A cross-party group of MPs has urged the government to introduce legislation that would put bank executives behind bars if they allowed or encouraged money laundering.
Parliament rushed through the Economic Crime (Transparency and Enforcement) Act in March in an attempt to deprive Russian oligarchs with ties to President Vladimir Putin of their UK-based wealth, and in the Queen’s Speech on May 10 the government promised to bring in another bill to tackle money laundering.
But Dame Margaret Hodge, the chair of the All-Party Parliamentary Group (APPG) on Anti-Corruption and Responsible Tax, said the group feared the government’s new bill would not go far enough.
The APPG called on the government to increase its spending on money laundering enforcement to £300 million ($366 million) and said there needed to be much more support for whistleblowers in the City of London.
Hodge said: “Our financial services and our defences against dirty money have been overrun. London is now the laundromat for washing dirty money and we can’t go on like this.”
She said prosecutions for money laundering had fallen by 35 percent in the last five years and claimed, “Our agencies are completely outgunned and are simply not fit for purpose.”
Conservative MP Kevin Hollinrake said corporate interests were lobbying the government not to bring in tougher measures.
He said: “If you’re a chief executive of a big bank, are you going to like the prospect of having your collar felt if things go wrong in your bank? You’re not, so you then go to the Treasury therefore and say don’t do that.”
Hollinkrake likened making bank bosses culpable for money laundering to the Corporate Manslaughter Act, which made construction executives accountable for accidents on building sites caused by negligence or mismanagement.
“Suddenly when that happened the deaths and serious injuries dropped like a stone, because that focuses the attention, it’s not just a cost of doing business,” he said.
The government says it will invest £100 million ($122 million) in economic crime enforcement, with another £300 million generated by the economic crime levy.
Transparency International UK’s Director of Policy Duncan Hames said, “We join these MPs in demanding an end to secrecy in Britain’s offshore financial sectors, an overhaul of the private sector’s dirty money defences, and a significant increase in funding for law enforcement to go after money launderers.”
In December last year the international affairs think tank Chatham House published a report that said: “The UK is often presented as one of the best regulated countries in the world in regard to money laundering. Yet it is also considered by some as the global capital of money laundering.”
PA Media contributed to this report.