A new report produced by anti-corruption watchdog Transparency International lays bare what it believes is massive and carefully planned money laundering in the UK. Here, Syedur Rahman voices concern about the effectiveness of the authorities’ efforts designed to tackle it.
Transparency International has argued forcefully that laundered money is making its way into even the most prestigious parts of the UK’s economy. In its report entitled ‘At Your Service’, the organisation makes it clear that ‘dirty’ money is present throughout the UK’s 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 direct result, everything from private schools and interior designers through 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’re receiving.
Arguably, this isn’t 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 so its property market) proving to be the traditional magnet for such cash. Every individual in possession of such tainted money will always look for ways of spending it that don’t attract official attention.
Wake-up call for the authorities
The depth to which Transparency International has demonstrated the scale and breadth of the problem should perhaps be seen as a wake-up call for the UK authorities. If laundered money is seeping into all aspects of UK life that cannot be good for anyone save for those with the tainted money and those with whom they choose to spend it.
It’s telling that, while Transparency International 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.
Either figure is alarming. 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 Transparency International’s is hardly encouraging. Both figures are glaring reminders that more needs to be done. Otherwise, we’re grudgingly accepting that criminal activity involving tens of billions (if not hundreds of billions) of pounds on an annual basis can continue unchecked.
Some of the readers of Risk Xtra may take umbrage at the idea that there’s somehow an acceptance of money laundering on this scale. They may believe the fact that it’s 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?
Suspected proceeds of crime
Transparency International’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 Transparency International is saying, that corporate 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 Task Force 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 perhaps need to be.
Syedur Rahman is Legal Director at Rahman Ravelli
*Visit the Rahman Ravelli website for a brief summary of money laundering issues and how to respond to allegations