The government is asking bankers and lawyers to provide feelgood stories about how they blocked dirty money from entering the UK, as ministers try to prove the UK’s money-laundering controls are working.
The Treasury’s call for evidence is meant to illustrate that the UK has upped its game when it comes to preventing financial crime, particularly since its last dismal assessment by the Financial Action Task Force (FATF) global crime watchdog in ۲۰۱۸, which fuelled allegations that London had become a hub for “dirty money”.
“To build the strongest possible picture of system-wide effectiveness,” the government call for evidence said, “we are looking for real-life examples with clear, demonstrable results that illustrate how the UK’s anti-money laundering, counter-terrorist financing and sanctions frameworks operate effectively in practice.”
The government is rushing to collect those examples before it submits its own evidence packet to the taskforce in October. The watchdog’s assessment team will then visit the UK for an on-the-ground review next summer.
But the UK faces an uphill battle to prove the City has made substantial changes, and are staying alert to new threats including a surge in AI-fuelled investment fraud and the growing popularity of cryptocurrencies, which can help shield the source of transactions.
Last year, the National Crime Agency estimated that £۱۰۰bn is being laundered through or within the UK every single year, with City firms providing legal and financial services for fraudsters, human traffickers, the illegal drug trade and other types of organised crime. The UK’s national risk assessment on money laundering and terrorist financing has also classed the UK legal sector as “high risk” for every one of its assessments since ۲۰۱۷.
“As the UK approaches its next FATF mutual evaluation in ۲۰۲۷, the pressure on its anti-money laundering (AML) regime is intensifying,” the rating agency Moody’s said in a report published earlier this year. “Billions are spent each year in the UK on supervision with hundreds of firms refused entry to the financial system following due diligence, yet an estimated £۱۰۰bn is still laundered annually.”
Moody’s added: “When FATF examiners arrive in the UK, they may ask how much of that risk is really being reduced by the UK’s controls, intelligence and enforcement, and how quickly.”
The first phase of the next FATF review will allow the UK government to submit its own evidence, outlining how effectively the country handles and prevents money laundering and other financial crime.
The Treasury is asking City firms to share any cases, from ۲۰۲۲ onward, showing how they dumped, or refused to take on, potentially high-risk clients. That is on top of cases where a company’s intervention later led to a state investigation or prosecution.
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The government has also asked companies for any examples where they discovered red flags for financial crime in customer profiles, and how this ended up changing the types of clients the firm was willing to take on.
A Treasury spokesperson said: “We take firm and coordinated action across government and industry to crack down on economic crime. We have introduced new strategies, enhanced enforcement capabilities and increased funding designed to disrupt those seeking to abuse the UK economy.
“As you would expect, the government regularly engages with industry on this – and preparations for the FATF assessment in ۲۰۲۷ are no different.”
