---

Crime: Money Laundering and Terrorist Finance

My honourable friend, the Economic Secretary to the Treasury (Ed Balls) has today made the following Written Ministerial Statement. The Government are today publishing their strategy to combat money-laundering and terrorist finance. This has been drawn up with law enforcement agencies, policy departments and the private sector to increase the financial challenge to a criminal and terrorist threat that is historically unique in its scale, complexity and international dimensions. In the past year, new measures have been brought forward that help to meet this challenge for the future, including: a series of reforms to maximise the impact of suspicious activity reports in tracking and tackling criminal and terrorist threats; new measures to enhance the UK's terrorist asset-freezing regime, including new terrorism and al-Qaeda orders and new safeguards on the payment of state benefits to the households of terror suspects; new draft money-laundering regulations, now subject to public consultation, which extend and promote a risk-based approach to tackling crime and terrorism; and significant new investigation powers to help trace and recover criminal assets. The strategy published today, copies of which are available in the Vote Office and the Library, shows that money-laundering and terrorist finance laws passed by this Government are already helping to save lives and bring criminals and terrorists to justice. The financial trails left by criminal and terrorist networks are now routinely used as part of the evidential case against them. New data also show that financial institutions are successfully identifying suspicious financial activity—equivalent to around 20 to 30 per cent of the estimated annual flow of laundered money in the UK. New financial powers are not just helping to detect crime and terrorism but to disrupt these threats as well. Nearly 200 bank accounts linked to terrorist suspects have been frozen in the UK. A bridgehead is being built into the criminal economy, with £100 million of assets being recovered annually from criminal gangs and used to fund further action against them and compensate victims. Financial investigations and money-laundering prosecutions have increased substantially. New centres of excellence, including specialist teams created to combat money laundering related to international corruption, are now helping to protect the integrity of the UK's financial system. New agreements at international and EU level have made the financial system an increasingly hostile environment for criminals and terrorists, while promoting UK objectives for effective and proportionate financial regulation. To build on this progress and respond effectively to the changing threat, the Government are today setting out the key strategic priorities for the future, backed up by further proposals that will demonstrate their commitment to their delivery. New measures to make greater use of financial tools to combat crime and terrorism include: further steps to promote the proactive use of asset-freezing powers, including the creation of a dedicated Treasury asset freezing unit that will increase the expertise and operational focus that the Government are able to bring to bear on asset freezing in response to advice from law enforcement and security agencies; a significant increase in targets for law enforcement agencies to recover criminal assets—doubling existing targets; and a new role for Companies House in ensuring that the data it holds is fully utilised by law enforcement agencies against criminals and terrorists; New measures to address areas that are particularly vulnerable to exploitation by criminals and terrorists include: consultation with the charitable sector on measures to keep it safe from terrorist exploitation, with additional funding of £1 million in 2007-08 to ensure that the Charity Commission has the resources it needs to identify and disrupt terrorist exploitation of charities and protect donor confidence; and targeted action against criminals exploiting ““money service businesses””, such as bureaux de change and money remitters, including by replacing the current registration system with a licensing system, underpinned by a new action plan for the supervisor, Her Majesty’s Revenue and Customs; New measures are announced that build on the UK's approach of risk-based and proportionate regulation that has underpinned the City's competitiveness and reputation for integrity. These include: the creation of a forum for financial regulators charged with promoting best practice; a commitment to consult on specific aspects of the money-laundering rules to reduce regulatory burdens further where possible; and developing further data-sharing between the public and private sectors, and pooling intelligence better between different public authorities; The strategy also announces fresh action at international level, including through the UK's presidency of the Financial Action Task Force from July 2007, to identify and tackle the most serious financial threats to international security and ensure an effective international architecture. The progress and the future priorities and measures set out in this document will help the Government meet their commitment to safeguarding the UK's prosperity and security for the future.