Closing the Loop

The UK has long been a key conduit and destination for the proceeds of corruption from around the world. While estimates differ, the total scale of these money flows is well into the billions. These are vast sums being stolen, depriving communities of money that should have been spent on essential services and other public goods.

Recently, the UK has taken steps towards increasing the rate at which these funds have been frozen, investigated, and recovered. Despite still being a fraction of illicit financial flows going through our economy, these amounts are now substantial – over £1.3 billion between 2005 and 2024, and growing. The challenge now is to ensure the efforts of law enforcement and prosecutors were not in vain, and to guarantee this wealth makes its way back to its rightful owners, as far as they can be identified.

Yet returning assets responsibly is not a straightforward task. Simply handing over substantial sums to a state with significant governance or corruption problems risks giving money back to those who stole it in the first place. In one return to Pakistan, the UK’s approach caused a major political crisis, contributing to the fall of the then Prime Minister and sending the country into turmoil. Getting this process right is absolutely crucial to avoid wasting scarce public resources here and hard-earned diplomatic capital abroad.

The UK has long positioned itself as a leader in this space, being a driving force behind global principles for transparent and accountable asset return in 2016, and more recently developing a clear set of guidelines for wealth repatriations. The latter is particularly welcome, providing more details on the mechanics of restitutions that should help it avoid repeating the mistakes of the past. But there is still room for improvement.

Many of the UK’s recent recoveries have been through the civil courts and settlements, which invariably contain no reference to the original crimes behind the money. This may be expedient for cash-strapped and risk-averse agencies, but it has led to money likely stolen from people abroad being pocketed in our public purse. Recognising the likely victims of these crimes, and seeking to benefit them instead, would demonstrate our continued commitment to securing justice and re-build the UK’s leadership on the global stage.

The UK could do more to involve civil society earlier in the returns process, both domestically and abroad. Seeking counsel on risks and approaches to return would not only bolster confidence in the process, but also help avoid diplomatic disasters that have blighted some past cases. And it could go further in improving transparency over both the process through which the funds were recovered, and their journey back to their
true owners.

While asset return is an inherently complex diplomatic task, it is one that we could improve through these low cost and common-sense tweaks to policy and practice. The UK is to host an illicit finance summit, which presents an opportunity for ministers to demonstrate leadership on accountable asset return. They can do so by adopting the 10 recommendations we set out in this paper, and encouraging other financial centres to do likewise.