Money laundering via UK ‘too easy’


Published: Wednesday 10th June 2015 by The News Editor

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It is “too easy” to launder illegal wealth through the UK and the regime for seizing corrupt assets is “not fit for purpose”, a report claims.

Authorities have “limited powers” and must work in a system that is overly reliant on achieving a conviction against individuals in the country where the money was stolen, Transparency International said.

The charity said a “very large” amount of corrupt wealth, stolen from around the world, is invested in the UK.

A group of experts focused on suspicious activity reports (SARs) that businesses are required to submit to police if they are suspicious about a transaction or activity.

Data shows that there are around 14,000 “consent” SARs that are so suspicious that the private sector asks for permission from law enforcement to handle the transaction.

Transparency International said new figures revealed in its research suggest that only a small proportion of suspicious activity linked to the highest level of international corruption is acted on.

In 2014, a total of 94 consent SARs, which were potentially linked to the proceeds of “grand” corruption, were referred to the proceeds of corruption unit (POCU), which was part of the Metropolitan Police until it was moved to the National Crime Agency earlier this year.

Seven of the 94 referrals, which related to transactions or activity worth a combined £113.3 million, were deemed so suspicious that POCU refused consent for them to be completed, the study claimed.

It added: “However, this is recognised by law enforcement experts as only a very small proportion of the wider threat.”

It said that laundering the proceeds of corruption is not unique to the UK but the country is “well placed” to lead international efforts to recover them because of its position as a leading financial, real estate and luxury goods centre, as well as the quality and expertise of law enforcement agencies.

“The UK’s performance in freezing, seizing and recovering those assets, while relatively strong compared to other countries, is undeniably very limited compared to the scale of the threat,” it added.

Grand corruption has been defined by the United Nations as pervading the “highest levels” of government, leading to a “broad erosion of confidence in good governance, the rule of law and economic stability”.

Nick Maxwell, Transparency International UK head of advocacy and research, said: “The UK’s asset recovery regime is clearly not fit for purpose and it is far too easy for individuals to launder their corrupt wealth through the UK.

“This failure is down to the limited powers UK law and enforcement agencies have to seize corrupt assets. The UK is well placed to lead on international efforts to recover the proceeds of grand corruption.”

Transparency International suggested introducing a new civil tool called an “unexplained wealth order”.

Suspects issued with an order would be required to explain legitimate and legal sources of wealth for suspicious UK assets or transactions, provided there was sufficient initial suspicion of criminality.

This would allow law enforcement agencies in the UK to start questioning and acting on corrupt assets without having to wait for a prosecution in an individual’s home country, the report said.

It also recommended that an appropriate body, such as the Law Commission or a Parliamentary Committee, consider the paper as the basis for a more wide ranging review of powers to tackle grand corruption and money laundering in the UK.

The report said: “We believe that broader discussion is now required within government, in Parliament and in society about what steps the UK should take to stem the flow of corrupt money into the UK and what is a proportionate response to the scale of the threat and the harm.

“These questions go to the heart of what society and economy we want to have in the UK.”

A spokesman for the National Crime Agency (NCA) said: “The report raises some valid and interesting points that we now need to examine in detail as part of the ongoing UK Anti-Corruption plan actions.

“The NCA is committed to tackling corruption and bribery and appreciates the work undertaken by Transparency International. “

Published: Wednesday 10th June 2015 by The News Editor

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