On the face of it, the UK government has made good progress in implementing the actions of its 2019 Economic Crime Plan. According to one study, 80% of the actions are either complete or in progress. But there are also questions about the effectiveness and appropriateness of these actions – notably those related to the ‘international’ strand of the plan.

According to Tom Keatinge (A Muddled Mosaic: The UK Still Lacks a Coherent International Illicit Finance Strategy, published by RUSI on July 21, 2021) the international dimension is important, as while much of the Economic Crime Plan focuses on the home front, the domestic reforms it seeks to drive should have international impact.

“In fact, given that the UK is a global financial centre and that it is acknowledged by the government to be a destination or facilitator of a considerable portion of the laundered proceeds of corruption, kleptocracy and other financial crimes around the world, these reforms must have international impact if the UK is to address its reputation as part of the global financial crime problem.

“For example, passing the legislation to reform Companies House is not just of benefit to the UK; it should equally benefit citizens of those countries whose kleptocratic leaders take advantage of UK companies to launder their ill-gotten gains.

“The reputational damage the UK suffers internationally also appears to be well understood. The plan observes that ‘illicit financial flows harm [the UK] economy, as well as the integrity and reputation of [the UK] financial system’ – a point reiterated by the Statement of Progress published earlier this year, which noted that ‘The volume of money laundered in and through the UK undermines the country’s reputation as a fair, open, rules-based economy that instils business confidence, and gives citizens assurance in their institutions’. This matters given the weight the government has placed on financial services as an engine of the post-Brexit economy.”

Firstly, as already noted, the international strategy displays a lack of focus. Two years on, what is left seems to be more a function of available funding and Whitehall politics than what is most appropriate for tackling the UK’s role in facilitating illicit finance.

Secondly, the Statement of Progress leans heavily on the UK’s 2021 presidency of the G7 as an opportunity ‘to strengthen the global response to illicit finance and combat priority threats to the integrity of the international financial system’. This is naturally a welcome commitment but lacks details and any sort of pathway to impact; it also relies on partners taking actions which are beyond the control of the UK. Furthermore, when the plan was originally announced in 2019, no reference to leveraging the G7 presidency was made, which adds to the sense that this is less an international strategy and more a series of opportunistic grabs.

And finally, the action update on the international strategy provided by the government is lightweight, suggesting all actions are ‘ongoing’ with little detail on what this means beyond the creation of a series of initiatives that suggest a ‘pass’ for effort but not much more. Overall, it really is not clear what the government’s strategy is. There is certainly no evidence that responding to the international dimension of economic crime – the threat to the UK from the rest of the world and the threat the UK poses – is indeed a top priority; and what cabinet-level leadership there is comes solely in the form of the foreign secretary’s virtue signaling via the introduction of his Global Human Rights and Anti-Corruption sanctions regimes.

To be credible, the international strategy needs two core pillars.

“Firstly, action should be ramped up on the role the UK plays in global illicit finance and asset sequestration. An international strategy needs to reflect the centrality of the UK to global illicit finance, so it must focus on what matters to partners. The UK’s role in facilitating illicit finance is a festering foreign policy issue for the country – just ask allies such as the US. Partners need to see clearly that the government is serious about addressing the UK-facilitated illicit finance that impacts their countries. Words must be turned into clearly demonstrated and committed actions. The pledge in the government’s Integrated Review to ‘reinvigorate’ the response to illicit finance was welcome, but what does it mean?

“Bright spots such as the National Crime Agency’s International Corruption Unit and International Anti-Corruption Coordination Centre should receive the investment they need to grow their impact, and the UK should leverage its leading intelligence capability to genuinely contribute to efforts to identify and seize illicit finance.

“For many countries, the international commitment of the UK to combatting economic crime is measured in pounds returned to their national coffers. By that metric, the UK could clearly do better.

The UK makes much of its membership of the global financial crime watchdog, the Financial Action Task Force (FATF), and has recently set up an Anti-Money Laundering and Counter-Terrorist Financing Technical Assistance Unit to support official development assistance (ODA) funded countries in implementing international financial crime standards. In addition, the UK has made much of its G7 presidency, claiming it will capitalise on this ‘to strengthen the overall international response to illicit finance and anti-corruption’. Time is running out to grasp this opportunity. September’s interior ministers’ meeting must therefore be used to move beyond rhetoric to concrete operational and measurable commitments.”

Ultimately, the UK must build credibility, and avoid the government’s predilection for ‘bold and ambitious’ plans that fail to deliver. Achievable and measurable objectives will suffice. Is the country to be a global problem-solver that supports other countries to address their individual shortcomings as identified by the FATF? Or would the UK be better served by prioritising addressing its domestic shortcomings that impact partners around the world?

These two ambitions can coincide and be mutually reinforcing, but until the muddled mosaic of ambition is provided with the dedicated senior leadership, funding and vision that it requires, the UK is destined to remain a very central part of the international illicit finance problem.

Indeed, the performance of the NCA in a case involving a Pakistani tycoon whose assets amounting to £190m were seized (December, 2019) for being laundered and that too suspected to have been derived from bribery and corruption and handed over to the Government of Pakistan has remained largely inexplicable. By not taking any action against the person who laundered the money in the first place and then keeping mum when the government of Pakistan instead of depositing the money in the national treasury hands its over back to the very tycoon from whom it was recovered by the NCA, the Authority has been seen as having actually abetted in a glaring international crime. Unless the NCA rights this wrong, it will not be able to re-establish the integrity and reputation of the UK financial system.

But then NCA perhaps has done exactly what the UK has been doing for centuries – colluding with the kleptocrats of the other world in looting its people.

At the beginning of eighteenth century India’s share of the world economy was 23 percent, as large as all of Europe put together. By the time British departed India, after having looted it white it had dropped to just over 3 percent.

And here is how the rich now violate the rules of the game they themselves keep setting via the institutions that they have created like the World Bank, the IMF, the Asian Development Bank, the World Trade Organisation etc. based on principles of what is called the Washington Consensus:

They had agreed to give a small percentage of their income annually – just 0.7% – in international aid to poor countries. Chema Vera, Interim Executive Director of Oxfam International, estimates that had all donor countries kept their promise they would have donated, over the last 50 years, an extra $5.7 trillion to the recipients. S0, in his opinion, the rich owe as much to the poor countries.

Not content with what they have already siphoned off from the developing countries over centuries these rich countries of the first world have established as many as 55 offshore sites to enable their traders as well as their so-called multinational companies to shift their profits to tax havens to continue robbing the developing countries of their legitimate taxes.

The rich world over half a century or so has been siphoning off annually even what little the developing countries earn selling cheap their natural endowments, agricultural produce and mining extracts like oil and precious and non-precious metals by offering them in return at exorbitant prices weapons which they do not need.

As Honore de Balzac, the French novelist of 18th century said, ‘Behind every great fortune lies a great crime’.

Copyright Business Recorder, 2021


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