Press release 20th Sep 2020

FinCEN Files leak is more stark evidence of the UK’s role in global money laundering and corruption

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20 September 2020, London - A major leak of law enforcement data has once again exposed Britain’s role as a facilitator of global corruption and money laundering. It also highlights the increasingly urgent need for an overhaul of the UK’s dirty money defences.

The leak, known as the ‘FinCEN Files’, and subsequent investigation by a global consortium of investigative journalists focuses on reports sent from banks in the United States to a US law enforcement agency about suspected money laundering. 

These Suspicious Activity Reports (SARs) repeatedly cite weak money laundering defences in the UK financial sector as a major problem. The leak shows how UK banks continually fail to address suspicious activity and instead offered their services to those with money to hide. Transparency International UK’s research has already identified 86 UK banks and financial institutions which have, unwittingly or otherwise, helped corrupt individuals acquire assets and move suspicious wealth.

The investigation also shows how UK shell companies remain a vehicle of choice for money launderers around the world. In particular, one address already identified by Transparency International UK’s research as a hotspot for high-risk activity is highlighted as a major concern. Broadly, our research has found at least 929 UK shell companies used in 89 corruption and money laundering cases, amounting to around £137 billion globally in potential economic damage.

Daniel Bruce, Chief Executive of Transparency International UK, said:

 

“These revelations are a damning indictment of the system that is supposed to prevent the UK and other financial centres becoming havens for dirty money. They add to the already overwhelming body of evidence of the UK’s central role as an enabler of global corruption and money laundering.

“It is deeply disappointing to see UK financial institutions falling short in their obligations to identify and act upon suspicious activity. Banks should be a first line of defence against dirty money; instead they continue to provide corrupt individuals with a route into our economy through the back door. The ongoing role of UK shell companies in money laundering schemes also risks tarnishing the UK’s reputation as a clean place to do business. 

“The Government should respond rapidly to this significant investigation in order to demonstrate that the UK is serious about tackling dirty money. We know the solutions exist; for example by bringing forward reform of corporate liability laws to hold banks accountable for money laundering failings and expediting the legislation to overhaul the UK company law. 

“As it stands, it remains far too easy for kleptocrats and criminals to launder their illicit loot using the veneer of UK companies and institutions. They should not be allowed to become complicit in the human suffering that is so often the consequence of complex global corruption”. 

 

 

What can be done?

UK banks currently face little prospect of facing criminal prosecution for their role in financial crime. This could be addressed through reform of the UK's outdated corporate liability laws. The Government consulted on these in 2017, but is still yet to publish a response. Legislation is also required in order to implement the overhaul of Companies House announced last week, which would make it harder for criminals to use UK companies for financial crime. 

The draft Registration of Overseas Entities Bill, which is currently awaiting Parliamentary time, would help tackle corruption on the UK’s doorstep by closing a loophole which allows criminals and the corrupt to hide their ownership of UK property by purchasing it via anonymous companies in secrecy jurisdictions.

A radical overhaul of the UK’s anti-money laundering supervisory regime is urgently needed to to establish a credible deterrent against British firms turning a blind eye or actively helping corrupt individuals. The current, disjointed approach involves 25 different supervisors responsible for monitoring anti-money laundering compliance, many of which lack the powers to sanction bad practice.

 

Notes to editors: 

Transparency International UK’s Chief Executive, Daniel Bruce is available for broadcast interview today and tomorrow (September 20th and 21st).

 

Contact:

Harvey Gavin

harvey.gavin@transparency.org.uk

+44 (0)20 3096 7695

+44 (0)79 6456 0340