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The UK’s defences against dirty money have been overrun – but its not too late to turn the tide

5 min read

The war in Ukraine has created an unfortunate, unwelcome but unique opportunity to clamp down on economic crime and drive dirty money out of our economy, our society and our politics.

It should not have taken a catastrophe of this magnitude to bring the issue into focus, but we owe it to the people of Ukraine to do our bit in the fight against the kleptocrats who are driving this conflict.

By rushing through an Economic Crime Bill earlier this year and speedily sanctioning thousands of individuals and entities linked to the Russian regime, the government showed it can act quickly and effectively, where the political will exists. The announcement, in the Queen’s Speech, of a second Economic Crime Bill is very welcome, as further legislation is required to close a number of loopholes and correct serious flaws.

However, we believe the government can increase its ambition on the issue and go further still. That’s why we launched our Economic Crime Manifesto last night. The attendees at the launch event included politicians, business leaders and figures from civil society. Momentum is growing behind this agenda, we must seize the moment.

The UK’s financial and professional services sectors are global leaders. Their size and reach make them attractive to those who seek to exploit that magnitude for their own nefarious ends. However, it also means that the UK is uniquely placed to lead the world in cleaning up financial services and setting standards for others to follow, demonstrating the best of what “Global Britain” could be.

London has become the jurisdiction of choice for too many crooks and kleptocrats who see it as soft touch

Proportionate action cannot come soon enough, for dirty money is a stain on the UK - it funds the very worst sorts of crimes including human trafficking, county lines drugs gangs, and much of it is linked to President Putin’s vicious war in Ukraine.

The City of London has become the jurisdiction of choice for too many crooks and kleptocrats who see it as soft touch where they can launder or stash their ill-gotten gains.

It costs the Exchequer at least £100 billion a year. Some estimates put the figure of total economic crime at nearly £300 billion annually, which is close to a third of government spending. In a cost of living crisis the nation simply cannot afford to see such sums at best go to waste and at worst used to bankroll crime and undermine national security.

It is all too clear that the UK’s defences against dirty money have been overrun. But we can turn the tide.

Our Economic Crime Manifesto is made up of pragmatic reforms, easy wins, and transformative polices that will drive out dirty money. It’s built around four key pillars – transparency, enforcement, accountability, and regulation.

We know the Economic Crime Bill will contain measures reforming Companies House, but we want the government to put transparency at the core of those changes by giving the registrar more powers to verify data and ensure that information on the register is accurate. Couple that with an increase of the fees for setting up a company from £12 to £50 and we can ensure that Companies House has a sustainable funding model long into the future.

Funding is the key to the enforcement aspect of the manifesto – our weak law enforcement agencies are under-resourced and over-burdened. A dedicated economic crime fighting fund would reinvest the proceeds of regulatory and criminal fines or seized assets into the agencies dedicated to rooting out and prosecuting economic crime, at no additional cost to already struggling households across the UK.

Meanwhile, Britain’s corporate criminal liability laws are outdated and ineffective, making it very difficult to hold large and complex organisations to account. We are calling for new “failure to prevent” offences for economic crimes such as fraud and money laundering, which would punish those directors and companies whose wilful ignorance or simple negligence facilitate economic crime.

Similarly, an innovative recommendation that would strengthen accountability is the establishment of an office for whistleblowers, to provide protection and compensation for those that speak out against or uncover economic crimes and other wrongdoing.

Proper regulation is needed around, for example, cryptocurrencies. The government wants the UK to be at the forefront of this innovative technology, but without some oversight and agreed rules crypto threatens to become a playground for bad faith actors and fraudsters.

We are resolutely not calling for regulation for the sake of it, but for better and smarter rules that are consistently enforced.

Business can be a force for good. But if good people look at the economic landscape and suspect it’s rigged, they are far less likely to take part, depriving the UK economy of the innovation, entrepreneurship and growth we need to drive the post-pandemic recovery.

The UK will prosper by combining an attractive business environment with the highest standards of probity and transparency. We can only do that if we drive out dirty money from our financial system once and for all.


Margaret Hodge is the Labour MP for Barking and chair of the APPG on Anti-Corruption & Responsible Tax. Kevin Hollinrake is the Conservative MP for Thirsk and Malton. 

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