Criminals use the British financial system to hide hundreds of billions of pounds of illegal money each year.
What it means: Did you see the stories about the banker’s wife who spent $16 million in Harrods? She is being investigated because some people don't think she got that money legally. If so, you may wonder how on earth she thought she could get away with it (a $16 million shopping spree doesn’t exactly scream ‘subtle’). But it seems that, actually, most people using dodgy money in London do get away with it.
We’re pretty sure there must be an unspoken rule that people in economics and finance can never call something by a name that actually describes what it is. Take money laundering, which has absolutely nothing to do with laundry. It means making money you got illegally look legit.
London is a really good place for money laundering. That’s partly because there’s lots of normal money passing through it, so it’s easier to slip the dodgy stuff under the radar. And it’s partly because the parts of the British government that are supposed to sniff out and stop money laundering are apparently not very good at their job.
To be fair, it’s mostly not their fault. It takes lots of money and people to discover economic crimes, and the National Crime Agency (NCA) has neither. Its counterparts in Europe have hundreds of investigators; NCA has “a few dozen”. And it’s budget is too small for the work it needs to do, and getting smaller.
Some people think Britain should just leave financial criminals alone. They say the City (which hires lots of people and pays a tenth of the country’s taxes) is already going to lose money from Brexit, so can’t afford to get rid of the criminals’ money too.
And they’re worried that because a lot of money launderers also live and spend money in the UK (they like the universal language and good schools, appaz) that if Britain scares them all off house prices and the pound might fall in value. That might actually be good for some people, but not for homeowners, or British businesses and tourists wanting to sell/travel abroad.
Read our explainer on the financial system.
