UK Must Do More To Curb Money Laundering Says TI

by Amanda Banks, for LawandTax-News.com, London

18 June 2003

Anti-corruption pressure group Transparency International has warned the UK government to tighten controls on the financial sector to prevent a rising tide of money laundering that could potentially threaten London's reputation as an international financial centre.

The scope of the problem is staggeringly large according to TI. The International Monetary Fund estimates that between $500 billion and $1.5 trillion are laundered every year through the global financial system. In the UK alone, the Home Office estimates that dirty money represents about two percent of gross domestic product, or approximately £18 billion.

The TI(UK) report makes a series of recommendations addressing the deterrence and detection of money launderers, the expansion of the activities covered by the UK’s anti money laundering regime and improvements in the current fragmented approach to enforcement. The recommendations could collectively help to constrain the flow of proceeds of corruption through the UK’s financial markets, the organisation says.

The Report recommends that action be taken to ensure that lawyers and accountants be subject to more rigorous inspections to counter their poor record in reporting suspicious transactions; that bureaux de change be brought under the regulatory scope of the Financial Services Authority; and that the government ensures that non financial institutions such as estate agents, casinos, and high value goods auctioneers be made aware of their new obligations under the revised European money laundering rules, which are soon to come into force. A further recommendation is that trustees and company formation agents should be brought within the regulatory scope of the Financial Services Authority.

John Drysdale, Chair of TI(UK)'s Money laundering working group and a former director of Robert Fleming, a private merchant bank, said: “The British government has so far failed to contain the growing menace of money laundering. Despite laudable efforts to tighten the UK’s anti-money laundering regime, too many weaknesses remain and the government must now dedicate adequate resources to ensure that proceeds of crime are not legitimised by the UK’s financial system.”

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