Economic Crime Manifesto: How to drive out dirty money
Thursday 12 May - 2022
Dame Margaret Hodge MP // Kevin Hollinrake MP said:
In the Queen’s Speech this week the government announced legislation to tackle the UK’s dirty money crisis. The Economic Crime and Corporate Transparency Bill is warmly welcomed, coming swiftly on the heels of the recently passed Economic Crime Act. Taken together, these new laws represent Britain’s response to the scandalous stories of Russian oligarchs who have been stashing their corrupt wealth here in London. Yet many of us long-time dirty-money fighters fear that the second Economic Crime Bill won’t go far enough to fixing the problem. As we all know, sequels often don’t live up to their billing.
Luckily enough for the government, we’re on hand to share some advice. Today we’re launching our cross-party economic crime manifesto that sets out a comprehensive list of pragmatic reforms that will begin to sort out our broken system. An overhaul of our anti-money laundering regulations; tougher and well-resourced law enforcement agencies; robust protections so that the press, parliament and whistleblowers can hold wrongdoers to account; and real transparency of ownership for companies, trusts, and land. Then we can begin to drive out economic crime.
There’s a simple reason for addressing this systemic problem: dirty money is the root of many evils. It stands behind the very worst corruption and criminality, yet it flows largely unchecked through the UK financial system. Britain is unwittingly complicit in bankrolling dictators and funding Putin’s barbaric war in Ukraine. At home, dirty money undermines our national security, allows organised criminals to prosper and damages Britain’s reputation as a trusted jurisdiction. All of this has a very real impact on the everyday lives of British people as fraudsters run amok at a time when a cost-of-living crisis rages on.
The phenomenal scale of the UK’s crisis of economic crime matches the global reach of the UK’s financial services sectors. The industries that are centred in the Square Mile are major success stories, as demonstrated by the World Economic Forum, which recently labelled London the world’s most “magnetic” city for the tenth year in a row. However, as the financial services sector has grown year after year, waves of dirty money entering the legitimate financial system have spiralled into a flood. According to the National Crime Agency, the UK’s money laundering problem runs to at least £100 billion annually. Our financial and professional services have been used and abused by bad actors at an enormous scale and now Britain’s defences against economic crime have been overrun.
Successive governments have made some important progress, such as leading the world in company ownership transparency and recently legislating to reduce secret offshore property ownership. But these measures represent just the start of the fightback against illicit finance. In the UK regulation is too lax, dirty money supervisors do not work consistently, and enforcement agencies are completely outgunned. It is not enough to have one of the toughest anti-money laundering regimes in the world if it is not up to the scale of the challenge.
Meanwhile our global allies are taking economic crime seriously. The US government is transforming its defences and has designated corruption a core national security threat and a risk to democracy. They have understood that dirty money can corrupt democracies as well as dictatorships, and corrodes everything that the West values. These international partners expect more from the UK but we are lagging behind.
The government must realise that Britain has a unique opportunity for global leadership. Sanctioning more than a thousand individuals and companies in a short space of time in response to Russia’s invasion of Ukraine has demonstrated that they can take swift action. But sanctions tackle the symptoms of this vast economic crime problem, not the causes. Ukraine should be a historic turning point. As home to one of the world’s largest financial centres, the UK has potential to step up alongside the US and play a catalytic role in making sure that the world’s worst crooks and kleptocrats find themselves with nowhere to hide or spend their ill-gotten gains.
The reforms set out in our economic crime manifesto will reinforce Global Britain’s reputation for integrity and make us the destination of choice for clean finance. They will support an international race to the top by showcasing and promoting the next generation of measures to fight dirty money. They will ensure our world leading financial and professional services are positioned on the right side of history, so that collectively we deliver on our ambition to be the ally that Ukraine needs and a positive, trusted force in the world. Driving out dirty money is good for business, good for Britain and good for the world.
Read our cross-party Economic Crime Manifesto HERE.