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Economic crime, corruption and a lack of financial transparency could be costing the UK up to £350 billion a year, a new report suggests.
The All Party Parliamentary Groups on Anti-Corruption & Responsible Tax and Fair Banking report argues that recovering money lost in the system and preventing future losses could be the key to much-needed economic growth.
The report launch occurred on the same day as Rachel Reeves welfare cuts u-turn left the Government with a £5 billion hole in its economic plans.
The Clean Foundations for Growth report states that the UK is “both a destination and transit country for economic crime primarily via Overseas Territories and Crown dependencies” and recommends implementing a publicly accessible register of beneficial ownership for companies operating there as an interim measure.
It also urges the Government to “create a real deterrent to enabling tax dodging, pro-actively using existing powers and requiring tax advisers to register with a regulatory body”.
Pushback against transparency rules from British Overseas Territories – which operate as tax havens – is a major hurdle for the Government in implementing an anticorruption agenda.
In 2020, the UK Government ordered the Overseas Territories to introduce publicly accessible beneficial ownership registers.
The publication of the anti-corruption report came two days after the British Virgin Islands (BVI), Bermuda, Anguilla and Turks and Caicos missed a key deadline on implementing a register of beneficial ownership listed in the territories.
On 23 June, BVI also announced a new policy on access to beneficial ownership information. It would only allow access to information about companies registered there if the party requesting it had a credible reason to believe that someone with a 25% or higher stake in a firm has violated anti-money laundering, counter-terrorism financing or counter-weapons proliferation financing rules.
After BVI missed the register deadline, the UK Anticorruption Coalition (UKACC) – a collection of anticorruption NGOs – stated “far from moving towards increased transparency and shining a light on economic crimes and tax abuse, their plans would actively place journalists and civil society actors at legal and physical risk”.
It added: “This is all the more concerning given that the BVI has recently been added to the Financial Action Task Force (FATF) grey list due to serious deficiencies in its anti-money laundering regime.”
If a country, or territory, fails to act on corruption and economic crime while on the grey list it can be added to the FATF blacklist. Countries currently on the blacklist include Iran, North Korea and Myanmar.
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The UKACC added that if any Overseas Territory “continues to defy the will of the UK Parliament, the Government should be prepared to escalate its response”.
“All legal and constitutional options should be on the table to ensure these commitments are delivered in full and without further delay,” it stated.
Speaking at a launch event for the report in Westminster – which was attended by anticorruption campaigners as well as representatives from banks and the lobby group for the City, UK Finance – Kathryn Westmore, a senior research fellow at the Centre for Finance and Security at RUSI, said that HMRC “has a lot of tools at their disposal” to tackle offshore tax evasion “that they are not using very well at all”.
Westmore added that “it’s really disappointing that they have not prosecuted anyone since they came into force”, referencing TBIJ reporting from 2024 that found that HMRC has not prosecuted anyone for enabling offshore evasion in five years.
UK anti-corruption champion Margaret Hodge said it has “never been more important than this week to get the resources through tax to pursue greater equality”.
The report also took aim at “the revolving door” between positions in public office and in the private sector, citing the example of spy-tech firm Palantir’s £330 million NHS contract for the Federated Data Platform, the effectiveness of which has been called into question in recent weeks.
The Financial Times reported in February that “Palantir is profiting from a revolving door of executives and officials passing between the data intelligence company and high-level positions in Washington and Westminster”.
This point may not sit well with the Government as a significant number of Labour’s 2024 intake of MPs have backgrounds in lobbying and the party made no secret of its welcome approach to trade associations and other big business lobbies in the run up to the last General Election.