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UK Bill aims at scuttling endemic money laundering

THE UK will allow its law enforcement agencies to target “unexplained wealth” and seize the UK assets of dictators and human rights abusers, even for offences committed overseas, writes Neil Behrmann
The House of Commons has passed the third reading of the Criminal Finances Bill with a unanimous vote – heralding a draconian antidote to endemic money laundering and tax evasion over the years.
The National Crime Agency (NCA) estimates that 1-3 per cent of gross domestic product or up to £90 billion ($112 billion) a year enters the country, courtesy of criminals, terrorists, nefarious dictators, corrupt politicians, opaque offshore companies, questionable trusts and global tax evaders.
Much tighter regulations on financial institutions, estate agents, lawyers and accountants as well as publicity of the Bill in the past year, have reduced laundered money.
“Real estate agents maintain that high stamp duty and Brexit are the main causes for the slide of prime London property prices from heady peaks, but the decline of money laundering flows is another major factor,” says Brendan Brown, head of economic research at Mitsubishi UFJ Securities International. “Tighter regulation and legislation have also contributed to sterling weakness, as in the past the inflows have helped finance UK’s wide balance of payments current account deficit.”

Seizing Assets

The Bill enables the seizure and forfeiture of proceeds from crime stored in bank accounts, property and precious metals and jewels. It will require that those suspected of money laundering explain the sources of their wealth. It will thus help “facilitate the recovery of illicit wealth and stopping criminals using the UK as a safe haven for the proceeds of international corruption”.
Home Secretary Amber Rudd said: “The Bill will give firms immunity from civil and criminal liability when they share information directly with one another on money laundering and terrorist financing.”
The NCA has new powers to request information from financial institutions and other regulated companies. The Bill makes it a crime for corporations who fail to stop their staff from facilitating tax evasion.
It says: “This will hold corporations to account for their employees’ actions, ensuring robust global compliance regimes. Unexplained Wealth Orders (UWO) will mean an individual or company will have to explain the origin of assets that appear to be disproportionate to their known income and if they are suspected of involvement in, or association with serious criminality. The power can also be applied to foreign politicians or officials, their family members or close associates, as such people can pose a particularly high corruption risk. The National Crime Agency, Crown Prosecution Service, Financial Conduct Authority, Serious Fraud Office and HM Revenue and Customs will all be able to apply for a UWO.
“Our aim with this provision is to ensure that illicitly held property in the UK is recovered . . . law enforcement agencies only have to prove, on the balance of probabilities, that the property is derived from unlawful conduct – a lower standard of proof than would be needed for a criminal offence . . . if an individual provides satisfactory answers to the UWO then no further action may be taken.”

Fairness and reasonable grounds required

The Bill’s fact sheet addresses questions such as the fairness of forcing people to reveal the origins of their property and the damage that would be done even when the property was perfectly legitimate. It states that “a law enforcement agency will still need to prove to the High Court that there are reasonable grounds to suspect that the known sources of income are insufficient for the purposes of enabling the person to obtain the property – this is a valuable safeguard to ensure that the power is not used inappropriately.”
© copyright Neil Behrmann, first published in The Business Times, Singapore February, 26, 2017
Neil Behrmann is author of Trader Jack- The Story of Jack Miner and anti-war children’s novel Butterfly Battle- The Story of the Great Insect War

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