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UK condemned as a shameful safe haven for Moscow's gold

UK condemned as a shameful safe haven for Moscow's gold

The UK's parliamentary Foreign Affairs Committtee has blasted Britain's status as a safe haven for dirty money as a "stain on our reputation", and called on the Government to bring forward legislation that would stop the flow of illicit cash through London.

The Committee finds that, so far, the Government’s rhetoric of “clamping down” on Russian money has not been matched with constructive action.

Sanctions against oligarchs and those who support, or receive benefit from, the Russian Government are not in and of themselves enough, the Committee concludes.

The report finds that legislation targeting enablers in financial markets should be strengthened.

It also calls for a substantial increase in funding for the National Crime Agency, Serious Fraud Office and other agencies, as well as a review of the Golden Visa scheme, which has allowed corrupt actors to establish positions of status in the UK.

Chair of the Foreign Affairs Committee, Tom Tugendhat MP, says: “Dirty money brings corruption to our homes and turns our institutions against us. It attacks our society and our security. For far too long successive Governments have allowed malign actors and kleptocrats to wash their dirty money in the London ‘laundromat’. Complacency has left the door open to corrupt wealth taking root and morally bankrupt billionaires using the UK as a safe deposit box.

“We first reported on the threat of foreign corruption in our 2018 report ‘Moscow’s Gold’. The Foreign Affairs Committee has called for a clampdown on the illicit finance that flows through our capital. It is shameful that it took a second invasion of Ukraine to force the Government’s hand.

“While the Economic Crime Act is welcome, it is also long overdue. Current legislation does not go far enough and the Government’s rhetoric is not matched by reality. Sanctions against Russian individuals and businesses can only achieve so much. We need much more fundamental - and long-lasting - legislative changes to weed out the scourge of dirty money."

Martin Cheek, managing director at AML software house SmartSearch, says too many regulated firms persist in using inadequate, legacy and manual processes to check the identity of new customers.

“Our recent survey of 500 regulated firms in the property, finance and legal sectors showed that 70 per cent of property companies, 47 of legal firms and 34 per cent of financial firms had not changed their approach to onboarding new customers since sanctions were imposed on Russia after its invasion of Ukraine.

“It’s no wonder that criminals and kleptocrats are taking advantage of these loopholes to wash their money in the UK."

Comments: (1)

A Finextra member
A Finextra member 30 June, 2022, 11:17Be the first to give this comment the thumbs up 0 likes

This regulation and enforcement should be self-funding, as the regulators and enforcers identify and sequester illicit or illegal funds they should be given those funds to invest in better systems and more staff.  this seems to work well in the USA with the DOJ motivated to intercept and secure laundered cash -  its time the UK Government broke its ties with Siberian Lords and their Knighted sons (amongst others) and replaced rhetoric with results.  I will be writing to my MP.  Thanks Finextra - good summary.

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