DIRTY DEALING: High-end jewelers and high-value art dealers are among the targets of criminals looking to launder their dirty cash, according to a report published this week by Transparency International U.K., a nongovernmental organization.
The report says billions of pounds of “dirty money” passes through the U.K. each year due to Britain’s inadequate anti-money laundering regulations.
It has also revealed that the luxury sector’s awareness of relevant laws in the U.K. remains low, and that only a few retailers have reported suspicious transactions over the last 12 months.
“One of the main reasons awareness of the rules is so low is that the numerous anti-money laundering supervisors are not doing enough to provide advice and guidance to the firms they regulate,” a spokesperson for Transparency International told WWD. “There is also a lack of transparency around enforcement against firms that do breach the rules.”
More than half of the 22 anti-money laundering regulators — most of them from private sector institutions — have been found to have a serious conflict of interest between their private sector lobbying roles and their enforcement responsibilities.
In the past year, only 677 penalties totaling 768,000 pounds, or $1.2 million, have been issued by HMRC, the U.K. equivalent of the IRS. According to the organization, the low figure is highly unlikely to act as a deterrent.
Transparency International also believes HMRC, Her Majesty’s Revenue & Customs, is ineffective as a regulator because it has an institutional bias towards secrecy and confidentiality.
All businesses selling goods more than 10,000 pounds, or $15,155, in cash must be registered with HMRC and must carry out checks to identify their customers.
The study has raised concerns that many businesses have failed even to register. “Even when registered, businesses do not face an effective deterrent to stick to the rules, and it is therefore likely that a high number of checks are not being carried out,” the spokesperson added.
To remedy the damages and further prevent illicit funds from pouring into the U.K., the organization is seeking a radical overhaul of its supervisory system. The group is
calling on the British government to strip the various private sector institutions and professional bodies of their anti-money laundering supervisory roles and consolidate them under a single, well-resourced “super” supervisor.
“The laundering of illicit money in the U.K. luxury goods sector damages the reputation of the industry, and shows it to be willing to accept any money, no matter who has suffered to make someone else rich,” the spokesperson said.