Bankers who allow drugs barons to launder illegal profits through their institutions should be punished with a new criminal law, MPs said today.
A report by the Commons home affairs committee suggests that, in order to boost earnings, many banking executives are turning a blind eye to money laundering, and entering into “high-risk” deals involving potential proceeds of crime.
Many are only concerned with avoiding “reputational” damage, the MPs say, and are willing to ignore their responsibility to prevent gangs laundering cash, if they believe there is little danger of such activities being discovered.
The report also warns that enforcement by the Financial Services Authority has been “too weak”. It calls for the current system of fines to be replaced by a new law making senior bankers criminally liable for any malpractice.
Committee chairman Keith Vaz said: “It is unacceptable for bankers to turn a blind eye to money laundering and to put profit before the lives who suffer from the drugs trade. By failing to challenge the most lucrative criminal activity in the world they are in effect aiding and abetting the drugs barons.”
The report says that being fined “is an inadequate a sanction for complicity in an international criminal network which causes many thousands of deaths each year”. It adds: “We recommend that the Government bring forward legislation to extend the personal, criminal liability of those who hold the most senior posts in the banks.”
It calls for a Royal Commission to be set up to overhaul drugs policy and examine the decriminalisation of cannabis and other substances. There also be for more efforts to keep prisoners and former inmates off drugs, and a new approach to tackling “legal highs”.
The committee took evidence from witnesses including former addict Russell Brand, Virgin boss Sir Richard Branson, police and medical experts.
On money laundering, the report cites a Financial Services Authority study that found a “poor compliance culture” at half of banks assessed. About a third of banks, including “major” institutions, “appeared willing to accept very high levels of money laundering risk if the immediate reputational and regulatory risk was acceptable”.
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Inadequate controls to prevent money laundering at HSBC were highlighted in a US Senate investigation earlier this year. It found Mexican drugs barons were among those who had exploited the bank’s failings.
Home Office minister Jeremy Browne said drug use was already falling, but promised to consider the report’s findings. Officials said that there would be no change to the law on cannabis.
