UK is Failing to Stop Corporate Financial Crime, NGO Says
07 Mar 2019

The United Kingdom is failing to hold multinational companies accountable for money laundering and other economic crimes, a watchdog group said in a report published Wednesday.

The findings by London-based Corruption Watch unfavorably compared UK financial crime enforcement to supervisory efforts in the United States, noting that the United Kingdom has yet to pursue a single criminal prosecution against a bank for money laundering or sanctions violations while American officials have imposed nearly £3 billion in criminal penalties against six banks for the crimes.

“There is no reason to suppose that this is because US companies are more criminal than UK ones,” the nongovernmental organization (NGO) said in the report, which also addressed responses to Libor manipulation and Forex rigging, among other crimes. “Indeed, many of the companies that have been penalised in the US are British banking institutions,” it said.

All together, the United States has imposed nearly £9 billion in monetary penalties against companies for criminal and non-criminal violations, a sum that is 34 times the total levied for similar purposes in the United Kingdom.

Such discrepancies are due in part to London’s adoption of the so-called “identification doctrine”—a legal criterion requiring prosecutors to single out an individual “directing mind” within a corporation that can be held liable for criminal violations, according to the report. That standard is “notoriously difficult to meet,” the NGO said.

Consequently, UK officials should make it illegal for companies to fail to stop economic crimes, especially when they profit from such failures, according to Corruption Watch, which also called for on the nation to commission an independent review of the effectiveness of its regulatory regime.

In December, the Paris-based Financial Action Task Force (FATF) concluded that the United Kingdom has a “well-developed and robust regime” to combat money laundering and terrorism financing but needs to strengthen its supervision of companies and better fund its financial intelligence unit.

Last month, London-based Standard Chartered Bank disclosed that it had set aside £688 million to settle regulatory matters related to American sanctions controls, foreign exchange trading issues and financial crime-related violations identified by US and UK officials. Of that sum, approximately £102 million will go to the UK’s Financial Conduct Authority.

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2 Responses to “UK is Failing to Stop Corporate Financial Crime, NGO Says”
James Michaels

James Michaels March 7, 2019

Experienced investigators of transnational money laundering have known for years that russian money laundering networks favour an established criminal architecture that uses companies registered in UK Companies House which in turn have as corporate directors offshore companies registered in the Seychelles or Cyprus or Panama. Seychelles offshore companies are completely anonymous and not even the government knows who owns them – the offshore laws in Seychelles are designed to facilitate financial crime and money laundering and Seychelles offers itself as a haven for criminals and their dirty money. If the Seychelles government wish to find out who owns an offshore company or trust they have to risk tip-off by asking the company agent, who in Seychelles is more likely to warn the client than assist the authorities. This was the case in the Magnitsky investigation, the theft of almost a billion USD from Moldovan Banks, the Russian Laundromat, the Ukrainian corruption scandal and many other related investigations. (Mossack Fonseca’s office in Seychelles registered companies for Panama head office without any knowledge of who was behind it.) The UK front -companies are then used to conduct the dirty transactions and to hold laundered deposits in the UK. The banks are more likely to trust a UK company opening and transacting an account than a Seychelles company – thats why russian criminals favour this architecture. The same architecture has been repeatedly used to conduct breaches of international sanctions against the regimes of North Korea and Iran. Rogue jurisdictions like Seychelles should be cut off from being corporate directors in the US, UK and the EU or from being used to open bank accounts outside Seychelles.

James Michaels

James Michaels March 7, 2019

Hong Kong Link: An analysis of the offshore companies used to mask alleged illicit moneyflows linked to the 1MDb case identifies that of the 85 or so offshore companies used, 72 were registered in the Seychelles and the rest in BVI. But the companies registered in BVI were established at the request the Seychelles agent, Offshore Incorporations Ltd (OIL). Offshore Incorporations is just a managed services agent owned by Mayfair Trust based in London.

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