Make the UK a global leader in tackling illicit finance and economic crime

The UK’s financial, legal, and accountancy sectors are the biggest in the world, making London a highly attractive place in which to invest and do business. However, this also makes it a target for criminals and adversaries to commit economic crimes and for dangerous illicit financial flows to flourish. 

Russia’s invasion of Ukraine is a prime example of how hidden wealth flows largely unchecked through the UK financial system, and is then used to underpin corruption, crime, and conflict. Corrupt leaders and their network of oligarchs use the UK to siphon resources away from their citizens, depriving them of essential services like healthcare and education. 

Foreign oligarchs and kleptocrats have also leveraged their wealth to exert influence and infiltrate the British establishment too, through activities like donating to prestigious universities, funding major political parties, and investing in football clubs. This poses a serious threat to the UK’s national and economic security.

These activities are often hidden behind anonymously owned shell companies - with many cases traced to the UK’s Crown Dependencies and Overseas Territories. Companies registered in these jurisdictions are used to shelter dirty money from countless other enterprises, including serious organised crime, tax evasion, and terrorist financing.

Meanwhile, UK-based “professional enablers” - lawyers, accountants, estate agents, art dealers, PR agents, and others - are often used to help launder ill-gotten gains. This is sometimes intentional and sometimes inadvertent, but the bottom line is that the UK must do more to address the loopholes that allow this to happen.

The last government made some important reforms following the war in Europe. But the job isn’t finished.

The 2024 Labour government must now:

  • We need this to address loopholes in previous Economic Crime Acts since 2022. Crucially, we need to:

    • Properly investigate the role of trusts, shareholder information, Scottish Limited Partnerships, and verification, in aiding hiding illicit wealth.

    • Significantly increase the amount of money that could be invested in law enforcement’s economic crime and asset recovery work, by ensuring there is more confiscation of assets following criminal enforcement action, and allowing for funds from suspected criminal accounts to be reinvested in enforcement agencies. 

    • Introduce a “failure to prevent” money laundering offence for senior executives to enhance enforcement against high end money laundering.

    • Introduce liability for senior executives where there is negligence in relation to economic crime.

    • Ensure victims of economic crime get proper compensation.

  • For far too long, the UK has sat at the centre of a global web of economic crime, preaching transparency while enabling the world’s leading network of tax havens. Through its Crown Dependencies and Overseas Territories (CDOTs), Britain effectively provides kleptocrats, criminals, and tax dodgers from all over the world a safe space from scrutiny and justice. Russia’s invasion of Ukraine made the world try far harder to counter the devastating effects of dirty money, but the UK now urgently needs to play its part by:

    • Working with financial centres in the CDOTs to establish public beneficial ownership registers in all of these jurisdictions. These registers would enable law enforcement, journalists, civil society and citizens to see who owns which shell companies - something that’s currently nearly impossible in most cases.

    • Working with those CDOTs planning to introduce closed registers with a ‘legitimate access filter’ to do so only as a stepping stone toward public registers. These are more effective for preventing and identifying economic crime, and in line with the will of the UK Parliament.

  • We should become a global leader in this area by:

    • Delivering measures to strengthen anti-money laundering supervision ahead of the next review of the UK by the Financial Action Task Force. 

    • Improving whistleblower protections and introducing financial compensation for people who blow the whistle on economic crime.

    • Developing a new sanctions policy to address professional enablers and ramp up Global Anti-Corruption Sanctions.

    • Bringing forward anti-SLAPP legislation to protect investigative journalists from vexatious and abusive lawsuits.

  • This sustained initiative to tackle dirty money should include:

    • Effective information sharing on dirty money.

    • Taking coordinated action against enablers and kleptocrats, including finding ways to engage the private sector with its global reach across these centres and closing down the architecture managed by international financial centres that facilitates enablers and kleptocrats.

    • Taking concrete steps towards best practice for regulation and supervision on anti-money laundering, and on corporate transparency, particularly trusts.

    • Taking the profit out of climate crime. We must ensure that climate transition and climate financing is not lost or diverted through money laundering or corruption. Also that all financial centres take coordinated action to tackle money laundering from crimes that cause serious harm to the climate. This includes environmental crime (such as deforestation or illegal fishing), fraud in carbon credits and fraudulent corporate statements on climate action.

    • Developing a concrete agenda for tackling illicit finance to support implementation of the Sustainable Development Goals including through support for jurisdictions in the Global South to improve their anti-money laundering and illicit finance systems.

    • Establishing live-streamed global data exchange on beneficial ownership of corporate structures, including trusts and trust like arrangements to ensure frictionless investigations.

  • Agencies like the National Crime Agency (NCA) and the Serious Fraud Office (SFO) need much more realistic and sustainable resourcing to go after criminals and kleptocrats that use the UK to clean their dirty money. We need to:

    • Create additional funding for the NCA and other economic crime fighting agencies via a pooled fund for reinvesting seized criminal assets and fines.

    • Undertake a review of what the NCA needs in order to operate at peak performance and fulfil its mission to be an elite crime fighting body that leads and coordinates law enforcement on tackling serious organised crime. 

    • Develop costings for the next Comprehensive Spending Review which would include an upfront investment as part of multi-year core budget for the NCA that enables pay reform.

    • Carry out an internal review ahead of the next Comprehensive Spending Review into how an Economic Crime Fighting Fund (based on pooling a range of economic crime enforcement receipts, funds from suspended accounts, the Economic Crime Levy and a potential new Fraud levy), should work. And we should hold a targeted engagement exercise on this review with key stakeholders in the public.