so it is really important to continue building on great initiatives like the Joint Money Laundering Intelligence Taskforce. I think there’s more law enforcement bodies can do with FinTech and Big Data companies as that will be the key that unlocks opportunities to really get behind and dismantle these interconnected OCGs.

What is the best way to use data to detect suspicious activity?

To think about where we are now in respect of our ability to use big data, compared to even five years ago, shows the rate of technological change. In HMRC we are extremely proud of what we’re doing with data to detect suspicious activity, of whatever kind, and our main challenge is creating capacity to ingest that data and do something with it! But that is a much nicer challenge than most!

As noted above, I think as those public and private sector partnerships deepen, we’ll both be doing so much more with data to help develop more resilient global financial systems. We’re moving away from thinking of risk in simplistic terms, e.g. someone is a cash-based money launderer, because the nature of the illicit financial system is one of variation and adaptability. And there will always be data, somewhere in the world, which could the key to unlocking those business models or money laundering networks.

So I think better sharing of risk profiles and operational experience will help drive better data interrogation and therefore detection of suspicious activity. And that sharing would flow between law enforcement and the private sector, so what do financial systems see as red flag indicators as set against what law enforcement has identified from investigations. Ideally, a virtuous feedback loop between key partners, much like what the new National Economic Crime Command is advocating.

How do you see the impact of Fraud and Financial Crime evolving over the next 6-12 months?

I think there’s much for the UK to reflect on post its FATF Mutual Evaluation Review. It was an outstanding result and I was lucky to be part of the onsite assessment, but we should not become complacent and instead look to continue promoting international best practice across a range of risk mitigation topics, like public private partnerships, corporate transparency and development of some of the most exciting financial investigation and asset recovery tools across the world.

But in terms of changing methodologies, we’re not seeing a significant or widespread shift away from what is working well for criminals and others! So in some respects we can really up our focus on those areas because we understand them and what makes them attractive in moving illicit financial flows. However, the challenge, for all of us, is that need to be adept at following the money if they displace from existing methodologies.

So I think we’ll see continued multi-agency engagement, further enhancements of data exploitation and risk identification and, hopefully, a more tangible impact on the most significant multi-jurisdictional organised crime groups!

 

We asked Kevin some informal questions...

What three items would you take with you if you were stranded on a desert island?

Hmmm. Assuming there’s power on this desert island, I’d bring my Wattbike (an indoor bike that can replicate famous cycling routes!) and associated cycling paraphernalia!  I’d also bring my Kindle for reading material, having downloaded every known desert island survival book going.  And finally, I’d bring a huge vat of factor 50 sunscreen as I am prone to catching the sun / getting a little sunburnt.

If you had not taken the career route to become a financial risk professional. What would you be doing right now?

Well before I joined HMRC I was working as an engineer for a construction company, so in theory could still be doing that!  But other than that, I’m not really sure what I’d be doing.  I did a geography degree at university but didn’t really have a particular career in mind for when I finished.

What TV show is your guilty pleasure?

I really enjoy Arrested Development although the latest Netflix developed episodes weren’t as good as the original.  I used to love Quantum Leap when I was younger and got very upset when it became apparent Dr Sam Beckett couldn’t leap home!  Poor Sam.  He did it for Al…  and being a child of the 80s I loved shows like the A-Team, Airwolf, Street Hawk, the Dukes of Hazzard but Knightrider was top of the tree.  There was nothing KITT couldn’t do!

 


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