London a haven for money laundering?

Italian investigative journalist and author Roberto Saviano had harsh words for the London banking establishment last week. According to Saviano, London is the leader in laundering drug money for the world’s narco-criminals.

Saviano, author of the best-selling Italian-mafia expose “Gomorrah,” asserts that many banks and other financial institutions in the United Kingdom have resisted international standards of Customer Due Diligence and Know-Your-Customer documentation in favor of reaping massive profits. And he said that authorities in the U.K. have largely turned a blind eye because of the appeal of profits and the absence of physical violence tied to the banking portion of the drug trade. Others, however, counter that considerable progress has been made in improving CDD (KYC) standards.

In an interview with the London-based newspaper The Independent, Saviano decried the efforts of Britain and Austria in stifling EU efforts to implement more effective anti-money laundering measures, and he attributed some of the reticence to close relationships between politicians and political donors in the financial-services industry in the U.K.

The boom of real-estate values in London over the years has also brought scrutiny to the presence and influence of laundered money in the British capital. According to the Independent, London real estate is a favorite channel through which to launder vast sums of money due to the high property values and “Britain’s notoriously lax rules on the disclosure of property ownership.”

Boris Nemtsov, the Russian anti-corruption crusader who was murdered in Moscow in February of 2015, had been a vocal critic of real-estate rules and enforcement in the U.K. and elsewhere because vast sums of irreplaceable public wealth from Russia and other countries in turmoil  had been plundered and moved off-shore and eventually into London real estate and other western investments by opportunistic oligarchs, corrupt officials, and family members.

A looming issue for AML enforcement and effective CDD (KYC) remains the identification and tracking of ultimate beneficial owners (UBOs). But the details of these requirements and the levels of transparency sought remain contentious. As authorities in both the European Union and the United States press for greater enforcement of money-laundering statutes and suppression of criminal and terrorist activity, the press for transparency in ownership will likely escalate.


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