Bold move against waste crime

Waste crime is a real problem. It is estimated to cost the UK economy more than £1 billion each year, and a recent Environment Agency survey found that almost a fifth of all waste in the UK may be illegally managed.

The Agency is taking action to tackle this issue by establishing a new Economic Crime Unit, marking a robust step forward in its efforts to tackle financial crimes within the waste management sector. This initiative is a significant move for an agency that has not previously had a strong focus on fighting economic crime. By introducing this unit, the Agency aims to enhance its capabilities in combatting money laundering and ensuring that financial investigations in the waste sector are conducted more efficiently and effectively.

The Economic Crime Unit is set to build upon the Agency’s Financial Investigations Team which has had some previous success in seizing assets and money linked to serious waste crimes.  

A two-pronged approach

The Economic Crime Unit is structured around two specialised teams: the Asset Denial Team and the Money Laundering Investigations Team. The former will concentrate on mechanisms such as account freezing orders, cash seizure, pre-charge restraints and confiscations to disrupt the financial flows of illegal waste operations. 

The Money Laundering Investigations Team will empower the Agency to carry out money laundering investigations specifically targeting environmental offences and waste crimes, with the aim of deterring criminals from offending with the threat of up to 14 years’ imprisonment.

Building on a wider criminal waste strategy

The Economic Crime Unit is not an isolated effort of the Agency to fight criminal waste fraud.

The Agency has been making significant strides in combatting such offences since April 2022 through enhanced collaboration with other agencies and access to key law enforcement databases. As one of the few non-police agencies granted access to the Police National Computer, Police National Database, and National Automatic Number Plate Recognition Service, the Agency's partnership with the police has expedited the shutdown of illegal waste operations. Bolstered by wider policy reforms aimed at empowering regulators with improved tools—such as the reformation of the carriers, brokers, and dealers system and the introduction of mandatory waste tracking—the Agency is looking to tighten the leash on waste criminals in more ways than one.

Furthermore, better sharing of information with other agencies, including the sharing of customs export data with HMRC, has facilitated a more intelligence-led approach, enabling the Agency to better identify, target, and intercept illegal waste exports, thus focusing its efforts on the most significant environmental threats and setting a new standard in protection against and prevention of environmental crime.

And that’s not all. The Environment Secretary has announced plans to ban executive board members and Chief Executives of water companies from receiving bonuses if serious criminal breaches, such as illegal sewage spills, are committed by companies under their control. Ofwat, the UK Water Services Regulation Authority, is set to take forward a consultation to determine the criteria for a ban which is expected to come into effect from April 2024. What is clear, however, is that water company bosses are expected to take on more responsibility for criminal breaches and the clamp down on environmental crime is gaining momentum across the board.

What's ahead?

Also on the horizon is the much-anticipated appeal of a High Court decision as to the applicability of the UK Proceeds of Crime Act ("POCA") to alleged forced-labour cotton products imported into the UK from Xinjiang. In May 2023, the Court of Appeal gave the World Uyghur Congress permission to appeal the previous decision¹ of the High Court that there was insufficient evidence to prove that specific consignments of goods imported to the UK from Xinjiang were produced by forced labour or in foreign prisons for the purposes of POCA (and the Foreign Prison-Made Goods Act 1897).

These developments mirror similar activity in continental Europe where NGOs have filed criminal complaints in respect of money laundering in the context of deforestation allegations.

Taken together, there is a clear uptick in oversight and enforcement activity both in the UK and abroad, which is focused on the links between money laundering, ESG and other non-financial offences. Environmental crime is certainly a climbing priority on all agendas.

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Authored by Liam Naidoo, Kevin O’Connor, Olga Tocewicz, and Sarah Tayara.

References

1 R (on the application of) World Uyghur Congress v SSHD, HMRC and the NCA [2023] EWHC 88 (Admin).