Dirty money: how to control the flow of corrupt wealth

A review of more than 400 money laundering and corruption cases in the UK has revealed the scope of potential beneficiaries of dirty money.

Transparency International UK has published a report, which exposes the spending habits of corrupt members of the global super-rich. It also highlights the roles that banks, financial institutions, law firms and accountancy firms have played, whether unwittingly or otherwise, in helping holders of corrupt or suspicious wealth to obtain, move and defend:

• 2,225 companies incorporated in the UK, including Overseas Territories and Crown Dependencies;
• 421 properties in the UK worth more than £5 billion; and
• 7 luxury jets worth around £170 million.

The report identifies 118 luxury goods and services firms and 177 schools and other educational institutional institutions, which have afforded corrupt individuals the opportunity to spend their illicit wealth.

Aside from revealing the numerous jaw-dropping purchases of jewellery, hovercraft and £126,000 paid by a shell company for a corporate box at Chelsea FC, Transparency International UK's investigation seeks to protect UK's global reputation as an open and accountable place to carry out business. In particular, the report advocates a tighter framework for unregulated sectors, which are increasingly becoming a target for money launderers. It also recognises that assisters to the distribution of funds obtained from corruption varies from the unwitting to the unscrupulous.

The report lays down ten key recommendations to encourage businesses to avoid scrutiny and to encourage a tightening of legislative control:

1. Support public corporate transparency of company ownership in the UK’s offshore financial centres;
2. Introduce transparency over overseas companies holding UK property;
3. Empower Companies House to increase the accuracy and reliability of the corporate register;
4. Businesses to apply ethical principles to guide their engagement with high-risk customers;
5. Help educational institutions make informed and consistent judgements about handling the donations they receive;
6. Extend money laundering threat assessments to key unregulated sectors
7. Reform corporate liability laws;
8. Radically overhaul the AML supervisory regime;
9. Consider extending the Senior Managers Regime beyond the financial sector; and
10. Adequately resource law enforcement agencies to pursue corruption and associated money laundering.

These recommendations seek to ensure the UK provides no place to hide, no one to help and no impunity towards corrupt individuals and conclude with a stark warning:

"As the UK seeks to re-negotiate its trading relationship with the world, these questions become even more important. If Britain wants to be a safe, reliable jurisdiction in which to do business, and where good governance and the rule of law are sacrosanct, then it must take measures to ensure its businesses meet the highest possible standards. Failing to do so would not only allow corrupt kleptocrats to continue plundering public money but would also leave the UK isolated; a rogue haven for dirty money floating off the coast of Europe."