David Lammy, the UK’s shadow foreign secretary, is unveiling plans to combat the pervasive issue of financial crime in the UK, according to the Financial Times.
Lammy asserts that after nearly 15 years of Conservative governance, the UK has become a hub for illicit financial activities, with London particularly notorious for its role in enabling kleptocracy.
Key to Labour’s strategy is the proposal for an international summit hosted in the UK to elevate the discussion on global financial crime. Moreover, Lammy advocates for the establishment of an international anti-corruption court, signalling Labour’s commitment to tackling financial misconduct on a global scale.
Labour’s proposed measures include broadening the registration requirements for UK trusts to prevent their exploitation for illicit purposes and enhancing transparency around trust ownership of UK property.
Additionally, the party aims to strengthen the UK’s sanctions regime to target individuals and entities complicit in money laundering activities, with a particular focus on professionals such as lawyers and accountants.
One of the key initiatives is Labour’s plan to incentivise whistleblowers by offering rewards of up to 25% of fines imposed on sanctioned individuals and entities. This move is intended to encourage individuals with insider knowledge to come forward, thereby aiding in the detection and prosecution of financial crimes.
Furthermore, Labour also seeks to address concerns raised by international allies regarding perceived loopholes in the UK’s sanctions regime. Lammy emphasises the need for the UK to reassume a leadership role in combating money laundering and corruption, proposing enhanced information-sharing mechanisms between countries to facilitate cross-border investigations.
Despite this, Ted Datta, Senior Director, Financial Crime Industry Practice at Moody’s, believes there is work to be done.
He said, “Cracking down on money laundering in the UK has the potential to deliver more transparency, but it doesn’t address the whole picture. Whistleblowing rewards for reporting on sanction breaches incentivize identification, but the challenges of spotting sanction breaches when bad actors use so many methods for hiding them still remain for organisations.
“It should be simple to answer the question “Who are you doing business with?”, but the reality is far more complex for businesses today. Companies can face significant challenges in acquiring the insights they need to make decisions; navigating opaque corporate ownership structures, including shell companies; and finding where true control lies within an entity that criminals are deliberately obfuscating.
“This lack of insight ultimately leads to more opportunities for money to be laundered and can make reporting hard. To ensure any regulatory anti-money laundering (AML) agenda is effective, comprehensive data from a range of sources needs to be brought together in meaningful ways to help paint a picture of risk associated with bad actors and the flow of dirty money.
“We’ve already seen organisations look to collaborate to address these issues, through coalitions such as the DT4C alliance. Data on beneficial ownership structure information already exists, organisations need to know how to access it efficiently and effectively.”
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