Anti-money laundering laws ‘lack teeth’
● Proposals to crack down on foreign criminals may prove ‘unenforceable’
Government plans to crack down on foreign criminals laundering their ill-gotten gains through the UK property market may prove“unenforceable ”, a parliamentary report has warned.
Ministers have drawn up legislation to establish a publicly accessible register of overseas organisations and individuals holding land in the UK.
However, a committee of MPS and peers set up to examine the Draft Registration of Overseas Entities Bill said its aim to create a “hostile environment” for money laundering could be jeopardised by a lack of “teeth”.
The warning comes amid concern that in 2017 alone, 160 properties worth more than £4 billion were identi - fied as having been purchased by “high corruption-risk individuals”.
Between 2004 and 2015, the committee said £180 million worth of UK property was subjected to criminal investigation as the suspected proceeds of corruption.
However, the committee said that such inquiries were frequently hampered because enforcement agencies were unable to access information about their anonymous foreign owners.
While it broadly welcomed the government’s decision to establish a register of beneficial owners, it expressed concern about the way it would operate in practice.
In particular it warned that failure to register a criminal offence could make it difficult to enforce overseas.
It suggested that civil penalties, backed by criminal sanctions for non-payment, could prove more effective.
“We recognise that there will inevitably be hurdles to enforcement, and that the aim of this legislation is to create a hostile environment for money laundering in the UK,” it said.
“But Parliament should not enact unenforceable legislation, and legislation without ‘teeth’ will be no deterrent.”
The committee also expressed concern that the Bill did not cover trusts, which could be used to circumvent the law, and at the lack of verification checks to prevent criminals submitting false information.
The committee chairman, Lord Faulks, said :“The legislation is well drafted, but there are still some loopholes in the draft Bill which, if unaddressed, could jeopardise the effectiveness of this important piece of legislation.
“In the current political climate, anti-money laundering may not seem an immediate priority. But the evidence we took shows there’s a huge problem, and it’ s not going away.
“Time is of the essence, the Government must get on with improving this Bill and making it law.”