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By Mineral Products Association

Plan to tackle dirty money in UK lacks ambition and funding

4 min read

The government’s new Economic Crime Plan, their blueprint for cracking down on dirty money, has finally been published and it deserves some credit.

First, proper acknowledgement by the government of the true scale of the United Kingdom’s dirty money crisis. Second, a serious definition of kleptocracy and plans for a government-wide approach to tackling it. Third, a commitment to introducing a new corporate offence for failure to prevent fraud, now the most common crime in the UK costing us £190bn annually. Fourth, pledging to support the implementation of public registers of beneficial ownership across the UK’s network of overseas territories and Crown Dependencies, many of which are secretive tax havens. This is all welcome news. 

Until the government puts money where its mouth is, their entire approach to tackling dirty money will just be smoke and mirrors

But, despite some reasons to be cheerful, the Economic Crime Plan is mostly a disappointment. It lacks ambition, proper leadership, and most importantly – money.  

Suella Braverman made a grand reveal at this week’s Economic Crime Congress of an additional £400m to fight economic crime, however, this isn’t new money. The plan simply reheats previously committed government spending of £200m to be spent over the next three years, along with an extra £200m provided by private sector contributions.  

The paltry £200m the government has managed to scrape together is in fact the same amount that it committed for fixing potholes in its recent Budget – not exactly commensurate with the £290bn that fraud and money laundering is costing us annually.  

Across the pond, the Americans are increasing their financial intelligence agency’s budget by 18 per cent this year, with a further 20 per cent proposed for next year. Not to mention that our financial services sector spends £34.2bn on anti-money laundering and compliance. The government’s plan pales in comparison and is unlikely to address the scourge of dirty money.  

And yet there is a simple solution to this funding problem. It currently costs just £12 to set up a company in the UK, which is incredibly low. This fee could be modestly raised and ringfenced to fund our law enforcement agencies, at no additional cost to the taxpayer. By comparison, the EU charges an average of €300 to set up a company, while it costs $1,000 in the British Virgin Islands. 

A cross-party group of MPs recently put forward this sensible proposal to better fund our enforcement agencies, but the government rejected it out of hand.  

This isn’t the only missed opportunity. The Economic Crime and Corporate Transparency Bill is being scrutinised in the House of the Lords right now. It’s our golden opportunity to rapidly implement new measures in the fight against economic crime, but ministers must accept it still needs toughening up.  

For instance, the Economic Crime Plan seeks to stop criminals and oligarchs from hiding their identity behind opaque company structures and secretive trusts. Yet a number of proposed amendments to said bill to address this problem – namely closing down loopholes and strengthening the Companies House register – were repeatedly turned down.   

The Economic Crime Bill is also an opportunity to introduce long overdue reforms to our corporate criminal liability laws. While the government has agreed to introduce a failure to prevent fraud offence, it has failed to take any steps in relation to money laundering.  

Ministers are missing their chance to bring forward real, long-lasting change. Instead, they seem to use this plan to kick the can down the road and pat themselves on the back. It is beyond frustrating that some of the proposals in this plan have already been put forward as amendments to said bill, only to be rejected.

Until the government puts money where its mouth is, their entire approach to tackling dirty money will just be smoke and mirrors. I just hope they look again at both the Economic Crime Bill and their plan so the UK can finally show dirty money the door. 

 

Margaret Hodge is the Labour MP for Barking and chair of the APPG on Anti-Corruption & Responsible Tax

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