The UK’s latest attempts at tackling dirty money, the Economic Crime and Corporate Transparency Act (ECCTA), passed by the Conservative government in late 2023, did not come without criticism from Labour. Shadow Minister for Investment and Small Business Rushanara Ali attacked the legislation as it went through the House of Commons as not going far enough to tackle Labour’s view that the UK has become a money laundering haven.

Sadly, our capital city has been nicknamed “Londongrad”, and is now considered to be a capital where money laundering and fraud are rife.

Rushanara Ali, shadow minister for investment and small business

What’s clear is that the Labour Party, should it form the next government after the general election on 4 July, will turn a sharp legislative gaze to the issue of money laundering.

In fact, seeing the UK as a haven for dirty money has been one of the guiding principles of Labour throughout the last 14 years of opposition. Former Secretary of State for Defense Des Browne, now in the House of Lords, has claimed London is used to launder cash by: 

Kleptocrats from Azerbaijan. Oligarchs from Russia. People traffickers and drug smugglers from the world over. Some have purchased properties in Mayfair and Hampstead. Others have set up shell companies on Harley Street. And they have been enabled by accountants, lawyers, bankers and estate agents, who are extremely happy to be facilitators in London’s money laundering industry.

Lord Browne of Ladyton, former defense secretary

Despite pushback from the Conservative government, there has been a cross-party effort from the House of Lords to tackle some of the worst excesses and legislative oversights. There’s been disbelief from many quarters about the exclusion of SME’s from the watered down failure to prevent fraud laws. Similar shock was expressed by the refusal to bring forward failure to prevent money laundering offences, individual liability for corporate officers for financial crime, or more money laundering rules for unregulated sectors. 

The tide of inaction on money laundering could likely turn no matter the shape of the next government. Even former Conservative Justice Secretary Robert Buckland attacked the lack of action on failure to prevent money laundering, which was also roundly criticised by anti-corruption campaigners, who have called the exemption for smaller companies “desperately short-sighted and entirely unnecessary.”

If Labour form the next government, economic crime in general and anti-money laundering in particular are likely to form the backbone of initial legislation given the unending criticism of the UK’s role in the ‘global laundromat,’ which London was called by shadow foreign secretary David Lammy.

The All-Party Parliamentary Group on Anti-Corruption, headed by Labour grandee Dame Margaret Hodge, recently produced a thorough manifesto on tackling economic crime. If the polls are correct and Keir Starmer is set for a stonking majority in the next parliament, it’s hard to imagine what of Hodge’s agenda would be omitted.

Despite Dame Margaret Hodge is not standing for re-election in 2024, but her manifesto is hardly an outlier in Labour thinking. It repeats common calls for finding new ways to seize frozen assets and enhance data sharing and crime fighting powers for law enforcement. 

The manifesto calls on the next government to ensure that all companies and firms should declare the identity of individuals with significant ownership or control over their activities. The UK should also impose obligations on Companies House to verify the status of shareholders and stop people hiding behind nominee shareholders. 

The APPG report also calls on the government to expand the failure to prevent fraud offence to cover companies of all sizes, as well as introducing a new failure to prevent money laundering offence, which may even go beyond just the regulated sector.

The manifesto also demands the next government introduce senior executive liability for economic crimes committed by the company as a result of neglect by a senior executive. This means individual criminal liability for senior executives who facilitate or fail to prevent these crimes from taking place. 

Significantly, the APPG manifesto includes demands for broadening the scope of regulations on the enablers of economic crime. The Anti-Money Laundering Regulations (MLRs) should cover private schools, universities, PR agencies, developers, all letting agents and commodity traders. There should also be consideration for including litigation in the anti-money laundering duties. 

The calls for more action to tackle money laundering come from shadow cabinet members, senior MPs, and former ministers. There is no quarter of the Labour Party that doesn’t consider tackling economic crime and Britain’s supposed role as the world’s money laundering capital as a matter of the highest priority. 

It will be for the next Government—the next Labour Government, I hope—to pick up the pieces and toughen up our response in order to end the corrosive impact of dirty money in our country.

Rushanara Ali, shadow minister for investment and small business

How should your business prepare?

• Understand how money laundering affects your industry and organisation specifically
• If you are regulated, consider reviewing AML procedures in terms of a new failure to prevent money laundering offence
• If you industry could be regulated in the future, start to understand what AML compliance would look like
• Prepare for the expansion of failure to prevent fraud offences
• Assess the risk of economic crime in your business, and prepare mitigation measures

The General Election and Compliance – Special Webinar

Every sector could be impacted and every area of compliance is likely to be reviewed by the next government. From overhauls of financial services regulation, reviews of data protection law, closer alignment with EU regulations and an expansion of health and safety protections, the next parliament will see compliance at the centre of the regulatory agenda.

With everything from whistleblowing reform to overhauls of corporate governance, new employment rights like menopause leave and expanded equal pay rules, alongside crackdowns on tax evasion and expansion of the money laundering regulations, organisations large and small should prepare for the outcome of the general election.

This webinar will cover:

• What the main parties are pledging on key compliance areas
• Potential changes to legislation including the Equality Act, sexual harassment and employment rights
• Expected legislation on AML, bribery, sanctions, fraud and economic crime
• Possible expansion of regulations around GDPR, AI and health and safety
• Preparing your organisation for future regulatory changes and new requirements