UK banks at high risk of exposure to laundered money, says report
The UK financial system is at high risk of being used to launder billions of pounds of corrupt cash through “known professional enablers” in the legal and property professions, according to a new report.
The national risk assessment of money laundering and terrorist financing warned that the country’s banking, accountancy and legal services sectors were at a high risk of exposure to handling corrupt money.
“The same factors that make the UK an attractive place for legitimate financial activity – its political stability, advanced professional services sector and widely understood language and legal system – also make it an attractive place through which to launder the proceeds of crime,” said the report by the Treasury and Home Office.
The report emphasised how little is known about the true volume of corrupt money moving in and out of the UK, with the financial sector as a whole said to be facing “significant intelligence gaps, in particular in relation to ‘high-end’ money laundering”.
It said: “There are known professional enablers within the legal sector who are facilitating money laundering through the purchase of property with criminal proceeds, and the creation of complex corporate structures and offshore vehicles to conceal the ownership and facilitate the movement of criminal assets.
“Although there are few complicit professional enablers known within the legal sector relative to the size of the sector as a whole, the potential impact they can have on money laundering remains high given their ability to conceal and disguise large sums of criminal money. They also pose a threat to the reputation and integrity of the vast majority in the legal sector who are not complicit in money laundering”.
While referring to the true amount of corrupt money moving through the UK as ‘an intelligence gap’, the report observed: “Some non-governmental organisations estimate that between £23bn-£57bn is laundered within and through the UK each year. The National Crime Agency assesses that hundreds of billions of dollars are laundered through UK banks and their subsidiaries each year.”
While the findings will exacerbate fears that the UK is failing to prevent corrupt money from entering the British financial system, anti-corruption campaigners have described the report as a positive step in recognising the need for stronger measures to tackle international corruption and financial crime.
Nick Maxwell, the head of advocacy and research at Transparency International, welcomed the report as “a clear and unambiguous recognition of the risk posed by money laundering in the UK”.
“It puts beyond any doubt that vast sums of money from the proceeds of corruption around the world are flowing into the UK, and our system for stopping it and preventing it isn’t fit for purpose,” he said.
“All countries are generally doing very badly at stopping the proceeds of corruption from being laundered, so it’s very positive that there’s such transparency over the law enforcement intelligence gaps.”
Legal professionals should be aware that they are vulnerable to being targeted by criminals because of the skills, services and products they provide which can facilitate money laundering, and the legitimacy they can lend to a criminal’s activities, the report said.