Britain must urgently review its “fragmented” anti-money laundering system and supercharge the UK’s companies registry, a powerful body of MPs has said.
The Treasury Select Committee report on economic crime, released today, also said HMRC should begin registering estate agents for anti-money laundering purposes, to prevent ill-gotten gains from being “stashed” in the UK property sector.
Nicky Morgan, the committee’s chair, said: “The government needs to bring greater order to a fragmented supervisory system, better identify the scale of the problem, and make a greater effort to combat the known risks and gaps in the supervisory system.”
MPs criticised the UK’s current system for stemming the flow of dirty money has “fragmented”, pointing to the mix of professional and statutory bodies currently in operation.
They warned about the “malign” influence of Russian money on Britain’s financial system, but said “the UK must achieve a balance and not create a risk that other criminals slip by while attention is focussed on individuals with a specific nationality”.
The report said the government ought to maintain a database of politically exposed persons – individuals “whose prominent position in public life may make them vulnerable to corruption”.
It demanded a fresh assessment of the scale of economic crime in the UK and new powers for Companies House, the body which monitors UK firms.
Companies House has come under criticism from anti-corruption campaigners, who say it lacks the resources to effectively tackle abuse of the UK’s registration systems through the creation of ‘shell’ and ‘wrapper’ companies. MPs said the government should “urgently consider” giving it new powers, “to ensure that it plays no role in helping those undertaking economic crime.”
UK limited partnerships and Scottish limited partnership have featured heavily in several major global money laundering incidents, including last year’s Danske Bank scandal.
Nienke Palstra, a campaigner at anti-corruption charity Global Witness, said the committee’s recommendations for Companies House were “spot on”.
“We know the UK is a favourite for the criminal and corrupt looking to stash stolen money or secure safe haven – and anonymous companies have made this easy,” she said. “Giving Companies House the resources and mandate to police their company register will address a glaring gap in the UK’s money-laundering defences.”
The Treasury Select Committee said Brexit “will provide both risks and opportunities in terms of economic crime”, urging the government not to “compromise” on the topic during trade negotiations.
“Brexit is of particular concern as Europe heads towards the creation of a centralised policing and investigations body, as well as looking to maximise the potential for information sharing”, said anti-financial crime expert Graham Barrow. “Given the global nature of organised crime and corruption… the potential for being excluded from information sharing is potentially damaging on both sides.”