Britain’s anti-money laundering system is “woefully inadequate,” leaving the country wide open to dirty money and terror funding, a leading anti-corruption group said Monday.
A report from Transparency International argues that UK’s financial supervision is in need of a radical overhaul, as each year billions of pounds of dirty money passes through the UK.
It says the system is too fragmented to be effective.
“The UK supervision system which should be protecting the country from criminal and terrorist funding is not fit for purpose,” said Nick Maxwell, Transparency International’s UK head of advocacy and research.
“Those vulnerabilities can be exploited by sophisticated terrorist organizations as well as the corrupt.”
The report also warns that penalties for professionals who don’t comply with anti-money laundering regulations are too small to be a deterrent.
Money laundering allows corrupt or illegal funds to be disguised as legitimate economic activity. There are concerns that failing to target fraudsters in the UK will allow terrorist financing to continue.
Earlier in 2015, the government’s money laundering and terrorist financing national risk assessment said there is “evidence of terrorist financing activity in the UK.” The report said terror funding in Britain uses the same methods as criminal laundering and “poses a significant threat to the UK’s national security.”
Labour leader Jeremy Corbyn has also warned that Britain must do more to starve Islamic State (formerly ISIS/ISIL) of finances and ensure that no European or Middle Eastern allied banks are providing the terror group with vital funds.
Speaking in the House of Commons last week, Corbyn also called for the UK to be more proactive about imposing sanctions on countries or companies suspected of funding Islamic State terrorists.
He told Prime Minister David Cameron that EU member states need to work together to ensure the terrorists are starved of “vital infrastructure.”
“Surely a crucial way to help defeat ISIL is to cut off its funding, its supply of arms, and its trade,” he said.
“Can I press the prime minister to ensure that our allies in the region, indeed all countries in the region, are doing all they can to clamp down on individuals and institutions in their countries who are providing ISIL with vital infrastructure?” Corbyn said.
“Will he, through the European Union and other forums if necessary, consider sanctions against those banks and companies and if necessary countries which turn a blind eye to those who do dealings with ISIL who assist them in their work?”
In reply to Corbyn’s question, Cameron insisted the UK was already playing a “leading role” in ensuring ISIS funds were cut off, but argued that targeting corruption should not be the only response.
“We cannot dodge forever the question of how to degrade and destroy ISIL both in Iraq and in Syria, … yes, go after the money, go after the banks, cut off their supplies, but don’t make that a substitute for the action that’s required to beat these people where they are,” the PM said.