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Economic crime is a scourge on the nation.


In advance of a debate in the House of Commons to call for new legislation to tackle economic crime, Dame Margaret Hodge (MP for Barking) and Kevin Hollinrake (MP for Thirsk and Malton) posted the following article on Thursday, December 02 2021, in the Times.

The article starts here:

A group of migrants rescued from the Channel are brought ashore at Dungeness, Kent. Many will have paid people traffickers

The tragic loss of 27 lives last week has focused even more attention on the Channel crossing crisis. The debate from the public, politicians and press has reached fever pitch. The reality is that there are no quick fixes and the solution lies in cooperation and the tackling of those who facilitate the journey: the people traffickers.

There are no shortages of individuals willing to sail a boat of asylum seekers across the Channel for a few hundred euros, but those responsible for the crisis are the profit-driven organised criminals that control them. To tackle this trade, we need to identify and act against the people at the top — to do this we need to be able to follow the money.

As Paul Stanfield, head of overseas crime at Interpol, said recently:

  • “If you want to tackle organised crime, you have to go after the money”.

Economic crime is behind much of the worst wrongdoing in our society. Terrorism, human trafficking, the drugs trade and corruption are all driven by the potential for huge profits. Without this and the ability to syphon money off and legitimise it, these crimes would be much less likely to happen. Yet sadly, the UK stands out on the international stage as a facilitator of wrongdoing.

Our lack of financial transparency, our weak regulatory system, and our poor track record on enforcement mean that we have left the back door open to economic crime.

Britain’s offshore tax havens, such as the British Virgin Islands, offer anonymity and act as safe havens for dirty money. Our corporate vehicles provide rabbit holes into which illicit finance disappears. Our property market allows criminals to hide and store their money. And our scores of enablers — lawyers, bankers, accountants, and more — promote financial structures or transactions that provide a veil of secrecy.

Economic crimes affect every single one of us. We all know a victim of a financial scam or have had a close call with a dodgy advert online. Fraud is now the most commonly committed crime in the UK with up to 4.6 million offences a year.

Meanwhile the National Crime Agency estimates that the cost to our economy from money laundering alone is £100 billion. To put that into context, it’s about the same as the budgets for the Department for Education and the Home Office combined.

The threat from economic crime goes beyond the financial, it endangers our national security. That was one conclusion from parliament’s Intelligence and Security Committee in a recent report.

UK Finance warned that “fraud is now at a level where it poses a national security threat”. Meanwhile on the international stage, corrupt embezzlement of public funds in the developing world can lead to state collapse, growing extremism, and a climate of global insecurity. economic crime truly is the root of many evils.

That’s why the All-Party Parliamentary Group (APPG) on Fair Business Banking and the APPG on Anti-Corruption and Responsible Tax have teamed up, with the support of 45 cross-party MPs, to call for urgent action.

Today we are leading a debate in the House of Commons to call for new legislation to tackle economic crime.

Why now? Because there is a real appetite from the government and parliament for reform. The recent Pandora Papers leak lifted the veil of secrecy on the UK’s role in enabling economic crime and, as we leave the European Union and build back from the pandemic, the UK has a unique opportunity to demonstrate leadership in combating economic crime.

There is support from across the political spectrum for tackling this issue, with legislation already being drafted. However, the government has not prioritised it in parliamentary time and we are now lagging behind our allies on transparency and illicit finance.

Together, we are calling upon the government to prioritise the following pragmatic, effective and achievable reforms that could be put into immediate effect this parliamentary session.

First, to reform Companies House. Our corporate register is little more than a library full of inaccurate or unverified information, with any individual able to form a company for £12 from anywhere in the world without any identification checks or information being verified.

UK corporate vehicles are easily able to be abused to create anonymous shell companies that hide illicit wealth. The registrar needs more money and new powers in order to act as a regulator, investigating suspicious activity and monitoring all company activity. This can be achieved by raising the company formation fee to £50, a fee that is still incredibly low by international standards.

Second, to create a public register of overseas UK property owners — the Pandora Papers showed that at least £4 billion of UK property is owned by anonymous overseas owners. Requiring any overseas entity, when purchasing UK property, to register with Companies House and submit verified information, would prevent owners hiding behind anonymity, preventing tax avoidance and money laundering.

The government first promised such a register in 2015, they have since consulted and drafted legislation but it is yet to be implemented.

Third, introduce failure to prevent economic crime. Complex governance and management structures for corporations, and a lack of legislation, prevent companies from being held to account for their executive’s actions.

Failure to prevent will play a preventative role by causing corporations to raise governance standards and create a responsibility for corporations to put checks and balances in place to ensure money laundering is not facilitated through their processes. It will also equip law enforcement with the tools to punish corporations that fail to prevent various economic crimes.

These are three practical steps with strong support from across the political divide. They are all “oven ready”. They represent an opportunity for the government to prove its integrity and guard our security. It’s time that we send out a warning shot to criminals the world over that their cash is not welcome here.

Thursday December 02 2021, 12.01am, The Times

Dame Margaret Hodge is MP for Barking and Kevin Hollinrake is MP for Thirsk and Malton


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