How is the UK Balancing the Need to Tackle Money Laundering with Attracting Overseas Investments?

London is well-known as a key financial center in Europe. It has been attracting and protecting foreign capital, concentrating innovation and talent on a global scale for years. Along with the advantages of the global hub status, regulators fear that the UK could become a place of significant financial crimes, which will affect the level of financial security in the country and its sovereign rating.

In the Integrated Review of Security, Defence, Development and Foreign  Policy, published in March, The UK government recognises the threat of money laundering and financial crime stating that the amount of money laundered through the UK each year are tens of billions of pounds. These are significant challenges for AML and compliance for both UK regulators and financial corporations licensed in this jurisdiction.

Read more about Getting MSB Registration in Canada

The issue of the national security by combating money laundering is of particular importance due to Britain’s links with jurisdictions perceived as secretavely, the continued strength of the British real estate market, and the promotion of the rule of law, democracy and stability.

The UK is of particular interest to foreign investors due to the possibility of setting up offshore companies in the British Crown Dependencies – Guernsey, Jersey and Isle of Man – and overseas territories such as the Cayman Islands and British Virginia. Offshore companies are legitimate tools for protecting confidentiality and structuring taxes. However, these jurisdictions are often involved in money laundering investigations in the UK.

Buying high-quality real estate in London with the help of criminal funds also makes it possible to effectively legalise them. However, a foreign business registration bill that would establish a public register of beneficial owners of foreign organisations owning UK property has not yet passed parliament, and the government has agreed that criminal sanctions in the bill are unlikely to be applied outside the territory. The Government’s plans for a major overhaul of the UK register of companies (including limited liability companies) include a mandatory inspection of all directors and persons with significant control over companies incorporated in the UK.

Read more about Fintech/PSP Update in Gift City India

Thus, a number of measures have been initiated to overcome the risks of national security in the area of combating money laundering. However, the application of such measures can significantly reduce the attractiveness of the UK for foreign investment and lead to an outflow of capital to countries with a more attractive regulatory environment. As a result, the Government must ensure that corporations do not face overly burdensome compliance requirements to the extent that foreign investment in the UK is constrained or that British citizens face burdens of bureaucracy.

The key conclusion is that private overseas investors with businesses in the UK need to strengthen measures to protect their capital and busiess interests, review their compliance positions and work with compliance experts to maintain their current business in the UK.

At PayCompliance, we have 18 years’ experience of supporting the success of payment institutions across 65 countries. Our comprehensive product range includes comlpliance consulting, financial auditing and licensing services.

Book a free consulting session here: https://paycompliance.com/schedule-a-free-call/.