London could become global cash laundering epicentre after Brexit, report warns
Runway at London City Airport looking west towards Canary Wharf and the City. Picture: LCA - Credit: LCA
London could become the world's next money laundering capital, a report into the effects of Brexit on the UK's financial sector has warned.
Researchers at Queen Mary University warned that millions of pounds from terrorists and organised crime groups could be funnelled through London's business districts in a 'race to the bottom' after Brexit.
Dr Anna Damaskou and Dr Angelos Kaskanis from Greece's Democritus University suggested Britain's obsession with attracting 'foreign money' to make up for the shortfall of EU funds after Brexit could lure the wrong crowds.
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'There are concerns that Brexit will make London a centre for money laundering,' Dr Damaskou said.
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'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.'
Dr Damaskou feared Britain's new-found 'freedom' could lead to 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, lauded UK regulations as 'the most mature in Europe'.
But it predicts Gulf states and other small EU countries that do not already use British standards could launder money through the capital because of new, relaxed regulatory environment.
The authors fear Britain could end up copying many Gulf states whose financial systems 'lack transparency and oversight' which has turned them into 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 urged.
They said that sweeping away financial regulations would give Britain a short-term economic boost but warned it could open the floodgates to money from drug running, modern-day people smuggling and global terrorism like ISIS and Al-Qaeda.
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