Shock comments have caused an uproar in the United Kingdom, where a high-ranking government official has claimed that not all is as it seems within the nation’s financial sector.
Deputy Foreign Secretary’s Bold Claims
On Monday, the UK’s deputy foreign secretary made some comments that got people talking.
Shocking Revelation
In a keynote speech to an independent think tank, Andrew Mitchell claimed that nearly forty percent of the world’s dirty money – money obtained illegally, through means like drug trafficking or other criminal activities – is laundered through London and other UK territories.
London’s Role in Money Laundering
Mitchell stated, “On the issue of dirty money, it is important to recognize that Britain has a dog in the fight. According to some estimates, 40% of money laundering around the world – this is money often stolen from Africa and Africans by corrupt businessmen, bent politicians and warlords, and so on – 40% of that money comes through London and overseas territories and crown dependencies.”
UK’s Crackdown on Financial Fraud
Mitchell made the comments as part of a bigger speech to inform the public about the UK’s new crackdown on financial fraud across its dependencies.
New Regulations on Beneficial Ownership
According to Mitchell, the Foreign Office is planning on introducing new requirements for crown dependencies and foreign territories to comply with UK regulations on the public disclosure of beneficial share ownership records.
Push for Open Registers
He stated that the public would begin to “see a greater emphasis now on introducing these open registers of beneficial ownership” due to the new foreign secretary – former prime minister David Cameron.
David Cameron’s Priorities
Mitchell explained that Cameron made tackling dirty money a key focus of his last few months in power – but after he stepped down, the momentum came to a complete halt.
Warning to UK’s Dependents
He issued a warning to the UK’s dependents, stating, “If these overseas territories and crown dependencies want to have our king and our flag, then they must also accept our values, which is why we are so intent on ensuring dirty money cannot flow in and from there.”
BVI’s Resistance to Public Registers
Mitchell’s comments come hot on the heels of the government of the British Virgin Islands (BVI) refusal to establish a public register of owners of companies created on the island.
Human Rights Grounds
Despite pressure from the UK to accept its new tax evasion and anti-money laundering measures, the BVI government has instead said that they will follow a ruling from the European Court of Justice (ECJ) “to help minimize the risk of legal challenges on human rights grounds.”
ECJ Ruling
Last year, the ECJ ruled that privacy and data protection are fundamental human rights that must be respected and carefully considered when granting access to public registers.
Good News For Some
For countries that have been pushing back on accepting new anti-dirty money measures, this ruling couldn’t have been better.
Fear of A Wealthy Exodus
These countries are reluctant to set up public registers because they fear the wealthy will leave and take their money with them.
UK’s Limited Power Abroad
The UK government has no constitutional mandate to change laws abroad, even in their own territories, and has faced an uphill battle so far.
A Lot Of Work Still To Be Done
Mitchell commented that “crown dependencies and the overseas territories have not yet done as much as they must do.”
Global Impact of Money Laundering
If Mitchell’s figures are correct and around 40% of dirty money is funneled through UK territories, that would be a huge amount.
The Enormous Scale of Dirty Money
The UN estimates that anywhere between 2-5% of global GDP is laundered each year – around $2 trillion. 40% of that would be $800 billion, which is more than some countries’ total GDP.
Battling Money Laundering
The UK has been battling a “dirty money epidemic” for years, according to a large group of politicians, who last month warned that the government is “utterly failing” in their attempts to gain control over the issue.
Criticism of the UK’s Efforts
According to these politicians, the UK’s money laundering woes are costing the country upwards of £350 billion per year despite a host of measures put in place to stop the flow of illegal cash in and out of the economy.
Dirty Money Worries
Whether the UK will manage to get control over this apparent epidemic remains to be seen, but for now, it seems as though its dirty money worries are here to stay.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
