Dirty money in the UK

 Predictably, there is much press anguish (February 2022) at the possible fate of the Ukraine. Russian "aggression" has been highlighted and various sanctions have been proposed. But, as Edward Lucas, points out there is hypocrisy here in the UK and it has been around a long time. (See his article of 2020 below ) For further reading see Oliver Bullough - Butler to the World: How Britain became the servant of tycoons, tax dodgers, kleptocrats and criminals.

"Behind the bombast is another uglier story, in which Britain stands out not for its mettle in resisting the Russian regime but for aiding and abetting it. Kremlin cronies have for years used London to launder their reputations and ill-gotten gains. An army of bankers, lawyers, accountants and fixers make their own smaller fortunes through this trade...

The money flows through impenetrable webs of offshore and onshore companies, trusts, and partnerships, which confer bullet-proof anonymity and unaccountability. Nosy journalists face crippling threats (I write from experience). This protects kleptocrats and rots our system...

One reason for inaction may be the role that wealthy, murky figures, often with Russian connections, play in the Conservative Party's finances. From the shadows of Whitehall, I hear repeated grumbles that the prime minister is personally resistant to any discussion of the issue.

Another is that the problem goes so deep. For all the government's tub-thumping, Russia is exploiting our national business model: servicing rich foreigners... This features fast-track visas and expert financial advice, plus hobnobbing with minor royals, the chance to endow an Oxbridge institution and even the prospect of a gong. From Azerbaijan to Zimbabwe, foreigners flock to take advantage.

Keeping loopholes open for the super-rich means that money-laundering and fraud go unpunished. White-collar criminals enjoy near-total immunity...

Our hypocrisy discredits us in the eyes of ordinary Russians, who dismiss our talk of liberty, legality and solidarity with allies as mere camouflage. Our east European friends may say thanks for our tanks but they worry about our banks - and our trustworthiness.

An admirable Russian exile, Roman Borisovich, runs "Kleptocracy Tours", a bus trip through central London, where people such as me provide the commentary, highlighting the palaces and penthouses owned by rich Russians and their extraordinary political connections. We are constrained only by time and the threat of libel. We are inviting MPs to the next one. Liz Truss should come.

(Edward Lucas, The Times, 2022) 

Letter

Maybe Boris Johnson could help ease tensions in Ukraine by inviting President Putin to a party (or a work event codenamed BORIS - Bring Own Red In Suitcase).

(John Enoch, Bexhill-on-Sea, East Sussex, The Times, 2022)

Dirty Money

Tartar Robbers Dividing Spoil
William Allen (!782-1850)
Photo Credit: Tate [ CC BY-NC-ND]

... It may be too sweeping to say that foreign sleaze-mongers have Britain in their grip. But it is undeniable that even the modest efforts made by David Cameron's government after an "Anti-Corruption Summit" in London in 2016 have largely fizzled.

Britain is nudging its overseas territories and crown dependencies towards more transparency. But these places are just a conduit. Few people retire to mansions in the British Virgin Islands or Nauru. They splash their cash onshore: notably in Britain, where they vigorously protect their wealth and privacy.

Kleptopia: How  Dirty Money is Conquering the World, a new book by the investigative journalist Tom Burgis ... unpicks the filthy flipside of globalisation; the overlap between international crime, abuse of power and our supposedly respectable financial system. The stories it tells are exotic: brave Kazakh strikers being raped in prison, gullible Italian officials colluding in a state-sponsored abduction, dodgy Swiss bankers smuggling diamonds to America in toothpaste tubes, phoney malaria diagnoses covering up murders in Missouri. But in each case the trail leads back here.

We should be ashamed of this and fearful of its consequences. Dirty money is soaked in blood and stinks of misery. By laundering it we corrupt ourselves. Our bankers, lawyers and accountants, who should be our system's gatekeepers, earn fat fees by flinging open the doors. The next line of defence should be the regulatory and supervisory bodies. But here the book paints a dismal picture of timidity and inaction.

... Britain is not the only culprit. Donald Trump is an archetypal denizen of this world of dodgy property deals, dud loans, and spooks-turned-crooks. It is hardly surprising that as president he has become the kleptocrats' champion. But the American criminal justice system still takes white-collar lawbreaking seriously. Ours does not.

... Are we a democracy, run by and for its citizens? Or a nicely camouflaged kleptocrats'  paradise? Let us hope that we still have the choice.

(Edward Lucas, The Times, 2020)

We, as a country, have known about this for years and years and still no radical solution has been highlighted by those in power.

*The US Treasury labelled Britain a "higher-risk" country for money laundering, likening it to notorious financial centres "such as Cyprus", according to the leaked Fincen files.

More companies registered in the UK were named in the "suspicious activity reports" sent by banks to the US Financial Crimes Enforcement Network than for any other country. In total, 3,282 British companies, including 100 at a single address in the home counties, were cited in the documents.

The leaked reports appear to confirm long-held suspicions that Britain is awash with dirty money as underworld groups and corrupt politicians from around the world use UK companies to launder the proceeds of crime.

... The leaked reports, which cover the years 2000 to 2017, show that British banks allowed companies they suspected of fraud or money laundering to move millions of pounds. They also show that leading City institutions had inadequate systems for monitoring suspicious activity and failed to take concerns seriously when challenged.

(Andrew Ellison, The Times, 2020)

Justice
unknown artist
Photo Credit: Torquay Museum [CC BY-NC]

*As soon as the government knew this week's leak of suspicious banking transactions - the so-called FinCEN Files - was on the way, it rushed out proposals to reform Britain's wild west company law. These would, said business minister Lord Callanan "enhance the UK's global reputation as a trusted and welcoming place to do business" - which it certainly is for kleptocrats.

But plans to make the ultimate owners of shell companies verify their identity are yet another minor tweak for a problem of international political proportion. They fit  a pattern that has persisted as long as the Eye has been exposing money laundering: action in appearance only. Thus British banks continue to wash corrupt money with abandon. Since new rules arrived in 2007, just 12 banks have been fined for money laundering - by piddling amounts compared to their profit from it. None has been prosecuted.

(Private Eye, No 1531, 2020)

Can't the Chief Executives of the banks in question be put on trial and jailed, if found guilty? If not, why not?