I WAS IN LONDON THIS WEEK...

I was in London this week, doing a keynote speech at a really terrific conference for top investment managers in the City of London. I opened with reading the preface of a chapter in The New Laundrymen – this being the UK version - which quotes British politicians from both sides.

To wit:

Harriet Baldwin MP, as Economic Secretary to the Treasury: “The UK’s anti-money laundering and counter financing of terrorism regime has a clear aim: to ensure that the UK financial system is a hostile environment for illicit finances.”

Lord Peter Goldsmith, as Attorney General, promising that the UK would become: “One of the least attractive locations in the world for organised crime to operate.”

Karen Bradley MP, as Home Office minister: “For too long corrupt lawyers, accountants and other professionals have tried to evade justice by hiding behind a veneer of respectability... a clear message to those individuals – if you are helping to oil the wheels of organised crime, you will be prosecuted and face being jailed.”

Theresa May MP, as Home Secretary: “We will act vigorously against the criminals and terrorists responsible, to protect the security and prosperity of our citizens, and safeguard the integrity of Britain’s financial economy.”

Anthony Browne, as chief executive of the British Bankers’ Association on banks sharing key intelligence with the authorities: “This will help us to make sure that London has one of the toughest regimes of any financial centre in the world.” 

Simon Kirby, as economic secretary to the Treasury: “Money laundering and terrorist financing should not and will not be tolerated.”

David Cameron MP, as Prime Minister: ““My message to fraudsters is, London is not the place to stash your dirty cash.”

Charles Randell, as Chairman of the FCA: “The UK is, and must remain, an inhospitable place for financial crime.”

What I didn’t add was the way I end that preface: I quote Pogo, Walt Kelly’s iconic cartoon character: "We have met the enemy and he is us."

The penultimate speaker of the day, before my keynote closing, was a bright, energetic and sincere functionary from the Home Office, who spoke with hope about the European Union’s 5th Money Laundering Directive (5MLD). She felt, even though Brexit had removed Britain from any obligation to follow these rules, that they would be followed because they were good and just, and because it was the right thing to do. 

During her Q&A afterwards, I was tempted to ask but didn’t – there was no reason to embarrass her - if she’d like to buy a bridge I own in Brooklyn. 

Her part done, she left. So when I stood up, I felt free to explain how the City of London – with no obligation to pay any attention whatsoever to 5MLD – would do just that.

Pay no attention.

I suggested that firms inside the EU looking to avoid 5MLD – not the big, honest ones who were in London and the EU already, but small dodgy firms with no reputational risk - would soon happily move to London. And as there was plenty of vacant real estate in the City, London would welcome those small dodgy firms with open arms.

In other words, Britain out of Europe would turn the City into a welcoming home for anyone and everyone wishing to avoid Europe’s rules and regulations.

Now, consider this. Had any of those political leaders I cite above shown any real understanding of the problem, they’d have known that rhetoric and window dressing can’t solve it. But rhetoric and window dressing is politically expedient. Despite the fact that many of those careers ended in tears, rhetoric and window dressing is still the norm. I say that because the morning of my keynote, I had breakfast with an old friend – one of Britain’s great financial crime investigators, who has finally succumbed to years of frustration and gone to the private sector.

He told me something that I repeated to the conference later that afternoon. I re-state it here. Keeping in mind the quotes above, and the feel-good factor that the lady from the Home Office wished to portray, here is the stark truth about financial crime in Britain right now.

The Home Office itself reports that last year, there were 10.4 million crimes committed in the country. That includes everything from murder to drunk-and-disorderly, from arson to shop lifting.

Of those 10.4 million, exactly one-half are financial crimes. In other words, last year there were 5.2 million financial crimes committed in Britain.

Of those 5.2 million, only 12.5% were investigated.

Of those 12.5%, the percentage of financial crimes committed in Great Britain that were brought to a conclusion, is 0.03%.

And out of the 128,000 police officers throughout the United Kingdom, the number of dedicated financial crime investigators – the number of officers who are trained in money laundering and fraud and other financial crimes and work that beat exclusively – is 528.

Care to guess why the City of London is the world’s most important dirty money sink?

Care to guess why, in Britain, the bad guys are winning?

*****

? Jeffrey Robinson 2020

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