Money Laundering: The Dirty Secret That Won’t Go Away
A report by anti-corruption watchdog Transparency International lays bare what it believes is massive, carefully planned money laundering in the UK.
Here Syedur Rahman of business crime solicitors Rahman Ravelli voices concern about the effectiveness of the authorities’ efforts to tackle it.
Transparency International has argued forcefully that laundered money is making its way into even the most prestigious parts of the UK economy.
In its report ‘At Your Service’, TI makes it clear that dirty money is throughout the UK economy, with corrupt individuals taking care to place their illegal gains into service industries that are not covered by strict anti-money laundering rules.
As a result, everything from private schools, interior designers, sports hospitality providers and suppliers of designer goods are becoming beneficiaries of ill-gotten gains; although many may not know the tainted origins of the money they are receiving.
This is arguably not earth-shattering news. It has, after all, been a very poorly-kept secret that the proceeds of crime have been and are being spent on a vast scale in the UK; with London (and especially its property market) proving to be the traditional magnet for such cash. And every individual in possession of such tainted money will always look for ways of spending it that do not attract official attention.
But the depth to which TI has demonstrated the scale and breadth of the problem should perhaps be seen as a wake-up call to the UK authorities, as if laundered money is seeping into all aspects of UK life that cannot be good for anyone but those with the tainted money and those with whom they choose to spend it. It is telling that while TI estimates the amount of such money entering the UK each year is around £325 billion the National Economic Crime Centre (NECC) believes it to be little more than £100 billion.
Laundered money is seeping into all aspects of UK life that cannot be good for anyone but those with the tainted money and those with whom they choose to spend it.
Either figure is alarming. And we may never determine which one is the most accurate. But the fact that the NECC’s estimate is less than a third of the size of TI’s is hardly encouraging. And both figures are glaring reminders that more needs to be done. Otherwise we are grudgingly accepting that criminal activity that involves tens of billions (if not hundreds of billions) of pounds annually can continue unchecked.
There may be some reading this who would take umbrage at the idea that there is an acceptance of money laundering on this scale. They may believe the fact that it is happening is far from an acceptance or condoning of it. But if all efforts to tackle money laundering are still allowing, depending on who you believe, between £100 billion and £325 billion to be laundered each year then surely anything other than a total reassessment of those efforts amounts to an unspoken acceptance of the current problem.
TI’s report states that 17,000 shell companies have been used by 582 UK firms or individuals to move suspected proceeds of crime into the UK. That works out at almost 30 companies per company or individual. And yet just under a year ago the Financial Action Task Force – the G7 countries’ answer to the money laundering and terrorist financing problem – was stating that the UK aggressively identifies and pursues money laundering. It went as far as to say that the UK is a global leader when it comes to promoting corporate transparency and has “a good understanding’’ of the money laundering risks. From what TI is saying, that transparency seems far from clear when it comes to establishing the source of funds.
I would be the last person to say that little or nothing has been done when it comes to money laundering. Aspects of the Criminal Finances Act (including unexplained wealth orders), the UK’s Money Laundering Regulations and the NECC’s own Joint Money Laundering Intelligence Taskforce (JMLIT) may well be making inroads into the problem. But even the most forgiving assessment of the situation indicates that the inroads that are being made appear to be neither as speedy nor as direct as they need to be.