The FT has noted in an editorial this morning that:
Denmark and Estonia are in the spotlight over a money laundering scandal that saw billions of dollars of suspicious funds from former Soviet republics pass through a subsidiary of Danske Bank. But a country with just as many questions to answer – in the Danske case as in many others – is the UK. While Danske's Estonian business was, in 2007-15, a wide-bore pipeline for dubious fund flows, the entities sending money through it were often shell companies registered in the UK or its overseas territories. For the sake both of its reputation and – given the vulnerabilities that stem from being a haven for Russian or other dirty money – its national security, London should launch a concerted clampdown.
What follows in the editorial is an understated tale of the failure of U.K. company regulation. The FT suggests:
tightening controls on so-called limited liability partnerships and Scottish limited partnerships that have become a vehicle of choice for money launderers.
And:
Companies House, the UK registrar, needs meanwhile to be given adequate resources and powers to check the veracity of information that businesses provide.
Whilst adding:
The government should also speed up adoption of a draft law to create a register of beneficial owners of overseas legal entities that own property or land in the UK. While putting its own house in order, the UK should use what influence it has to ensure compliance with a law that parliament adopted in May requiring companies registered in British overseas territories to disclose their beneficial owners. The requirement should be extended, too, to the UK's crown dependencies of Guernsey, Jersey and the Isle of Man.
Before concluding that:
The risk, however, is that a desire to ensure the City of London clings to its status as a global financial hub after Brexit will lead to laxer standards and enforcement. That would be a mistake. The way for the UK to prosper outside the EU is not to become a quasi-offshore, low-regulation tax haven, but to strive to combine an attractive business environment with the highest standards of probity and transparency.
Having spent years talking about the abject, and I suggest deliberate, failure of Companies House to regulate this is very welcome. It would have been better still if the FT had noted the simple failure of Companies House to collect data from 10% of companies each year, to which it turns a deliberate blind eye, so allowing widespread fraud to persist. But all steps in the right direction are appreciated, and this one is as such.
The question is whether the Tories will take the slightest notice.
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From the Tories there will be an ‘angry from Tunbridge Wells’ moment where they pretend to be concerned but then normal service will be resumed.
The Tories are happy to compete by undercutting everyone else – whether it is low wages or loose or non-existent legislation.
Have you watched the Spider’s Web documentary?
Yes
I was meant to be in it, but could not make the recording dates
Oh yes!
Absolutely brilliant that documentary is. It should be on prime time TV.
Do you have any idea what constitutes competitive advantage in banking Richard? I feel I should know and have to admit no model other than criminality makes sense to me. One wants to welcome positive change, but all that is happening is a new shuffle. The game goes on.
In much of banking competitive advantage means regulatory arbitrage. In other words, it means imposing a cost on society that it was never intended to suffer.
Once it meant great customer service but they can’t even be bothered to supply ATMs now.
“Once it meant great customer service but they can’t even be bothered to supply ATMs now.”
And in the case of the dually mis-titled ‘Royal Bank of Scotland’, branches seem to be regarded as something of an extravagance.
It is worth mentioning the auditors in the context of FT the article.
From https://www.bloomberg.com/news/articles/2018-09-26/danske-s-auditors-in-crosshairs-after-missing-dirty-money-clues
“Danske changed its auditors several times during the period in question, according to its annual accounts. Between 2010 and 2014, it switched between Grant Thornton, PwC, KPMG, Deloitte and EY.”
That many?
And none yelled?
I despair
Agreed, take for example company number 10684315. It filed a confirmation statement on 28/03/2018 saying it has a principal activity, it operates a blog that states:
“This blog is published by and copyright of Progressive Pulse Limited, company number 10684315 at:”
…and yet it filed dormant accounts for 31/03/2018. Needs looking at.
It does publish it
That’s completely true
It earns no revenue for doing so
That is also completely true
That is apparently a company limited by guarantee with no assets and no income. On what basis would it not be dormant, Jim?
(Erroneously, page 5 of the filed accounts say it is a company limited by shares.)
As someone who often looks up the details of English companies, the quality of information available from the public filings has declined noticeably in recent years since proper annual returns were replaced with useless “confirmation statements”. The substantially increased thresholds for filing shorter and unaudited accounts are a problem too.
The question is whether the Tories will take the slightest notice.
I’m sure you know the answer to that question.
“A study by the Bureau for Investigative Journalism has found that the City accounted for £11.4m of Tory funding — 50.79% of its total haul — in 2010, a general election year”
So that should slant you towards what their policy will be re better financial regulation………