The IPPR event on ‘Combatting Kleptocrats’ heard that the ‘amount of money laundered through the UK annually is larger than our entire defence budget’.
An anti-corruption event at Labour Party conference was told that the government will do all it can to ‘change Britain from being a jurisdiction of choice for economic crime and dirty money’ to making it a ‘jurisdiction of choice for good money’.
Following Russia’s invasion of Ukraine, greater attention has been paid to Russia’s illicit financial flows, with London often described as the ‘dirty money capital of the world’ for a number of countries.
The IPPR event on ‘Combatting Kleptocrats’ heard that the ‘amount of money laundered through the UK annually is larger than our entire defence budget’.
Stephen Doughty, Minister for Europe, North America and Overseas Territories, told the event that the Tories had allowed Russian illicit finance to enter London and that the government was determined to carry out enforcement action against those involved in fraud and economic crime.
The minister pledged to create an international corruption court and new whistle-blower scheme to tackle illicit financial flows.
The UK has imposed sanctions on banks, companies and individuals linked to Russia since the invasion of Ukraine however questions remain over how effective action has been. Anti-corruption organisation Transparency International has identified, at least £1.5bn of UK property owned by Russians accused of financial crime or with links to the Kremlin.
Baroness Margaret Hodge, former chair of the Public Accounts Committee from 2010 to 2015, told the event that ‘£350bn a year comes through Britain which is dirty money’ and that a lot more needed to be done on regulation and enforcement.
Baroness Hodge also highlighted how the crown dependencies and the British overseas territories are collectively responsible for facilitating nearly 40% of the tax revenue losses that countries around the world suffer annually to profit shifting by multinational corporations and to offshore tax evasion by primarily wealthy and powerful individuals.
She warned that the financial services sector could resist change but that the government had to prioritise tackling illicit financial flows.
To highlight how much of a problem dirty money is in the capital, Joe Powell, Labour MP for Kensington and Bayswater, who has worked on tackling corruption and tax dodging, highlighted how Kensington is the epicentre of London’s dirty money problem.
Approximately 6,000 properties in the borough are registered to anonymously owned companies, a quarter of which are based in Jersey and the British Virgin Islands, while the constituency itself has one of the highest inequality rates in the country.
Doughty said that the government was looking to work on a cross-party basis to tackle fraud and economic crime and vowed it would be an approach taken across all government departments.
The Labour minister also said that the government is working as ‘quickly as we can’ to ensure the £2.5bn from Roman Abramovich’s sale of Chelsea FC, are used for the benefit of victims of the war in Ukraine.
Currently the funds are sitting frozen in a bank account.
Basit Mahmood is editor of Left Foot Forward
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