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6 Actions the Government Can Take to Crack Down on Corrupt Money

Written by Robert Barrington on Monday, 19 March 2018

Robert Barrington, Executive Director of Transparency International UK, discusses what more could be done to prevent the proceeds of corruption entering the UK financial system – and what to do about money that slips through the net.

In the arcane world of debates about tackling money-laundering, time seems to have sped up since the Salisbury poisonings.  Things that had previously been promised, and shelved in the Brexit phoney war, and things that were always necessary but never promised, suddenly look more necessary and more likely.

Six of them are outlined below – actions that could make a real difference in deterring and detecting corrupt capital flows. Here they are:

1. Require the UK’s Overseas Territories and Crown Dependencies to operate to the same levels of transparency as the UK. They are a loophole that needs closing.  The Panama Papers showed us how illicit Russian money can end up in London, via attempts to hide it in the UK’s offshore islands.

2. Accelerate the timeline for introducing a public register of the real owners of overseas companies being used to buy UK property and bid for UK Government contracts.  We would finally know who really owns those mansions in Mayfair, and be able to ask where they got their money from.

3. Although the government should not direct law enforcement agencies which cases to investigate, it can provide proper resourcing to the teams meant to investigate corruption. This would enable them to investigate and serve the new Unexplained Wealth Orders.  The NCA’s Anti-Corruption Unit is substantially funded by DFID, which sets the priorities of which countries’ citizens are investigated; the unit should have funding to enable it to take on all cases, including Russia.  Likewise, Companies House should be given sufficient resources to identify suspicious activity.

4. Use the Bribery Act. Again this should be free from political interference, but political and diplomatic clout can be used to encourage other countries’ law enforcement agencies to cooperate.  So for example, if a Russian company with a presence in UK (like a London listing) appears to be paying bribes overseas, the UK’s Serious Fraud Office could prosecute in the UK if it had help gathering evidence and building a case from the relevant country overseas.

5. Find out who is already here.  From 2008-15, ‘investors’ could pitch up to the UK with £1-2 million and buy an investment visa – this was the ‘blind faith’ period, post-financial crisis, with more or less no questions asked.  We know that nearly a quarter of the visas were granted to Russian nationals, but not the names.  The Home Office should publish the list, and undertake retrospective due diligence on those who bought the golden visas, to work out whether some of them should not really be here.

6. Prohibit agents that are not registered with a UK anti-money laundering supervisor from setting up companies in the UK.  Another loophole to close.

I will end with three important notes:

a. Not all Russians in the UK are owners or beneficiaries of corrupt capital, so measures should not be a blanket targeting of one country.

b. The judiciary and law enforcement are independent in the UK, and so anti-money laundering measures need to be generally applied and not targeted at a specific overseas government that the UK government of the day does not like;  though given dodgy Russian assets may be up to 20-25% of the money laundered through the UK each year, they would be caught in the net.

c. Though the UK could substantially improve, it has already taken some decisive action in recent years, and is certainly no worse than other major financial centres; but more can be done, and that would be more effective.

 

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Read 140 times Last modified on Thursday, 29 March 2018 11:00
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Robert Barrington

Robert is TI-UK's Executive Director. You can view his full bio here, and tweet him @TIukED.

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