Written evidence submitted by Amanda Busby (IEF0002)
By way of introduction, I wish to say that I am an interested member of the public with former personal relationships and family members within the Finance Sector.
I would like to add that I have read carefully and watched film regarding the secrecy that is afforded individuals, companies and trusts particularly, through a number of loopholes in the current system, and I am writing in to raise questions and ask for you to seek answers as to why this continues. Where possible, I make suggestions.
Finally, as a standard retail customer of HSBC myself, I was horrified to discover that not only were they involved in money-laundering, but they were caught and fined (the system was working in that case), and yet they were quoted by George Osborne as being “Too big to jail”.
(1) This is therefore my first area of concern – being too big to prosecute. How can we as a country operate such a system – and how can we change this? Also, why are fines smaller than gains when the criminals are actually caught, and why are those responsible not struck off as a culpable medic would be?
(2) Which leads me onto the culpability of those UK professionals found to be responsible for aiding and abetting money-laundering. The code of practice and subsequent register for ALL financial advisors within the Big 3 particularly ie the banking sector, accountancy, and legal practices should be watertight. Other financial advisors should also be registered - with the whole administering differing levels/grades of membership of one overall professional body, with those grades being dependent on not just qualifications, but on the level, types and amounts of money/services being managed. Off-shore should be one of these categories. Registration should be a bench-mark that professionals sign up to in exchange for the professional status (and rewards) of offering advisory and practical services - with violation of the rules leading to de-registration. It should be as strict as medical registration – and therefore a full structure of oversight should be in place
(3) Which brings me on to due diligence – which is clearly and flagrantly being disregarded as a duty and function. So, I ask how can the absolute necessity for it be built in to advising and transacting? Why not at every stage – from company registration, to ‘tax advice,’ to legal advice, to banking advice – and then in key transacting stages – due diligence checks be made a legal requirement, then loopholes should disappear. Surely, sight of audited company accounts should be part of this checking, along with banking records? And if, as mentioned in point (2), offshore trading with its complexity and opaque structuring is reined back by ‘due diligence legal declarations being a legal requirement from the transacting customer’, coupled with a trading ban being upheld on listed ML states and domains and residents/businesses, dirty money can be avoided. Contd....
I do recognise that the huge number of smaller private banks in The City is facilitating much of the problem, which is why trading practices for all banks that office, trade and HQ here, need stringent ML and due diligence regulation – with their own governing body ‘with teeth’ working with a financial industry-wide overseer. (RBS, Lloyds, HSBC, Santander (and BCCI) however, can hardly be described as smaller.)
(4) Which leads on to nominee directors and UK exempt ‘people with personal security concerns’ who don’t appear on Co records. Somewhere in the Co registration and a needed new due diligence checking system, records of these people must be kept. If the registration and membership of professional service providers is properly organised, as the electronic world makes so easy now, in the way that the DWP, Civil Service generally and Health Service do, with staff grades determining access to levels of information, and the more sensitive data (nominal directors shouldn’t be very high priority in my view) only being available to the highest ‘needs to know’ senior professionals in and outside govt depts (incl, for example, inside a new overseeing body), this, too, can reduce the trading of dirty money.
(5) Part of point (3) referred to The City’s global banking status where its de-regulation is a trading magnet. To re-iterate the points above, The City’s banking sector needs to liaise with their own and other due-diligence bodies, including seeing audited accounts – with those auditors being liable for due diligence in trading accounts (they’re supposed to be already), but with a specific due diligence registration and professional body of their own – with these due diligence overseers meeting and working together either as or under one regulator. Accountancy (City-based, especially) has been described as the backbone of the opaque offshore system. The City along with British Overseas Territories tax havens are the major cause of the problem we have here with dirty money. As the BOTs are part of the UK in certain legal definitions, optimally, an alignment with new City-wide (and country-wide, of course) due diligence requirements needs to come into force for them. HMRC and The Treasury have a role in these changes with possible new legislation as well.
(6) And finally, legal firms are also involved in the setting up of Cos, and as they are the only ones (I believe) currently held responsible for due diligence, this aspect of their operations in financial matters needs to be overseen and to align with the other financial service providers – with contracts for end-users and providers/facilitators being water-tight (and laws and penalties aligning as well).
Thank you for your invitation to contribute. The above is long overdue, with enormous changes already in online banking, with the crypto revolution on the doorstep.
Amanda Busby
February 2022