Last week, shadow foreign secretary David Lammy reiterated Labour’s commitment to fighting the UK’s dirty money problem by vowing to create a transatlantic anti-corruption council alongside the US, EU and other allies to coordinate the fight against corruption if his party wins the next election.

“Transnational crime is an area that provides the perfect example of where domestic and foreign policy meet,” Lammy said. “Dirty money from Russia and other authoritarian states has been a stain on London for too long.”

But does Labour’s policy on tackling kleptocracy add up?

The Conservative government has already declared ‘Londongrad’ closed, introducing two new pieces of economic crime legislation over the past year.

The first, the Economic Crime (Transparency and Enforcement) Act 2022, created a new register of foreign ownership of UK property that is already starting to deter investment from high-risk jurisdictions. And the Economic Crime and Corporate Transparency Bill – currently going through Parliament – will introduce long-awaited measures to improve the UK’s corporate register and prevent it from being exploited by kleptocrats and criminal gangs.

The government has also promised to add a new ‘failure to prevent’ fraud offence to the bill, to hold companies to account, as well as having closed the UK’s golden visa regime – which had provided a red carpet for dirty money entering the UK – in February 2022. A review of other similar schemes was also ordered, which appears to be ongoing.

And last week, the government published a new package of measures in the 2023 to 2026 Economic Crime Plan, which laid out 48 actions designed to reduce money laundering, combat kleptocracy and counter fraud. It also plans to launch two new (much-needed) strategies, one to tackle fraud and another against corruption, promising that the latter will “close down London as a centre for corrupt elites to launder money and enhance their reputations as well as scaling up law enforcement capabilities”.

These are all welcome steps, of course, but there is still far more to be done. And in the face of this frenetic activity, Labour – which is polling far ahead of the Conservatives, with the next election likely to be just over a year away – needs some concrete policies to tackle dirty money.

At the moment, there is too little detail about the party’s plans, including what the transatlantic anti-corruption council would actually do – and what it would deliver, both overseas and at home. There is a risk that the council (and any anti-kleptocracy summit, which Lammy also promised) could end up being another international talking shop, and – if the Republicans take power in the US in 2024 – potentially not a very useful one.

So what could Labour commit to that would show ambition in this space?

First, it should give credit where credit is due. The Tory government has gone a long way in just over a year. Much of this progress can be attributed to the genuine hard work of civil servants, who have used Russia’s full-scale invasion of Ukraine to push reforms that had long been in the making. It was helped by real cross-party parliamentary pressure on the government to go as far as possible as well as some high-level ministerial commitment from the likes of Tom Tugendhat, Andrew Mitchell and Kevin Hollinrake. Labour should commit to continuing this programme of work and taking it to the next level.

Second, Labour should take inspiration from other governments. Last week, the Biden administration in the US unveiled the actions it has taken over the past year on kleptocracy. Creating an anti-corruption policy board for the State Department; issuing an anti-corruption policy for the USAID programme; funding investigative journalists and their defence against defamation cases; introducing a whistleblower reward scheme of up to $5m for information that leads to recovery of corrupt assets – there is a lot to borrow.

Third, any policy on tackling dirty money needs to be about much more than foreign policy. A joined-up anti-kleptocracy policy from the shadow home, treasury and foreign secretaries could do well to look at some of the EU’s new proposals to tackle money laundering (also revealed last week). These include creating a powerful supervisor of supervisors to make sure money laundering regulations are effective.

Fourth, if Labour wants to show that it would go bigger and further than the current government, it should supercharge the UK’s anti-corruption sanctions regime. This means having a coherent, consistent policy behind those sanctions, and creating an independent oversight panel for sanctions implementation. It could also commit to ramping up the use of aid to tackle corruption, including for specialist law enforcement bodies such as the National Crime Agency’s international corruption unit.

Two key things

Ultimately, however, if any party is truly serious about tackling the UK’s dirty money problem, it will need to do two things.

The first is to back words with money. No amount of good policies or laws are going to make sustained inroads unless they are robustly implemented and properly enforced – and that takes money.

Last week’s Economic Crime Plan has already been widely criticised for having inadequate funding and no new government investment. Labour’s commitment to look at recycling more funds from penalties back into the Serious Fraud Office and at ‘spend to save’ models for corporate fraud is a great start; if seriously implemented, it could form a real basis for ramping up enforcement across the economic crime space, from fraud to dirty money.

The second thing is to get the UK’s own house in order. Understandably, countries around the world don’t take kindly to being lectured on corruption by jurisdictions that either harbour corrupt wealth from kleptocratic regimes or fail to tackle their own domestic corruption problems.

This is an area where the current government is weakest. So far, it has failed to implement any meaningful recommendations on upgrading the regulation of ethics in government made more than 18 months ago by the Committee on Standards in Public Life. Labour’s proposal for an integrity and ethics commission is promising, but must not be allowed to go the way of President Biden’s electoral promises on ethics, which have yet to be fully realised.

Labour's task is simple but not easy. Everyone likes to talk tough on dirty money. But the test of a potential party of government is this: is there substance beneath the soundbites? Labour has sketched some outlines for a sensible policy, but until the picture is clear, the jury is out.