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Closing down the safe havens: Does crime pay?

Written by Guest on Thursday, 19 December 2013

Does crime pay? A new UK National Audit Office report suggests it does…

This week the National Audit Office reported that at least £99.65 of every £100 generated by the criminal economy in 2012-13 was kept by criminals. If on a best case scenario, we are only able to deprive regular criminals of 0.35% of their illicit gains in wealth, it is highly likely that UK’s success in seizing the assets of those involved in complex, sophisticated and trans-national grand corruption is even smaller. Quite frankly, those sorts of odds make it rather attractive for dishonest politicians and officials to launder their illicit wealth through the UK.

Transparency International UK’s recent paper entitled “Closing Down the Safe Havens: Ending impunity for corrupt individuals by seizing and recovering their assets in the UK” estimated 99% of corrupt flows go undetected let alone seized. The paper makes it clear that current levels of asset recovery in the UK are “insignificant compared to the problem”. The paper recommended bold reforms – both policy and legislative – if the UK is to improve the detection and confiscation of corrupt assets. The NAO’s report serves to justify TI-UK’s concerns and demonstrates how little is being recovered across the spectrum of criminal activity.

The NAO’s report states that there is no coherent strategy for confiscation orders in the UK. The same can be said for tackling corrupt flows – TI-UK’s report suggests a more proactive, de-politicised and unrestricted approach. It calls for a single well-resourced dedicated unit to locate and retrieve corrupt assets, such as in the US. The UK needs to move away from being wedded to the idealistic approach of securing a conviction in the origin state. In cases of foreign corruption this is rarely achievable. Greater focus should be placed on depriving the corrupt of their ill-gotten assets through mechanisms like non-conviction based asset forfeiture which do not require a criminal conviction.

But TI-UK’s Paper recognises that a major policy change alone will not turn the tables on the corrupt. Legislative change is required. TI-UK recommends that serious consideration be given by the UK Government to introducing proportionate laws that give the upper hand to law enforcement. We need laws that allow quicker freezing of assets suspected of being gained through corruption. The paper also asks the UK Government to contemplate the benefits of introducing a new offence of corrupt enrichment. This offence would apply to public officials both domestic and foreign, to deprive them of assets which are substantially in excess of any reasonable expectation of their official wealth, unless they can prove that they are legitimate.

Of course, confiscating the illicit assets isn’t the only issue. You have to find them. Detecting corrupt flows in the first place is difficult. Increasingly sophisticated methods are used to disguise beneficial ownership including through the use of corporate vehicles and trusts. Financial institutions and professional service firms need to be much more active in uncovering suspicious funds and stopping corrupt flows flowing through their institutions.

The recommendations for improvement to the success of the confiscation regime in the NAO report seem sensible. However, it concludes that whilst the UK Government wants to reassure the public that “crime does not pay”, it accepts that the present system is not working well enough. Without the more radical change, the reality is that the UK will continue to allow the corrupt to act with impunity on our doorstep. The situation remains pressing and untenable.


Antonio Suarez-Martinez is a partner at Edwards Wildman. Antonio is an expert in asset recovery matters and worked on the Transparency International UK paper Closing Down the Safe Havens.


Read 8524 times Last modified on Tuesday, 24 November 2015 11:47


The TI-UK blog features thought and opinion from guest writers as well as TI staff. Any opinions expressed by external contributors do not necessarily reflect the views of Transparency International UK.

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