Letter from the National Crime Agency highlights problems with the UK’s political finance enforcement regime

6 June, 2024 | 4 minute read

Spotlight on Corruption is today publishing the National Crime Agency’s (NCA) response to our letter, in which we called for the agency to coordinate the UK’s response to serious breaches of political finance laws and close the enforcement gap that’s leaving our democracy exposed to dirty money and foreign influence. 

We received the NCA’s letter in January and are publishing it now given the increased focus on these issues as a result of the announcement of a UK general election to take place in 4 July 2024.

As we told the NCA, there is no agency with overall responsibility for criminal enforcement of UK political finance laws. The Electoral Commission recently lost its powers to bring criminal proceedings and has highlighted the “enforcement gap”. The Metropolitan Police, the only force with a specialist unit to tackle electoral finance breaches, focuses on electoral fraud and malpractice in London, and has proposed withdrawing from enforcing election finance offences.

In its response, the NCA outlined its activities in relation to this sort of crime but did not indicate that it wants to play a central role, despite its national-level powers, legal tools and international networks that would make it uniquely well placed to do so.

Better laws would help political finance enforcement

The letter suggests that the weaknesses in criminal enforcement of electoral finance laws may result, at least from the NCA’s perspective, from problems with those laws. The NCA said its decision to investigate depends on whether it can prove a crime has been committed as defined by the law. The NCA highlighted that the law, “…does not prohibit funds originating from overseas to be used in donations as long as the donating entity is eligible to donate in the UK.”

In June 2022, the New York Times reported that the NCA decided against bringing a prosecution in relation to a donation to the Conservative party, “because of weaknesses in political financing laws”. The NCA told an MP who had raised concerns about the report: “provided a donation comes from a permissible source, and was the decision of the donor themselves, it is permitted … even if the donor’s funds derived from a gift from an overseas individual.”

Under section 61 of the Political Parties, Elections and Referendums Act 2000, an offence may be committed where someone makes a donation on behalf of an unlawful donor, like a foreign national or company overseas. But for that offence to apply, the money needs to be given to the ‘donor’ with an agreement that it will be donated. Without evidence of that agreement it will not be possible to prove that the ‘donor’ was just a conduit and in breach of the law.

As the NCA noted, “It would be for Parliament to change the law to address this, or other areas you have highlighted that could be seen as potential regulatory gaps.”

Better checks on donations are required

Another such gap, and the other side of this problem, is that the law does not require parties and MPs to undertake due diligence on donations or identify the true source of donated funds. There is agreement among independent bodies and security experts that UK political finance is vulnerable to foreign influence, and that parties should do more thorough checks to determine the true source of donations. This includes the Electoral Commission, the Committee on Standards in Public Life and the Intelligence and Security Committee. Spotlight and a coalition of experts produced a draft ‘know your donor’ policy for political parties to show what this might look like. 

On 23 May, the Joint Committee on the National Security Strategy wrote to the Prime Minister, as part of its inquiry on Defending Democracy, to highlight risks and threats to the UK’s democracy in the upcoming election. The Committee highlighted recommendations made by the Electoral Commission, including that parties “should be required to carry out risk assessments and enhanced due diligence checks to ensure they know where donations have come from.”

We welcome the NCA’s commitment to support efforts that will reduce vulnerabilities and improve the effectiveness and resilience of our democratic processes – and we urge it to make full use of its powers through enhanced collaboration with partner agencies and publicly commit to more robust enforcement. In order for the NCA to really ramp up enforcement, though, it needs to be given the resources to create a dedicated election finance unit with specialist expertise.

All political parties need to play their part in strengthening our electoral system. They should come forward with credible proposals to improve our political finance laws and enforcement, and implement robust ‘know your donor’ policies, ahead of the election. There is no shortage of ideas on the table. As Spotlight and civil society partners recently highlighted, independent expert bodies broadly agree on the problems and much-needed reforms.

In many ways, this is a novel election – with new risks of foreign interference, unprecedented amounts of money being spent by parties on campaigning, new rules for the Electoral Commission to operate under and a vast increase in the number of voters overseas. After the hubbub of electoral campaigning has died down, any new government will need to work with the Electoral Commission and independent bodies to conduct a review of how this election played out, what impact these new rules had and whether our democracy really is being safeguarded under them.

This article was updated on 11 June to clarify that we received the NCA’s letter in January of this year.

Picture of NCA officers: There is currently no single law enforcement body with overall responsibility for political finance enforcement
There is currently no single law enforcement body with overall responsibility for criminal enforcement of the UK’s electoral finance laws.

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