Bank bosses should face jail if they fail to prevent money laundering, a cross-party group of MPs has said.
Launching a manifesto to tackle economic crime, members of parliamentary groups on anti-corruption and fair business banking warned that Britain’s defences against dirty money had been “overrun” and called for wide-ranging reform.
As well as making senior executives criminally liable for failing to prevent economic crime, the group called on the Government to treble the amount of money it spent on enforcement over the next three years to £300 million and provide more protection for whistleblowers.
Labour’s Dame Margaret Hodge said: “Our financial services and our defences against dirty money have been overrun. London is now the laundromat for washing dirty money and we can’t go on like this.”
Although the Government promised to bring in a second Economic Crime Bill in the Queen’s Speech on Tuesday, Dame Margaret said many MPs feared it would not go far enough and would press the Government to take tougher measures.
Conservative MP Kevin Hollinrake said making executives criminally liable would “be the sea change we need”.
He compared it to changes that made construction company executives liable for failing to prevent accidents at work.
Mr Hollinrake said: “Suddenly when that happened the deaths and serious injuries dropped like a stone, because that focuses the attention, it’s not just a cost of doing business.”
Calling for more funding for enforcement agencies, Dame Margaret pointed to a 35% fall in money laundering prosecutions in the last five years, saying: “Our agencies are completely outgunned and are simply not fit for purpose.”
The Government has already committed to spending £100 million over the next three years on economic crime enforcement, with another £300 million coming from the private sector through the economic crime levy, but MPs want to see that commitment increased to match those private funds.
Campaign group Transparency International UK welcomed the proposals, with director of policy Duncan Hames saying: “This manifesto is a compelling call for Government to act here in Britain on the scourge of economic crime and corruption.
“We join these MPs in demanding an end to secrecy in Britain’s offshore financial sectors, an overhaul of the private sector’s dirty money defences, and a significant increase in funding for law enforcement to go after money launderers.
“Now is the time for Government to press forward against the kleptocrats who hide their dirty money here.”
But both Dame Margaret and Mr Hollinrake acknowledged there were “vested interests” who would lobby against their proposals.
Mr Hollinrake said: “If you’re a chief executive of a big bank, are you going to like the prospect of having your collar felt if things go wrong in your bank? You’re not, so you then go to the Treasury therefore and say don’t do that.”