UK’s defences against ‘dirty money’ overrun, say MPs
The UK has become “the jurisdiction of choice for dirty money”, harming its national reputation and democratic institutions, a cross-party group of MPs have said as they urged a new government focus on money laundering and corruption.
An economic crime manifesto launched by the group calls for measures including transparency reforms for company records, a crackdown on tax avoidance in UK overseas territories, and more resources for enforcement.
Other ideas include making it an offence to fail to prevent crimes such as money laundering or targeting bankers, and a dedicated office for economic whistleblowers.
The Russian invasion of Ukraine and the subsequent emergency measures taken against potentially illicit Russian money in the UK had been a wake-up call as to the scale of the issue, the MPs said.
Margaret Hodge, the Labour MP who is co-leading the initiative and who chairs the all-party group on anti-corruption, said: “This is a huge problem. Our financial services and our defences against dirty money have been overrun.
“London is now the laundromat for washing dirty cash, and we can’t go on like this. Britain will not prosper economically on the back of dirty money. Our national security is under threat, our economy is suffering and our democratic values are being undermined.”
An economic crime bill rushed through parliament in March set up a register of the ultimate owners of overseas-held UK property, while a bill unveiled in this week’s Queen’s speech will tighten up company records, among other measures.
However, Hodge, who launched the manifesto in parliament on Thursday alongside the Conservative MP Kevin Hollinrake, a co-chair of the all-party group on fair business banking, said more was needed and that there had been a particular lack of action over money laundering. “That has meant that we have become the jurisdiction of choice for dirty money, a safe haven for dirty money,” she said.
Among the recommendations in the report is the creation by early 2023 of public registers of beneficial ownership in UK overseas territories and crown dependencies. A number of these territories have been linked to financial irregularity, with the premier of the British Virgin Islands arrested in the US last month over allegations of cocaine importation and money laundering.
The manifesto calls for the immediate allocation of an extra £300m to be spent on economic crime enforcement, contrasting the UK’s record on this with the resources devoted to parallel agencies in the US. “As economic crime has become a greater problem, our agencies have done less and less,” Hodge said.
The focus on Russian money meant more attention was being paid to the issue, she added. “Did Ukraine bring it to a head? Sadly, yes. We don’t celebrate that but we’re going to, obviously, grasp the opportunity it presents to do something.”
Hollinrake said concerted government action was especially needed to overcome corporate reluctance over ideas such as offences of failing to prevent money laundering. “There are huge vested interests,” he said. “If you’re a chief executive of a big bank and you think there’s a prospect of having your collar felt if things go wrong in your bank, you’re going to go to the Treasury and say ‘don’t do that’.”