Police escort an arrested man and carry away evidence after a dawn raid on a property in east London. Photograph: PA Images/Alamy View image in fullscreen Police escort an arrested man and carry away evidence after a dawn raid on a property in east London. Photograph: PA Images/Alamy Financial sector UK asks banks for feelgood stories about keeping out dirty money City firms tapped for case studies to try to convince global watchdog that London has cleaned up its act
Prefer the Guardian on Google 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 2018, 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.”
Read more 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 £100bn 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 2017.
“As the UK approaches its next FATF mutual evaluation in 2027, 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 £100bn 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 2022 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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