The UK’s law enforcement regime is not “up to the job” to prevent fraud and money laundering infiltrating the country’s financial system, according to findings by an influential group of cross-party MPs published today.
It is far too easy for financial criminals to clean dirty money through Britain and the government needs to urgently strengthen anti-money laundering defences, according to a new report by the Treasury Select Committee.
UK company laws have failed to stamp out money laundering activity and have allowed millions of pounds of dirty money from Russia to flow into the country.
Graeme Biggar, director general of the National Economic Crime Centre, warned the Committee during their evidence gathering to feed into the report that “it can be too easy to set up companies here, as we have seen repeatedly over the years”.
Russian and former Soviet Union laundromats, vehicles used to clean ilegal funds, have been able to wash money through UK corporate structures on an industrial scale.
Biggar said “a disturbing proportion… not much shy of 50 per cent in one case” of dirty Russian money has been funnelled through UK corporate structures.
The warning comes as the Commons foreign affairs committee yesterday launched a new probe into foreign cash pouring in Britain amid intensifying concerns over the scale of dirty money moving into London from Russia.
A sweeping shakeup of company law in the UK is needed to prevent criminals from hiding behind opaque corporate structures, the report suggested.
Evidence provided by Transparency International UK that informed the report found 929 UK companies have been involved in 89 cases of corruption and money laundering, amounting to £137bn in economic damage.
The report also slammed the UK’s approach to regulating and policing cryptocurrencies for being far too lax and allowing “pernicious scammers” to rip off consumers, Tory MP and chair of the Treasury Committee Mel Stride, said.
Stride said fraudsters have been allowed to act with “impunity, ripping off innocent consumers with fraudulent online adverts, impersonation scams and dodgy crypto investments” for too long.
“There are increasing risks around cryptoassets,” the Committee said, adding the government needs to set out a plan to ensure all crypto firms are registered to adequately monitor and prevent money laundering activity. Cryptocurrencies such as Bitcoin have been criticised for creating channels to allow money to flow into illegal terrorist organisations. Research by Chainalysis also found crypto scammers stole over £10bn of consumers’ money last year.