To prevent the estimated loss of up to 45% of foreign direct investment (Source: London School of Economics) which goes to the financial services sector in the UK, the UK Government is to roll back legislation for money launderers, drug dealers, Middle Eastern Dictators and Russian Billionaires. Theresa May’s recent pledge on a low tax and dynamic finance sector can only mean one thing, more dodgy cash in the UK. The UK (including some dependencies) is responsible for 4 of the 15 worst money laundering areas in the World, so it already has form. Also, many UK banks have been fined by the US for assisting in money laundering.
Capital inflows from illegal activities are nothing new. During the 2008 banking crash, the UN estimated that 350bn USD suddenly appeared in the world’s financial system. Much of it making its way through British territories and then on to London.
Middle Eastern states and Russian oligarchs have already been very successful in placing cash in the UK financial services sector and (usually) London based property schemes. Some are already believed to have seized on the opportunities that Brexit presents, namely the lack of oversight of where their money comes from. Meanwhile, the legitimate operations of many UK financial institutions will move to more transparent counties such as Germany, France and Luxembourg. Putting Luxembourg and banking transparency together may sound a little odd, however over the last 10-11 years this tiny country (where I live) has significantly boosted its compliance worldwide with some very thorough “know your client” rules being put in place.
Responsibility for negotiating financial arrangements with non-EU countries will rest with The Disgraced Former Defence Secretary Dr Liam Fox. One might pay a little more attention to his register of members’ interests to see just who may wield influence in the future.
This article was published on my original blog in January 2017. You can check out web.archive.org for proof.