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Halting the Torrent of Stolen Money Finding a Safe Haven in the UK

By December 7, 2015 No Comments

In a report titled “Don’t Look, Won’t Find” released on 23rd November, Transparency International UK found the country’s AML supervision to be “fragmented”, “inadequate” and riddled with a “lack of transparency”, allowing “billions” of pounds in corrupt funds to flow into the country every year. Of the existing patchwork of 22 watchdogs, 15 lobby for the companies they oversee. TI-UK also found that a third of banks dismissed serious allegations of money laundering without adequate review.

Turning a Blind Eye

Obtaining figures through a freedom of information request to HMRC, TI-UK highlighted that in 2014-2015 the average fine issued by HMRC to supervised firms that broke money laundering rules was only £1,134, with all fines totaling just £768,000.

That’s the kind of sum that could purchase a house in the UK property market, which would appear to be one of the best ways to hide stolen money. Only 0.05% of all suspicious activity reports came from this sector, even though it is a well known magnet for corrupt funds (with at least £180M of UK property currently subject to criminal investigation).

Perhaps the most staggering figure, though, is 0: the number of sector supervisors in the UK that the report deemed to provide a proportionate and credible deterrent to money launderers.

Stemming the flow

TI-UK recommends that the current “mish-mash” regulatory structure is replaced by one “super” supervisor. It also calls for greater personal culpability to be placed on senior managers for misconduct within their firms.

Addressing the structure is a daunting task, according to TI’s head of advocacy and research who told the FT that the “HMRC have an institutional bias towards secrecy and confidentiality that hampers their effectiveness as an AML supervisor”

Equally, a push for personal culpability has not been met with enthusiasm by the Treasury lately. In October, it abandoned plans to introduce a burden of proof for managers at financial firms, which would have compelled them to demonstrate that they had done the right thing if wrongdoing happened on their watch.

How the government will respond to this report, if it really means to give teeth to David Cameron’s claim that dirty cash is not welcome in the UK, remains to be seen.  

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