Banks’ view on launderers: You are awful… but I like you
AS many an old lag will tell you, doing the crime is easy: hiding the money is the hard part.
Luckily for the corrupt officials and businessmen in Russia happily stealing from customers and taxpayers, London has for decades been offering an exclusive laundering service.
The Evening Standard and The Independent first exposed the UK end of the Laundromat scandal, which has re-emerged in today’s papers, back in 2014. Working with the Organised Crime and Corruption Reporting Project, we reported how UK front companies were being used in a £14 billion money-laundering operation to route money from eastern Europe through British banks.
What was so striking then, and still is now, is how widely the laundry’s mechanics penetrate into UK life.
From Millfield School and accountancy firms to luxury-goods and property companies, London appeared almost designed to service this corrupt machine.
Most of it is unwitting or naive. I’ll never forget the stunned silence on the phone from Millfield’s bursar’s department when we informed them they had received thousands in fees from a company suspected of moneylaundering. “But… but... we rely on Lloyds to check these things,” was the gist of its response. And there’s the rub. The “end” companies — particularly schools and colleges unregulated for money-laundering — rely on their banks to sniff out the villains.
But the banks say they process so many transactions, they can’t thoroughly check them all.
We’re the victims in all this, they say.
The Laundromat was entirely facilitated by Britain’s lax rules on setting up companies. At the time, anyone could form a business at Companies House without declaring its beneficial owner. That made the banks’ task of uncovering dodgy origins of their customers’ cash extremely hard.
The loophole has since been closed. But, according to Transparency International, the trail can still run cold if those owners are based offshore.
Why? Because tax havens still refuse to publish ownership lists. And besides, as TI’s Robert Barrington puts it: “You could tell the BVI the owner was Mickey Mouse and they probably wouldn’t check.” Which prompts the question: if the banks were really feeling so victimised by moneylaundering, why aren’t they using their exceptional lobbying power to get Government to reform the tax havens? After all, most of these places are British crown dependencies that wouldn’t survive without us.
A sceptic might suggest banks are enjoying the profits from these illicit money flows rather more than they let on.
@ArmitageJim