Labour to outline clampdown on UK ‘dirty money’

Labour is planning a crackdown on dirty money in the UK, with proposals to punish white-collar enablers of kleptocracy and offer rewards of up to £250,000 to whistleblowers who identify sanctions breaches.

David Lammy, shadow foreign secretary, will on Tuesday set out his party’s plans for Britain to spearhead an international initiative to tackle financial crime, starting with a UK-hosted summit to drive the issue up the global agenda.

He will also advocate for the creation of an international anti-corruption court to prosecute the most serious crimes, if Labour wins the general election expected later this year.

After almost 15 years of Conservative-led rule, Britain is a “corruption services centre”, while London is a “hotbed of kleptocracy”, Lammy will say in a keynote speech at the Institute for Public Policy Research think-tank in London.

He will vow that a Labour government would introduce a “fresh approach based on action, enforcement and a crackdown down on the enablers”, a category spanning professionals such as lawyers, accountants and estate agents.

His intervention comes after Andrew Mitchell, Tory deputy foreign secretary, last week cited estimates that 40 per cent of the money laundered around the world is routed through London, UK overseas territories and crown dependencies.

Money laundering involving criminals and terrorists costs the UK more than £100bn a year and the scale of the problem harms confidence in the British economy, according to a 2019 assessment by the National Crime Agency.

Labour’s package of measures includes widening the registration requirements for UK trusts in order to stop them being used for illicit activity, while pursuing other avenues to boost transparency around trust ownership of UK property. This would involve working with the overseas territories on a common transparency regime.

The party will also pledge to tighten the UK’s sanctions regime to crack down on white-collar enablers of money laundering, including looking at fresh mechanisms to ban such people from entering the UK.

Labour will incentivise people to come forward with information that leads to the discovery of assets of sanctioned individuals and entities held in UK jurisdictions by offering whistleblowers up to 25 per cent of any fine handed down by the Office of Financial Sanctions Implementation. The regulator may impose fines of up to £1mn.

Warning that allies in the US, Ukraine, Africa and the Caribbean have raised concerns about the UK’s approach to corruption and perceived loopholes in its sanctions regime, Lammy will say: “Our security partners see us not only failing, but too often enabling Russian kleptocrats to grow stronger.”

Kleptocracy, corruption and money laundering continue to finance crime on British streets and have “made a mockery of the rule of law”, he will say.

As part of the party’s drive for the UK to adopt a global leadership role on anti-money laundering, Labour is proposing a new framework for effective information-sharing between countries.

This would involve establishing real-time global data exchanges on the beneficial ownership of corporate structures, including trusts and trust-like arrangements, to aid cross-border investigations.

Labour officials stressed party leader Sir Keir Starmer would champion the City of London and professional services, but warned corruption is undermining the UK’s standing. “If we don’t address this threat to our reputation for high standards, our competitiveness is at risk in the long term,” said one.

While the Tory government has introduced two economic crime acts since Russia’s full-scale invasion of Ukraine in February 2022, analysts say tougher action is required to stem the flow of dirty money through London.

Tom Keatinge, director at the centre for finance and security at Rusi, said “the UK needs to be a more visible political actor on this topic” and commended Labour’s proposal to lead a new international initiative.

He said it was right for Labour to treat financial crime as a foreign policy matter, as other nations viewed Britain and parts of its professional services industry as being “part of the problem”.