Money laundering, McDonnell(Labour) demands review into City of London role

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London – John McDonnell, he shadow chancellor, has called for an inquiry into London’s role in global money laundering, amid concern about UK banks’ exposure to a corruption investigation about Gupta family and South Africa President Jaocb Zuma.

McDonnell said London had become “notorious” as a centre for money-laundering.
The warning comes after the Guardian revealed that the chancellor Philip Hammond has asked Uk financial authoritiesto look into whether HSBC and Standard Chartered were involved in transactions related to the Guptas.

The potential involvement of UK banks was first raised by former Labour cabinet minister Peter Hain, who grew up in South Africa and was a prominent anti-apartheid activist asking in the House of Lords for an update on the government’s progress in investigating bank accounts “suspected to have been set up for the purposes of transnationally laundering an estimated £400m of their illicit proceeds”.

Speaking after Hain’s question, Lord Davies warned the government it must act fast to ensure the UK’s reputation as a financial centre is not affected.

Lord Davies said: “It’s quite clear that a number of British banks have got clear and significant interests in South Africa. It’s important now that action is taken to make sure these banks are clear of this corruption and, if not, that action is taken against them. It will not do Britain’s reputation any good at all to be tardy on this very significant issue.”

In a statement following Hain’s intervention in the House of Lords, McDonnell called on the government to consider a wide-ranging review into the role of UK financial institutions in global corruption.

McDonnel said: “This is the third high-profile money laundering scandal to involve major British banks this year, and London has become notorious as a global centre for money laundering. There are many hardworking people in our banking sector who will feel frustrated and dismayed by such stories, but they are let down by poor leadership and weak oversight that undermines the financial sector’s reputation. It’s time the chancellor considered a wide-ranging independent inquiry that leaves no stone unturned in rooting out unlawful and damaging activity. The government cannot continue to drag its feet on this matter as it will be the British banking industry as a whole that risks long-term damage to the reputation on which it depends.”

The chancellor has asked the Serious Fraud Office, National Crime Agency and the Financial Conduct Authority to seek information from Hsbc and Standard Chartered about their potential involvement with transactions related to the Guptas.

Riccardo Cacelli