British authorities are facing intense criticism over their failure to effectively prosecute individuals involved in financial crimes. Recent reports have shed light on the glaring lack of enforcement against both financial insiders responsible for reporting suspicious money flows and affluent tax evaders.
Government data obtained by Ruth Paley, a corporate crime lawyer at Eversheds Sutherland and analyzed by the anti-financial crime network ACAMS, revealed that between 2012 and 2021, UK authorities only initiated 23 cases against bankers and other financial insiders for neglecting to report money laundering suspicions. Paley suggested that these cases were more likely linked to individuals involved in broader criminal activities within the banking sector rather than mere negligence.
The infamous FinCEN Files investigation, conducted by the International Consortium of Investigative Journalists and BuzzFeed News in 2020, brought to light the significant involvement of major global banks, including HSBC and Barclays, in facilitating the circulation of illicit funds.
Lawmaker Margaret Hodge, a prominent voice on anti-corruption matters from the United Kingdom’s Labour Party, told ICIJ that “just 23 criminal investigations” was an “appalling” figure that indicated a “clear reluctance from law enforcement to pursue individuals working in the banking sector”.
“We know from the FinCEN Files that high street banks all too often believe that they can get away with a tick box exercise, meanwhile failing to robustly pursue blatant wrongdoing”, she said. “The system needs a complete overhaul with tougher duties on banks and professional enablers and a well-resourced enforcement capability”.
In a separate report, UK authorities also came under fire for the low number of cases against rich tax cheats. According to an investigation by The Bureau of Investigative Journalism and TaxWatch, only 11 “wealthy” people were prosecuted for tax fraud last year, despite the outsized role the UK and its overseas territories, including the British Virgin Islands, Cayman Islands and Jersey, play in enabling tax dodging and financial secrecy.
In 2020, a global investigation by the International Consortium of Investigative Journalists and BuzzFeed News exposed the pivotal role played by the world’s biggest banks in facilitating global dirty money flows. Based on a leaked trove of documents from the US Department of Treasury, the FinCEN Files identified thousands of UK shell companies that received billions of dollars in suspicious transactions, and showed how bankers at HSBC, Barclays and other top British banks courted high value, high risk clients.
About 800,000 British taxpayers are categorized as “wealthy” — having an income above £200,000 (about $243,000) a year or £2 million (about $2.43 million) or more in assets — according to the UK’s tax authority, HM Revenue and Customs, but fewer than 100 have been prosecuted for tax crimes since 2017, TBIJ reported.
Furthermore, an investigation conducted by The Bureau of Investigative Journalism and TaxWatch highlighted the inadequate prosecution of wealthy tax evaders in the UK. Despite the significant number of wealthy taxpayers, comprising individuals with substantial assets or high annual incomes, the authorities had only prosecuted a meager 11 individuals for tax fraud in the previous year. Dan Neidle, founder of Tax Policy Associates, emphasized the need for stricter penalties to deter tax evasion, as the current emphasis on civil penalties and settlements undermines the rule of law.
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