Government urged not to compromise in fight against money laundering post-Brexit

The Government must safeguard high standards of financial crime defences and not compromise on anti-money laundering supervision when securing trade deals after Brexit, a top MP has warned.

A new report on economic crime published by the influential Treasury Committee said an increase in trade with countries outside the European Union after Brexit will increase British firms’ contact with markets with lower standards for anti-money laundering.

It urged the Government to “lead the fight against economic crime” and guarantee that the flow of information between enforcement agencies in the EU and Britain is maintained post-Brexit.

Nicky Morgan, who chairs the House of Commons committee, said: “With the uncertainties of Brexit around the corner, the Government should regularly review the UK’s effort to combat money laundering to ensure a constant stimulus to improve.

“When the UK does leave the EU, there will be both risks and opportunities in terms of economic crime.

“The Government must ensure it does not bow to buccaneering deregulatory pressures and maintain its intentions to lead in the fight against economic crime.”

The committee has called on the Government to re-order the country’s highly fragmented anti-money laundering supervision systems.

It suggested that the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) should be designated as the “supervisor of supervisors”.

OPBAS already oversees 22 accountancy and legal professional bodies and the committee said the regulator should therefore supervise HM Revenue & Customs (HMRC), the Financial Conduct Authority and the Gambling Commission on anti-money laundering procedure as well.

This follows concerns that HMRC treats its supervisory responsibilities as a “bolt-on activity” to its revenue generating operations and the committee said if HMRC is to carry on supervising anti-money laundering systems it “should have a departmental objective relating to this work”.

The committee identified estate agents and Companies House, a register of firms in the UK, as particular risks to money laundering.

Proceeds from financial crime can be stashed in the property sector, while Companies House is not obligated to carry out anti-money laundering checks.

Mrs Morgan added: “The Government needs to bring greater order to a fragmented supervisory system, better identify the scale of the problem, and make a greater effort to combat the known risks and gaps in the supervisory system.

“The committee’s comprehensive report makes a series of recommendations around estate agents, Companies House, financial sanctions and the UK’s corporate criminal liability framework that would help the UK combat economic crime.”

Nienke Palstra, of Global Witness, which campaigns on corruption, said: “The committee’s recommendation for Companies House is spot on. We know the UK is a favourite for the criminal and corrupt looking to stash stolen money or secure safe haven – and anonymous companies have made this easy.

“Giving Companies House the resources and mandate to police their company register will address a glaring gap in the UK’s money-laundering defences.”