Britain’s Soft Approach to Financial Crimes: Fewer Than 25 Prosecutions Against Bankers and Tax Cheats in a Decade

London — Recent reports have shed light on the U.K. authorities’ modest enforcement actions against financial criminals, including bankers and wealthy tax evaders.

Few Prosecutions Against Financial Insiders for Money Laundering

According to an analysis by moneylaundering.com, from 2012 to 2021, U.K. authorities opened just 23 cases against bankers and financial insiders for failing to report suspected money laundering offenses. While under U.K. law, employees at financial institutions and other companies subject to anti-money laundering rules can be held criminally liable for not reporting suspicious transactions, the number of prosecutions averaged only two per year.

Ruth Paley, a corporate crime lawyer at Eversheds Sutherland, shared her concerns, noting that these cases were likely not against “hapless individuals who haven’t done their job properly.”

I would contend that these individuals are unlikely to be such people. – Ruth Paley, corporate crime lawyer, Eversheds Sutherland

In a joint investigation by the International Consortium of Investigative Journalists (ICIJ) and BuzzFeed News in 2020, the significant role played by major banks, including those based in the U.K., in facilitating global money laundering was exposed. The FinCEN Files identified thousands of U.K. shell companies that had received billions of dollars in questionable transactions.

Margaret Hodge, Labour Party MP, voiced her concern, stating that the “appalling” figure of just 23 cases was a clear indication of the “reluctance from law enforcement to pursue individuals working in the banking sector.”

Low Number of Prosecutions Against Wealthy Tax Cheats

Another report criticized U.K. authorities for their low number of cases against wealthy tax cheats. The Bureau of Investigative Journalism (TBIJ) and TaxWatch uncovered that in 2021, only 11 wealthy individuals were prosecuted for tax fraud. With about 800,000 British taxpayers classified as “wealthy,” yet fewer than 100 have been prosecuted for tax crimes since 2017.

Dan Neidle, founder of Tax Policy Associates, observed that HMRC had focused on financial recovery rather than costly criminal proceedings and felt a complete system overhaul was necessary. He suggested tougher duties on banks and professional enablers, as well as a well-resourced enforcement capability.

Calls for System Overhaul and Inspiration from Ireland

An HMRC spokesperson acknowledged pandemic-related court delays but confirmed that they still had “more than 300 people under criminal investigation” as part of their efforts to tackle wealthy offenders.

Tristram Hicks, a financial crime consultant and former Scotland Yard detective, echoed the call for an overhaul and suggested looking to Ireland’s successful Criminal Assets Bureau for inspiration. The CAB has an exceptional track record in recovering assets from criminal enterprises, earning recognition as a world-class model.

We need something better than what we have now. The Criminal Assets Bureau in Ireland is a shining example of how it should be done. – Tristram Hicks, financial crime consultant and former Scotland Yard detective.