AML after Brexit: deductions of thoughts
The UK’s National Crime Agency estimates that approximately 24 billion pounds of laundered money flows through the UK annually. The NCA also reports that there are 2 million Suspicious Activity Reports in its database. These numbers indicate that the UK will be vulnerable to increased money laundering if the British government does not provide for a strong anti-money laundering protection post-Brexit. Once the UK has exited the EU, the EU Directives on Anti-Money Laundering and Terrorist Financing will no longer apply to the UK. It is a moral imperative that the British government implements comprehensive anti-money laundering laws, surveillance, and enforcement mechanisms proactively and well in advance of Brexit.
This could happen? We know that NCA reports that London as a financial center is particularly exposed to money laundering activity. Commonly, illicit funds are generated abroad and then laundered in London and the UK. If large sums of money are laundered in the UK, the UK’s financial sector could be negatively affected. and many financial institutions could decide to leave the UK and move to another location.
Another risk related to Brexit is the relocation of firms. If a large number of companies leave the UK, national anti-money laundering authorities could have difficulty surveilling all transactions and relocations.
Prime Minister Boris Johnson stated that he supports the establishment of several tax-free zones in ports in the UK after Brexit. He considered the transformation of Belfast, into a tax-free zone and London in a new financial hub open to a new deal (not with EU countries maybe?)
Supporters plans in favour of turning all of Northern Ireland into a free port argued that would lift custom duties on imports that are processed in the area. The idea of tax-free zones in the UK is based on the Singaporean tax model. This plan could hit against EU authorities in Brussels but UK is not more an EU member, so, UK Gov could open new free duties fiscal ports and make new relationships with other extra EU countries (PRC for example). An introduction of free ports in the UK could boost the money laundering activities or opportunities.
We can suppose that create a free port inside the UK as a model Singapore or Monaco could have more vulnerable to illicit financial activity. How?
Free ports are warehouses in which high-value assets like art, gems, gold, or wine collections can be stored and are attractive offshore financial centres because they eliminate import duties, user tax, VAT all this with the benefit of a high degree of secrecy. High-value goods stored in free ports and traded between offshore companies worldwide can be paid for in cash or similar kind. This can reduce the transparency of transactions and conceal the identity of the ultimate beneficial owner of goods.
UK policymakers are aware of these risks doing a tax-free zone in the UK post-Brexit? Or the temptation of having a new deal to boosting the real economy is so hard that they can simply turn a blind eye on money laundering?