UK receives best report from anti-money-laundering watchdog

UK receives best report from anti-money-laundering watchdog

The UK received a better than expected report from the global anti-money-laundering watchdog, landing the highest assessment in the world — despite a dirty-money problem officially estimated to be in the hundreds of billions of pounds.

In findings that anti-corruption campaigners greeted “with disbelief”, the Financial Action Taskforce, which sets global standards against financial crime, gave the UK top marks in eight out of 11 key goals, meaning that the UK has a better assessment than countries including the US and Switzerland.

The FATF’s positive review is a boon to the UK government as it tries to take a tough line on money laundering amid concerns that the City of London is being used to wash what the National Crime Agency estimates to be hundreds of billions of pounds of ill-gotten gains from around the world.

Government rhetoric has intensified in the wake of the nerve-agent attack in Salisbury on a former Russian spy, which the UK government blames on Russia, plunging relations between the two countries to a post-cold war low.

Since the attack in March, the UK has secured its first court orders that seize assets where there is no legitimate explanation for how they were acquired, and restricted the so-called golden visa scheme that was popular with wealthy Russians and Chinese nationals.

Ben Wallace, the security minister, said the review “sends a strong message to criminals that we will come for them, their assets and their money”.

But campaigners were more sceptical, both of government efforts and of the review, which they accused of “glossing over fundamental failings”.

“This gold star for the UK’s anti-corruption efforts suggests that the G7’s watchdog is asleep on the job,” said Ava Lee of Global Witness, referring to the Group of Seven leading industrial nations. “Giving [the UK] so much credit before we have seen real change makes a mockery of the whole process.”

London’s role as a global financial market, with expensive real estate, meant that the UK was particularly vulnerable to money laundering, the FATF concluded, also highlighting the role played by its overseas territories and crown dependencies.

In recent years there have been 1,400 money-laundering prosecutions annually in the UK, but the FATF said these statistics could not show that the UK had effectively clamped down on “high-end” cases because these had only been prioritised since 2014 and took years to investigate and prosecute.

The UK’s system of reporting suspicious activity also attracted a black mark. FATF said the system needed “significant overhaul to improve the quality of financial intelligence available”. There was under-reporting of suspicious activity reports, or SARs, by lawyers and accountants, the report said.

It also said that the UK had failed to improve action around the Financial Intelligence Unit, which oversees the SARs system, since the last FATF review a decade ago. It urged the UK to give it more resources, people and better technology.

Ben Morgan, a partner at Freshfields Bruckhaus Deringer and former joint head of bribery and corruption at the Serious Fraud Office, agreed. “I’m not sure anyone is really happy with the system as it is,” he said. “It’s a significant burden on businesses who have to file masses of reports [and] that blizzard of information makes it harder for law enforcement to spot the high-quality intelligence they are looking for.”

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