The House of Lords, the U.K. Parliament’s upper chamber, debated this month what action the U.K. government is taking to prevent money laundering through British banks by families and businesspeople linked to the government of South Africa.
The debate comes amid concerns that many British banks have become embroiled in allegations of widespread corruption concerning the Gupta family in South Africa, who have close personal ties to President Jacob Zuma and his family.
Recently introduced money-laundering regulations set out strict rules that British banks must follow when doing business with those linked to public functions that may expose them to corruption risk. “We are concerned about the allegations in South Africa, and the British high commission is monitoring the issue closely,” said Lord Bates, U.K. Minister of State for the Department for International Development.
During the House of Lords meeting, Lord Peter Hain hinted toward an expanding corruption probe: “In my letter of 25 September to the Chancellor, I supplied for investigation 27 names and personal identification numbers, including President Jacob Zuma, 11 members of his family, 11 members of his close friends, the Gupta family, and their five associates, together with 14 entities linked to the Guptas and suspected to have been set up for the purposes of transnationally laundering an estimated £400 million, or 7 billion rand, of their illicit proceeds.”
Hain asked for assurance that those banks will track down the laundered money, return it to the South African Treasury, and supply evidence to its officials to enable the prosecution of all those connected with such corruption.
“We realise that London, as the largest financial centre, is a target which can be used for this purpose [corruption], but we are determined to root it out,” Lord Bates responded. “That is why, when we are provided with information—as when the noble Lord, correctly, wrote to the Chancellor setting out that detail—immediate action is taken to refer it to the relevant authorities to ensure that they can pursue the matter and that justice is done, and is seen to be done.”
Lord Davies of Oldham said, “[I]t is quite clear that a number of British banks have got very significant interests in South Africa. It is important that action is taken now to make sure that these banks are clear of this corruption and, if they are not, that action is taken against them.”
To ensure a speedy response to the issue, the matter has been referred to the Financial Conduct Authority, Lord Bates said. Other measures intended to help included passage of the Criminal Finances Act this year, in addition to the introduciton of tough new anti-money laundering regulations in July this year. Additionally, on 19 October 2017, the Sanctions and Anti-Money Laundering Bill was introduced. “We are taking this very seriously, because we realise the consequences of not doing so for the reputation of the City of London and the U.K.”