18/04/24

UK: UK failing to fight ‘dirty money epidemic’ costing £350bn a year, MPs warn

As published on: cityam.com, Thursday 18 April, 2024. 

The UK is “utterly failing” to fight the “dirty money epidemic” that is costing £350bn a year, MPs have warned.

Any future government must strengthen transparency, regulate lobbyists and close sanction loopholes, according to a new economic crime manifesto published by MPs today.

Dame Margaret Hodge, who has long campaigned on tackling corruption as an MP, stressed that following the general election, parliamentarians “will have to work to ensure that the UK is no longer the destination of choice for criminals, kleptocrats, and fraudsters”.

Hodge, co-chair of the all-party parliamentary group (APPG) on anti-corruption, responsible tax and fair business banking, told City A.M.: “One of the most frustrating things about the UK’s dirty money crisis is the enforcement agencies are utterly failing to use the tools we already have.

“We must properly resource our law enforcement, crack down on oligarchs evading sanctions, ramp up penalties for professional enablers, and enhance transparency through public registers of beneficial ownership in our offshore tax havens.”

It comes after City A.M. reported last week that legal powers, known as unexplained wealth orders (UWOs), have only ever been deployed by the National Crime Agency (NCA) in five cases and have never been used by the Serious Fraud Office (SFO).

This is despite the government anticipating as many as 20 uses per year when it introduced the measures in an effort to clamp down on kleptocrats and clean up London’s reputation.

The report calls on the government to enforce existing legislation and insist on public registers of beneficial ownership in the UK’s overseas territories and crown dependencies.

It warns that successive governments failing to act poses a direct threat to the UK’s national security, economic prosperity, global reputation, social stability and democratic integrity.

MPs also want to see: information on the owners of UK properties published, as well as complete company information available on Companies House; and the creation of a specific offence of ‘failure to prevent’ money laundering and criminal liability for top decision makers.

Further recommendations include: founding a ring fenced economic crime fighting fund to reinvest fines and criminal assets in enforcement; closing sanction loopholes, including in relation to Russian oil; extending regulatory rules to lobbyists; as well as beefing up the Electoral Commission watchdog, and creating a new Commons committee on corruption.

Hodge added: “Prioritising the battle against dirty money is non-negotiable. Economic crime is costing our economy £350bn each year.

“Only then can we hope to turn the tide against dirty money and ensure London is, once again, open for clean business.”

Bill Browder, head of the Global Magnitsky Justice Campaign, warned: “Russia is a rogue state with an insidious dictator intent on destabilising the UK and its allies.

“Opponents to the regime find themselves shot out of the sky, beaten to death in prisons or poisoned in British cities. Yet the UK continues to pussyfoot around Russian dirty money.

“Sanctions are hardly going to work if Putin’s cronies can squirrel assets away in the murky corners of the British financial system, or enforcement agencies are hopelessly outspent and outmanoeuvred.”

A government spokesman said: “Dirty money is not welcome in our country and through the Economic Crime and corporate Transparency Act we have introduced world-leading powers which are tough on kleptocrats and criminals seeking to abuse the financial system.

“Our Economic Crime Plan 2 also sets out comprehensive commitments to reduce money laundering, increase the recovery of criminal assets, combat kleptocracy and sanction evasion.”