‘Great rhetoric, now act!’ Fight money laundering, anti-corruption group tells govt

© Transparency International UK
Government proposals to crack down on vast sums of dirty money pulsing through the heart of Britain are welcomed, but must be backed up by bold action, Britain’s leading anti-corruption think tank says.

Plans to reveal the true beneficiaries of far-flung secretive shell companies, used by criminal syndicates to hide ill-gotten gains, are expected to be announced by Prime Minister David Cameron at an anti-corruption summit in May.

In excess of 36,000 UK properties are owned through opaque offshore firms, valued at up to £170 billion (US$244 billion).

The government’s new proposals would pave the way for these firms to name those who have primary control over key transactions on a public register. Only the firms that opt to comply would be permitted to purchase and sell property in Britain.

At present, it remains unclear whether these rules will apply to roughly 100,000 offshore firms that own property in the UK, or merely new real-estate purchases.

‘Bold rhetoric requires bold action’ 

Transparency International (TI) UK has welcomed the proposed reforms, but warns “bold rhetoric needs to be backed up by bold action.”

The anti-corruption think tank says the changes are vital, but adds it is imperative they are “not shot down” by powerful, self-serving lobby groups that have no genuine interest in reform.

While owning real-estate via a shell company is legal in Britain, offshore firms are shrouded in secrecy – allowing the ultimate owners of these properties to bask in anonymity.

As it currently stands, criminals who use shell companies to evade tax or launder dirty money do not appear on public registers, meaning they are largely immune from international law-enforcement bodies.

While these fraudsters remain unaccountable, offshore firms route their financial proceeds through an opaque and complex global financial system that cuts right through the heart of Britain.

TI UK says dirty money laundered via the UK entrenches human misery in the world’s poorest nations, shattering the lives of millions in the process. This argument is backed my multiple human rights NGOs worldwide.

Panama Papers scandal & UK corruption 

News of government plans to reveal the true beneficiaries of far-flung shell companies follows the highly-controversial Panama Papers leak, which sparked a year-long probe into the activities of Panamanian law firm Mossack Fonseca.

Of the 214 corporate actors exposed, 50 percent were registered in the British Virgin Islands, a UK Crown Dependency. Britain was the second most popular state for the disgraced law firm to operate in, according to TI UK.

Research conducted by the International Consortium of Investigative Journalists (ICIJ), which worked with German newspaper Suddeutsche Zeitung on the leaked data, shows Mossack Fonseca collaborated with 1,924 UK professionals to set up offshore firms, trusts and foundations for clients.

Dubbed the most prolific leak in offshore history, the secret files include 11.5 million records, some of which date back to the 1960s. The data also spans 214,000 offshore firms linked to individuals in more than 200 states and territories. Among these individuals are white collar criminals, drug traffickers, billionaires and sports celebrities.

Empty rhetoric?

Under separate proposals announced by Britain’s Home Office on Thursday, suspected white collar criminals guilty of money laundering in the UK could be stripped of their assets if they are unable to prove the origins are legitimate.

A government consultation, published in advance of next month’s anti-corruption summit, deals with these so-called ‘unexplained wealth orders’. The policy, which calls upon financial institutions, accountants, and law firms to take special measures when dealing with suspect firms, has already been implemented in other states.

TI UK’s executive director Robert Barrington has welcomed Westminster's proposed reforms, but says “the proof of the pudding” will be in whether these policies are put into action.

“The powers that are envisaged could make a real difference and, while it is important they are properly debated in parliament to allay any concerns over civil liberties, it is equally important that they are not watered down by self-interested lobbying during the consultation process,” he said.

Barrington argued it is imperative the government stand by its previous pledge of pushing Britain’s Crown Dependencies and Overseas Territories to bring in public registers of beneficial ownership.

“While the mood music is positive, giving [UK] law enforcement agencies sufficient resources will be a fundamental part of making this work,” he added.

Earlier this month, TI UK published a scathing analysis of Britain’s role in the murky world of global corruption. The report, titled ‘Paradise Lost: Ending the UK’s role as a safe haven for corrupt individuals, their allies and their assets’, laid out a number of key concerns.

Among these, are the ease with which investors can purchase property anonymously in Britain, the manner in which British Overseas Territories shroud company ownership in secrecy and TI UK’s perceived powerlessness of UK law enforcement agencies’ ability to seize ill-gotten gains.

The report also expressed concern over accountants, lawyers, estate agents and other “professional enablers” who are complicit in money laundering schemes.