Major step to strengthen Britain’s defences against dirty money welcomed

Transparency International UK today welcomes the Government’s decision to overhaul the policing of anti-money laundering rules in the private sector.

Following 10 years of campaigning by Transparency International UK, the move will see oversight of lawyers, accountants and company formation agents pass to the Financial Conduct Authority (FCA).

This overhaul promises more consistent levels of oversight and enforcement across sectors vulnerable to money laundering and will facilitate cooperation with law enforcement agencies. Drawing on its established regulatory powers, the FCA will now need to be adequately resourced to effectively ensure that the UK professional services don’t play a role in facilitating the flow of dirty money. 

It is now vital that the Government delivers a smooth transition – transferring existing intelligence to the FCA – and provides the body with the authority, resources and technical expertise needed to oversee such a diverse and complex sector. 

Steve Goodrich, Head of Research and Investigations, Transparency International UK, said:

“These reforms are long overdue and present a welcome step towards fixing the UK’s broken system for tackling illicit finance.

“For too long, fragmented and ineffective oversight of lawyers, accountants and company formation agents have enabled kleptocrats, oligarchs and criminals to launder and stash their dirty money here - contributing to Britain's £100 billion-a-year money laundering problem. Rationalising the current patchwork of regulators into one properly resourced organisation has the potential to provide a step-change in the UK’s efforts to tackle dirty money.

“For this reform to succeed, the FCA must be equipped with the funding and expertise necessary to oversee a broad range of professions. A smooth transition, with intelligence and investigative leads from existing supervisors passed on to the FCA, will also be vital.” 

The current system of more than 20 different supervisors was in urgent need of an overhaul. It provides an uncoordinated, ineffective response to tackling ‘professional enablers’ unwittingly or knowingly contributing to the UK’s £100 billion a year money laundering problem. Transparency International UK’s 2015 research identified a range of issues, including:

• major conflicts of interest held by private sector supervisors, who are responsible for both regulating their members and lobbying on their behalf
• weak enforcement of the rules by supervisors
• poor information sharing, especially across sectors

Poor private sector oversight has allowed rogue company formation agents to facilitate industrial-scale money laundering, which damaged the UK's reputation as a clean and trusted place to do business.  

Notes to editors 

This announcement comes as a response to a consultation launched under the previous Government. Transparency International UK’s full response can be found here. 

Previous research by Transparency International UK found that UK companies, accountants, lawyers, and other professional services facilitated the diversion of £325 billion worth of funds from 116 countries across the world. The funds were diverted from rigged procurement, bribery, embezzlement and the unlawful acquisition of state assets. The entities involved included: 

• 81 law firms 

• 62 accountancy firms 

• 86 banks and financial institutions