UK Government to Introduce Bill Cracking Down on Money Laundering​

By Jake Rickman​

What do you need to know this week?

In light of Russia’s illegal invasion of Ukraine and the sanctions Western nations have passed as a consequence, the UK Government is renewing its efforts to limit the ability of money launderers to use the country as a hub for their activities.

The law in the UK defines money laundering as the “process by which the proceeds of criminal conduct are dealt with in a way to disguise their criminal origins”.

Government ministers intend to put forward a new bill designed to tackle “economic crime”, including money laundering.

The most important feature of the bill will, if passed, create a new register that requires any foreign commercial entity attempting to buy property in the UK to disclose who the “beneficial owner” of the property will be.

These names will be kept on a registry managed by Companies House, which is the public body that regulates most business entities, including domestic and foreign companies operating in the UK.

Why is this important for your interviews?

The global crisis has raised sensitive issues relating to foreign investment in the UK.

The fall of the Soviet Union and the resulting wave of state-owned entities that were broken up and sold to private businessmen in the 1990s means that to this day, Russia boasts a number of wealthy individuals with outsized influence on Russian politics.

London has long had a controversial reputation as a haven for oligarchs from Russia and elsewhere to invest their wealth, some of which may ultimately derive from criminal activities, because of its position as one of the global financial capitals. So much that it has earned the name “Londongrad”.

The bill in question focuses on property purchases. UK property — London in particular — is an attractive investment asset because it performs incredibly well, having grown nearly 10% in the last 12 months. It is also comparatively easy for an individual to hide behind corporate structures.

Under the new bill, this will no longer the case. For example, if a money launderer owns a company registered in the Cayman Islands and tries to buy a house in Belgravia, they will no longer be able to keep their identity a secret.

How is this topic relevant to law firms?

As the law currently stands, it is a crime to be knowingly involved in the process of laundering money, even if the money is not directly yours.

Given that solicitors are among the few professions that deal directly with their clients' money, such as when holding their clients’ purchase monies on their behalf during the final stages of large transactions, many law firms are at risk of becoming complicit in a laundering scheme. In many cases, this is a criminal offence.

That is why you will almost certainly have to undergo regular “AML” (anti-money laundering) training as a trainee and beyond.