According to the general definition formulated by the Financial Action Task Force (FATF), money laundering is defined as the concealment of the proceeds of crime by legal means.  London is considered a "centre of money laundering"[1], other sources such as Transparency International confirm this finding and estimate that 100 billion British pounds are derived from organised crime in Britain. In addition, in December 2018, Duncan Hames, Director of Policy at Transparency International UK, said:

"UK anti-money laundering regulations in the private sector remain weak, fragmented, and lack credible deterrence. The government should pass the long-promised Corporate Responsibility Acts to hold companies accountable for their role in money laundering in the UK. »

The fragility of London
Despite all the laws, measures and international conventions against money laundering and the fight against the financing of terrorism, Britain retains clear flexibility in how companies are registered as well as in how to conceal the real economic beneficiaries. The revelations of the panama papers, and other cases, show a direct link between the jurisdictions historically under the responsibility of the British crown, and money laundering.

The NGO Transparency International estimates that more than 86,000 UK properties are owned by foreign companies, located in foreign jurisdictions, very often within the Commonwealth, where it is impossible to identify their physical owner. Although morally reprehensible, this unfair competition through the courts, and British Isles with special statutes, benefits the United Kingdom, where cases of money laundering are currently valued at more than £90 billion per year.

As Brexit approaches, ostensibly without a reasonable deal, the UK's economic and financial future is causing increasing concern for the British authorities. Among these fears, economic turmoil, stock market volatility, and a drying up of investments.

As Antonio Maria Costa (head of the United Nations Office on Drugs) explained during the subprime crisis, several banks in need of liquidity did not hesitate to launder drug money to the amount of 325 billion US dollars. Far from reaching this scale, the British authorities are nevertheless concerned about this risk and take into account the real threat of the rise of money laundering.

The National Crime Agency (NCA) said it received 463,938 suspicious activity reports in 2018, nearly 10 percent more than the previous year. Concerns about proven money laundering increased by 20%, reaching 22196 cases in 2018. The kingdom's parliamentary instability, political imbroglio, and popular indecision created as many opportunities to "place" foreign capital in Britain.

With a no-deal Brexit, fears about the UK's budget security are growing. The UK would thus become an even more important magnet for white-collar crime.

Implicitly using the fiscal and economic argument, in order to obtain concessions from Brussels, London brandishes the thesis of flexibility, and more competitive tax rates, thus creating a zone of fiscal complacency at the gates of Europe. Prime Minister Johnson highlighted the possibility of establishing free ports, and tax-advantaged zones, to attract foreign capital. This new situation opens the door to many money laundering opportunities, facilitated by regulatory uncertainty and post-Brexit uncertainty.

In such a context, it is to be feared that the City will be potentially attractive to capital of criminal origin. This thirst for investment has led to the British economy being infiltrated by the mafia. In 2018 the Sunday Times explains how the Calabrian Ndrangheta detected the advantage of an investment need, with British accounting flexibility. The most commonly used cases on the London stock exchange are what is known as mirror trading. This consists of buying stock market products in a currency, and reselling those same products in euros or dollars. This was the case for the client of a Moscow-based bank, which from rubles was able to convert them into US dollars for a total of at least $6 billion using the markets. Once converted into easily exchangeable currency, this capital can then be transferred to European bank accounts in countries such as Cyprus, Malta, Estonia and Latvia.

London's stock market
war alternatives Britain has other financial strategies because of its financial ecosystem bringing together a set of players, which together can weaken the European Union with the shadow banking method. Indeed, lenders, brokers and other credit intermediaries do not fall under the conventionally regulated banking sector, and therefore have more freedom than banking institutions.

Operating outside banking regulation with a financial power of 2.2 trillion pounds, British shadow banking has a capacity for nuisance and destabilization of the most important. Indeed, since British banks do not have the possibility to carry out certain actions on the markets, they delegate their tasks to actors not subject to banking regulation.

In a context of economic warfare, the targets are unlisted shares, unlisted derivatives, or credit default swaps[2] (CDS) in order to destabilize competing institutions or jurisdictions. Since March 2019, a swap line, i.e. exchange, has been opened between the European Central Bank and the Bank of England, allowing these two institutions to exchange in their own currencies, but also the European Central Bank to lend to British banks in order to avoid bankruptcy.

However, in a context of historically low credit, shadow banking by CDS, could lead to bet on a collapse of the European banking system and an insolvency of European institutions in difficulty, including Italian and Spanish banks, as well as Deutsche Bank, Commerzbank and several German regional banks. The recent study by McKinsey explains that one in three banks is threatened with disappearance worldwide. Just as George Soros speculated against the British pound in 1992, we can fear a similar situation on the part of our British allies against Europe.

The UK, failing to find a diplomatic exit from the EU, should seek to conclude financial data-sharing agreements, which would benefit all EU countries. The fight against financial crime is going to become more difficult and we must prepare for it collectively. British officials are cynical in indirectly using fraud, dumping, and money laundering to negotiate, or ultimately destabilize an already fragile Europe on tax issues.

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[1] In the text moneylaundering  center.

[2] Credit default swap also called CDS.