British companies have become “the money launderer’s vehicle of choice” because of “sleep walking” at Westminster about the risks of financial corruption, a leading expert on economic crime has warned ministers.
Helena Wood, from the Royal United Services Institute think-tank in London, said that successive “laundromat-style scandals” and the amount of corrupt wealth invested in UK property had damaged the country’s reputation.
The problems are also harming national security by allowing illicit profits to be generated by terrorists and criminals, as well as “undermining the integrity” of the financial system and fuelling fraud against individuals and businesses.
Ms Wood said a succession of measures were needed in response including tighter regulations, stronger enforcement and changes to the way that companies are formed and monitored.
She commented in an assessment of the Government’s fight against economic crime and the plan drawn up for tackling the problem. It also came as allegations that Africa’s richest woman, Isabel dos Santos, daughter of Angola’s ex-president José, used financial schemes that exploited her father’s status to amass her estimated £1.7 billion fortune.
Ms dos Santos, who spends much of her time in London, has denied any impropriety. But the claims against her — which follow high-profile cases such as the £22 million “unexplained wealth order” issued against Zamira Hajiyeva, the big-spending wife of a jailed Azerbaijani banker — have led to renewed concern about the laxity of anti-corruption rules in this country.
In her assessment, published in a blog on the Royal United Services Institute website, Ms Wood said: “Promoting Britain as a bastion of fair play, the rule of law and integrity will ring hollow if it remains central to the financial crime and corruption woes of others.”
She said economic crime measures that should be implemented as a priority include reform of company formation rules to make misuse harder. She also called on HMRC to provide “more robust” supervision of service providers who help others to form companies.