There should be a serious overhaul of the way anti-money laundering rules are supervised.
The call has come from Transparency International after it emerged that HMRC is considering ending its role as the anti-money laundering regulator of sectors including estate agents.
HMRC has told the Treasury Committee that as part of next year’s government spending review, it plans to discuss whether other organisations would be better suited to the task.
HMRC currently supervises professional services, estate agency, high value dealers, and trust and company service provision.
Transparency International has previously criticised the performance of HMRC as AML supervisor, and in particular highlighted the estate agency sector as being particularly at risk of money laundering.
Its research has found that £4.4bn worth of property across the UK might have been bought with suspicious money.
Transparency International says this could just be the tip of the iceberg. Across the UK 86,000 properties are owned through anonymous companies registered in secret havens, a common method used by corrupt individuals to hide their identities.
Despite high levels of risk in the sector, just 0.12% of all reports to the police of suspicious activity in 2015/2016 were by estate agents.
Transparency International says that one reform that is needed is transparency over enforcement action.
It also says that fines should be “meaningful”.
HMRC declines to say what action it has brought against agents, or how many fines it has issued.
Duncan Hames, Director of Policy at Transparency International UK, said: “We welcome HMRC’s open reflection on their role in preventing money laundering in the UK, and the priority they are able to give it. The National Crime Agency has observed there is a realistic possibility that hundreds of billions of pounds of money laundering impacts the UK every year.
“Our current defences have failed to curb the influx of dirty money, and it must now be a clear priority for any organisation taking on that role.
“Any review of the UK’s anti-money laundering supervision must be prepared to seriously overhaul what has been a weak line of defence.
“It’s absurd that in the property sector, where commissions on luxury homes can be in the tens of thousands of pounds, money laundering fines average just £1,000.”