Minister tells MPs FCA and police will look closely at Guardian reports that UK banks processed $740m from Russian operation

This article is more than 3 years old

This article is more than 3 years old

Fraud investigators have launched a review of the activities of Britain’s high street banks following revelations in the Guardian about a $20bn money laundering scam that MPs described as a national disgrace and scandal.



Forced to answer urgent questions in the House of Commons, the Treasury minister Simon Kirby announced the Financial Conduct Authority (FCA) and the National Crime Agency (NCA) would be examining allegations that Britain’s banks processed vast amounts of tainted money from Russian criminals without noticing.

But in sometimes bruising exchanges, Kirby was criticised by MPs from all sides for giving complacent answers to questions, and for failing to acknowledge the ease with which such cash can be transferred through London, which is now seen as one of the money-laundering capitals of the world.

Labour called for the debate after the Guardian revealed that police in eastern Europe have been investigating how at least $20bn was moved out of Russia during a four-year period from 2010.

Detectives have exposed a money-laundering scheme, called the “Global Laundromat”, that was run by Russian criminals with links to their government and the former KGB.

Documents seen by the Guardian show British-registered firms played a prominent role in the money laundering network – and the UK’s high street banks processed almost $740m from the operation without turning back any of the payments.

HSBC processed $545.3m (£436.8m) in Laundromat cash, mostly routed through its Hong Kong branch. The troubled RBS, which is 71% owned by the UK government, handled $113.1m. Coutts, which is owned by RBS and used by the Queen, accepted $32.7m of payments via its office in Zurich, Switzerland.



In all, 17 banks based in the UK, or with branches in the country, are facing questions over what they knew about the transfers.

Speaking to the Guardian, the head of the NCA’s money laundering unit, David Little, said the amount of Russian money now coming into the UK is a concern because “we don’t know where it is coming from”.

“We don’t have enough cooperation [from the Russian side] to establish that. They won’t tell us whether it comes from the proceeds of crime.”

He also said that UK banks needed to spend more money investigating criminal activity because sophisticated money launderers knew how to defeat their flagging systems.

His remarks were referred to by MPs during a half-hour debate in which Kirby, economic secretary to the Treasury, insisted the UK was doing more than any other country to tackle money laundering.

How 'dirty money' from Russia flooded into the UK – and where it went Read more

The minister said: “The Financial Conduct Authority and National Crime Agency take any such allegations seriously and will investigate closely whether recent information from the Guardian newspaper regarding money laundering from Russia ... would allow the progression of an investigation. Beyond that we need to make sure sophisticated criminal networks cannot exploit our financial services industry.”

The shadow chancellor, John McDonnell, called for an assurance from the government that “there will be the potential of opening up criminal proceedings to break up what is effectively a criminal network”.

He said the minister “does not seem to realise the immense gravity of the situation we are facing”.

Labour former minister Ian Austin told MPs an estimated £100bn is laundered through London every year – but only 0.17% of that has been frozen by the authorities.

“We might as well go from here, go to Heathrow and put up a welcome sign for Russian murderers and money launderers.”

James Berry, the Tory MP for Rossendale and Darwen, said the allegations “if proven, will be a national disgrace”.

Robert Barrington, the executive director of Transparency International UK, said the Guardian’s revelations of the UK’s role in financial crime should “come as no surprise to anyone”.

British banks handled vast sums of laundered Russian money Read more

“A year after the Panama Papers, we can see that the anti-money laundering supervisors have been asleep on the job, the banks have been at best lax and at worst complicit, and the UK’s law enforcement agencies have a dismal track record of investigations that lead to prosecutions.

“Basically, the UK’s anti-money laundering defences are just not fit for purpose. The government needs a concerted, world-class strategy to deal with this if it’s going to convince people that we are not in a post-Brexit race to the bottom in which corrupt money is welcomed to the UK with open arms.”

In a statement, the FCA, said: “Clearly these are serious allegations and we will investigate any evidence that we receive.”

The NCA said it would “consider any formal request for assistance from the Moldovan authorities in connection with their investigation, and will consider whether information provided by the Guardian or other media sources would allow the progression of an investigation.”

The Guardian put detailed questions to all 17 UK based banks. The response from RBS was typical.

In a statement that also covered Coutts and NatWest, RBS said: “We are committed to combating financial crime and money laundering in line with our regulations and have controls and safeguards in place to identify, assess, monitor and mitigate these risks.”