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UK must end its role as a safe haven for corrupt money from Russia

Written by Ben Cowdock on Friday, 23 March 2018

Following the attempted murder of Sergei Skripal and his daughter in Salisbury, the Prime Minister has confirmed that it is “highly likely” that Russia was responsible and has led international condemnation of the Kremlin, vowing to “bring all the capabilities of UK law enforcement to bear against serious criminals and corrupt elites.”  Most welcome though it is, it should not have taken an incident of this magnitude to prompt such a response. Corrupt individuals and repressive regimes have become accustomed to acting with impunity in the UK as we provided them with a safe haven and a place to hide their wealth.

For years our relaxed approach to regulation has allowed a corrupt global elite to treat the UK as their own personal playground, spending ill-gotten gains on homes, luxury goods and even private education.  The UK’s laid back attitude helps corrupt state actors cement their positions of power. Unlike your conventional mafia, however, they have a state apparatus at their disposal.

Such assaults on UK soil are not unprecedented. Alexander Litvinenko is reported to have fallen out of favour with Putin after challenging corruption at the FSB when they both worked there. One of his final acts was to blow the whistle over an assassination attempt on the oligarch Boris Berezovsky. Sanctions in response to Litvinenko’s murder did little to prevent criminal elements moving money from Russia to the UK.

Whilst clearly not all wealthy Russians in the UK have grown rich by corruption, over the last decade or so, kleptrocrats from Russia have continued to launder unfathomably large sums through the UK – money that has been plundered from state coffers and solicited in bribes. Estimates vary, but the National Crime Agency indicates that tens to hundreds of billions of pounds a year in illicit wealth are laundered through the UK from around the globe. Recent investigations by journalists at the Organised Crime and Corruption Reporting Project (OCCRP) suggest this estimate is certainly in the right ballpark.

Far from trying to stop this looting, some of the UK’s network of professional enablers have actually provided a helping hand. Our businesses and lax company law have allowed this money to be stolen, our banks process these payments, our property market provides an attractive investment opportunity for these funds, and the financial secrecy available in our Overseas Territories and Crown Dependencies helps hide the paper trail. Loopholes in our immigration checks for wealthy investors will undoubtedly have allowed some of those complicit in these activities to gain residence and citizenship here.

Beyond being an end destination for illicit wealth, even our democracy has been left vulnerable to manipulation by corrupt and repressive regimes. We have seen state-backed attempts to gain political influence through Westminster lobby groups and alleged fraudsters seeking-out UK PR firms to help alter Western sanctions policy. RT – the Russian state broadcaster sanctioned for producing misleading content on Ukraine and Syria – has paid UK politicians to appear as guests and even hosts in the past, lending legitimacy to a platform which acts as a mouthpiece for the Kremlin.

Last week the Prime Minister vowed to “bring all the capabilities of UK law enforcement to bear against serious criminals and corrupt elites.” This is the correct approach: law enforcement and our judiciary operate independently of political directions, and any action should address high value money laundering regardless of the nationality of the beneficial owners. These bold words came hot on the heels of the very first use of new police powers to investigate suspicious wealth in the UK, a promising start to pursuing those who have hidden dirty money here.

The UK should seek to build on this by applying these powers to more of the billions of pounds in property bought here with suspicious wealth, not allowing considerations of foreign relations to become a brake on their use. The effectiveness of these powers would be increased if there was transparency over who owned property here. To enable this and unveil the real owners of around 85,000 UK properties purchased using anonymous companies, the UK Government should accelerate plans to implement the now much-delayed property register.

These are measures that the UK Government has committed to, but there is more to be done to ensure we no longer provide a hospitable environment for criminal actors. It’s time the UK Government stopped defending the secrecy of its Overseas Territories and Crown Dependencies which offer corrupt individuals anonymous companies to hide behind. We must also wake up to the likelihood that the Tier 1 (Investor) visa system was abused by the corrupt prior to 2015 and seek to clarify who gained golden visas during this time, carrying out source of wealth checks on those with suspicious funds.

Whilst dirty money is able to flow freely into the UK, associated state actors will feel emboldened to act with impunity. This comes at the cost of the people they govern as well as those living here in the UK. The UK should adopt a resolute posture, sending a robust message to corrupt elites around the world that their crimes and corrupt wealth will no longer be tolerated here, denying entry where necessary and seizing assets bought with illicit funds. Only by doing this will the UK earn a reputation as a place where the rule of law stands strong against those who have grown used to their power being unrestrained


Read 709 times Last modified on Friday, 23 March 2018 16:05

Ben Cowdock

Ben is Investigations Lead at Transparency International UK, responsible for leading research into corrupt money entering the UK. He holds an MA in Governance and Corruption from the University of Sussex.

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