Regulation  

Govt is not doing enough over London 'laundromat'

Rachel Adamson

Rachel Adamson

For decades now the UK has established itself as a safe haven for economic crime and criminal wealth.

The ‘London laundromat’ has provided corrupt individuals with an easy route to wash money through property, with very little protections or deterrents in place to safeguard against such misuse.

A recent study even estimated that a staggering £88bn is laundered every year through the UK, highlighting the sheer scale of the issue.

Amid the fallout of the war in Ukraine, the government has tried to make amends, scrambling to save its reputation.

Over the past few months, we have witnessed a raft of measures being unveiled to curb white-collar crime and money laundering, which are likely to somewhat stem an ever-rising tide and have certainly shown promise.

However, the question now on everyone’s mind is whether this action is too little, and too late.

2022: the year of mitigation

After receiving Royal Assent in March, the Economic Crime (Transparency and Enforcement) Act 2022 was billed as the government’s flagship policy to crack down on illicit finance and drive dirty money out of Britain.

The act unveiled a selection of measures to curtail financial malpractice and corruption. Measures taken include the establishment of a Register of Overseas Entities to increase transparency surrounding ownership, empowering the use of unexplained wealth orders, and strengthening the UK’s sanction regime.

The act was vital in addressing the yawning gap of current legislation and is a key deterrent to those who would seek to hide and launder the proceeds of bribery, corruption and organised crime in the UK. 

However, many of the key tools needed to clamp down on economic crime in the UK were still absent and there is certainly a question mark looming as to why it took a war in Europe for the government to finally act on the issue.

There is a strong argument that many of these measures should have been introduced some years ago.

To help plug the gaps not addressed in the Economic Crime Act, the government announced at the recent Queen’s Speech the economic crime and corporate transparency bill, which is to be a priority this year.

While we are still awaiting the concrete the details of the bill, much of the focus seems to centre on tackling digital crime alongside the reform of Companies House.

The introduction of powers to make Companies House a more effective investigation and enforcement body and improve data-sharing between businesses are to be warmly welcomed, however, there has yet to be any mention of increased investment and resources going to the body to support it in counteracting fraud.

Without resources at the coal face, there is a real risk that the UK will become a toothless tiger attempting to crack down on economic crime.