[LONDON] Britain's "woefully inadequate"anti-money laundering system has left the country wide open to corrupt money and terrorism funds and needs radical overhaul, a leading anti-corruption group said on Monday.
Each year billions of pounds of dirty money flow through Britain, but the system for identifying it is too fragmented and unaccountable to be effective, according to a report by Transparency International UK (TI-UK).
"The UK supervision system which should be protecting the country from criminal and terrorist funding is not fit for purpose," said TI-UK's Head of Advocacy and Research Nick Maxwell. "Those vulnerabilities can be exploited by sophisticated terrorist organisations as well as the corrupt."
Penalties for professionals such as lawyers and estate agents who fail to comply with anti-money laundering regulations are also too small to act as a deterrent, the report said.
Money laundering is the process of disguising the origins of money obtained from crime and corruption by hiding it within legitimate economic activities.
The government's 2015 money laundering and terrorist financing national risk assessment said there was "evidence of terrorist financing activity in the UK" which uses the same methods as criminal money laundering and "poses a significant threat to the UK's national security."
Money laundering is also pushing up London property prices because money commonly ends up in high-value physical assets such as real estate and art.
Britain's National Crime Agency's economic crime director told The Times newspaper this year that London property prices were being artificially driven up by overseas criminals wanting to hide their assets.
TI-UK wants Britain to create one independent and accountable national supervisory body to replace the current system of 22 - often private sector - supervisors responsible for spotting dirty money in sectors such as financial services, accountancy, legal services and property.
Making senior professionals personally liable for money laundering is a key part of the fight, TI-UK said, but Britain is scrapping plans to treat senior bankers as guilty until proven innocent for failings which happen on their watch.
This u-turn was "reportedly due to heavy lobbying by the banking sector," TI-UK said.