This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.
Responding to illicit and emerging finance
Date Published: 30 June 2022
This is the report summary, read the full report.
London’s role as a global financial centre is tarnished by its reputation as a hub for illicit finance. The consequences for our national security and the integrity of our institutions and services are laid bare by the current war in Ukraine; assets laundered through the UK are financing President Putin’s war in Ukraine. This interim report assesses the consequences of the complacency of successive Governments towards illicit finance and the adequacy of the current Government’s response.
The Economic Crime Act establishes a register of beneficial ownership of overseas property and reforms Unexplained Wealth Orders. While welcome, we conclude that the measures in the Act do not go far or fast enough and do little to address the fundamental mismatch between the resources of law enforcement agencies and their targets. We call on the Government to increase substantially funding and expert resourcing for key law enforcement agencies.
Despite the Government’s threats to impose swingeing sanctions against Russia, the UK’s sanctions regime was found to be underprepared and under-resourced. Furthermore, the Government appeared to lack a grip on both the enablers of potential sanctions targets and, crucially, their proxies to whom wealth was transferred. We recommend that the Government provide the sanctions unit with the necessary additional resources for the duration of the Ukraine crisis as well as working to develop a professional sanctions cadre within the FCDO.
Illicit finance is a transnational challenge that exploits the space between legal jurisdictions. Building on the coordination and cooperation over the war in Ukraine, we urge the Government to develop a comprehensive transatlantic partnership to curb kleptocracy.
We regret that it has needed a war for the Government to make progress on long-promised plans to tackle the flows of illicit finance through London and beyond. Further action is now needed to ensure that those with dirty money no longer have a place to hide it.