The big financial districts in Canary Wharf and the City risk becoming centres for “dirty money” laundering from terrorism and international crime in what could be “a race to the bottom” when Brexit transition ends.
That’s the stark warning facing east London and the Square Mile from an academic at Queen Mary University.
Cutting regulations and becoming “hooked on attracting foreign money” might also attract proceeds from criminal or even terrorist activity, a report by Dr Anna Damaskou from Queen Mary’s and Dr Angelos Kaskanis from Greece’s Democritus University suggests.
“There are concerns that Brexit will make London a centre for money laundering,” Dr Damaskou points out.
“As things stand, Boris Johnson’s government has signalled that it wants Britain to be entirely free to make its own rules. So the UK will be without reference to the EU once transition ends on December 31, unless there’s agreement.”
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Dr Damaskou fears “a race to the bottom” with financial deregulation and lack of dealing with jurisdictions outside Europe, in particular tax havens like Dubai.
The report from the Tactics Institute for Security and Counter Terrorism, issued through Team Britannia consultancy in Shoreditch, praises current UK regulations as “the most mature in Europe”.
But it forecasts there could be money laundering through rogue Gulf states and small EU countries that don’t use British standards or aren’t able to police tough regulations.
Post-Brexit Britain could go the way of some Gulf states, the authors fear. These states “lack transparency and oversight” during periods of rapid economic growth, booming property market and free ports creating a safe haven to launder proceeds of illegal arms sales, drug smuggling, people trafficking and terrorism.
London’s significance as one of the world’s leading financial centres “must continue to work with the rest of the EU”, the Tactical Institute urges.
A wave of deregulation giving a short-term boost to Britain’s economic growth is “a superficially attractive prospect”, but could open the floodgates to money-laundering from drug running, modern-day people smuggling and global terrorism like Isis and Al Quaida.