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UK under fire over 'dirty money'

The report says London's financial district is a haven for "dirty money"

PARIS, France -- A French report has criticised the UK for failing to tackle money laundering and secrecy in the City of London.

The report on Britain's role in worldwide financial criminal activity, put together by two French lawmakers, cited the country's "permeability" when it comes to money of illegal origin.

In Britain, officials immediately criticised the report as inaccurate and outdated.

An annexe to the main report also detailed Osama bin Laden's alleged financial interests in Britain. The 70-page document says up to 40 British banks, companies and individuals are suspected of having links with bin Laden.

Vincent Peillon, the report's co-author, criticised Britain for legislative delays, the absence of judicial cooperation with other European countries and administrative hurdles in dealing with money laundering.

"Today, the battle against financial delinquency and money laundering in Great Britain is absolutely insufficient," Peillon said. "We have evidence that the mechanisms simply don't work."

Arnaud Montebourg, the report's co-author, told Reuters: "Tony Blair, and his government, preaches around the world against terrorism. He would be well advised to preach to his own bankers and oblige them to go after dirty money."

The report also demanded a dismantling of offshore tax havens like Jersey and Gibraltar.

Banks in Britain were far too secretive, political leaders far too forgiving, and policing agencies often admitted they had far too little fire power to respond, the report said.

"The City is an impenetrable fortress with a status, rights and customs of its own, a closed universe where every financier, banker or businessman chooses silence above all else," it said.

A spokesman for the British Treasury in London dismissed the allegations. "The UK has one of the most comprehensive systems of controls and laws to combat money laundering and the financing of terrorism in the world," the spokesman said.

The report was carried out for the National Assembly's information mission, which has primarily an advisory role for French lawmakers. The commission has also criticised Switzerland and Monaco for their practices.

France itself and Luxembourg would be the next on the list for investigation, Montebourg said, but Britain, with its big financial business, was crucial at such a sensitive time.

Money laundering involves exchanging or investing funds earned from illegal activities such as prostitution, gambling and drug trafficking in order to conceal their source and make the money appear legitimate.

U.S. President George W. Bush ordered a freeze on the assets of dozens of people and organisations suspected of conducting or financing terrorist activities, including those of Osama bin Laden, on September 24.