This Is Whats Missing From The Uks New Anti

Susan Hawley from Spotlight on Corruption walks us through the new Economic Crime Bill – and explains why it might be more bark than bite

Will the new Economic Crime Bill that the UK gov­ern­ment is now rush­ing through Parliament real­ly put Londongrad out of busi­ness? The gov­ern­ment says the leg­is­la­tion will help it get on top of Russian prop­er­ty in London, enforce sanc­tions, and bring more McMafia cas­es to tack­le cor­rup­tion and seri­ous and organ­ised crime. 

But there’s a risk the new mea­sures will be more bark than bite – par­tic­u­lar­ly if they aren’t cou­pled with a huge new invest­ment in law enforcement.

Let’s take the new reg­is­ter of those who own UK prop­er­ty from over­seas, which is intend­ed to tack­le the £170bn worth of for­eign-owned prop­er­ty in this coun­try. This leg­is­la­tion has been sit­ting on a gov­ern­ment shelf for four years.

It’s very wel­come that the gov­ern­ment is now fast-track­ing the reg­is­ter, but it con­tains some sig­nif­i­cant loop­holes. As it cur­rent­ly stands, it allows a 6‑month imple­men­ta­tion peri­od, giv­ing Russian oli­garchs plen­ty of time to shift their assets out of UK prop­er­ty. Meanwhile, there is noth­ing to stop peo­ple from ask­ing some­one to hold the prop­er­ty on their behalf as a ‘nom­i­nee’. What’s more, com­pa­nies that have prop­er­ty trans­ferred into their name are allowed to plead igno­rance about the iden­ti­ty of the indi­vid­ual who ulti­mate­ly benefits.

Ultimately, the reg­is­ter is only going to be effec­tive if the UK also fast-tracks leg­is­la­tion to make sure all the infor­ma­tion can be ver­i­fied at Companies House, and ensures there’s robust enforce­ment of the rules. The gov­ern­ment has vowed to do that, in a sec­ond bill com­ing in the sum­mer – but it has been promis­ing this leg­is­la­tion for sev­er­al years.

Next on the bill’s list are some wel­come changes to the UK’s McMafia regime (Unexplained Wealth Orders) to allow law enforce­ment to inves­ti­gate dodgy mon­ey. There hasn’t been any new use of these McMafia Orders since 2019 when the National Crime Agency (NCA) was hit with a £1.5m bill for try­ing one against the daugh­ter of the for­mer pres­i­dent of Kazakhstan. The Economic Crime Bill will make sure that law enforce­ment doesn’t get hit with huge costs when it brings rea­son­able cas­es to court. But for all their glitz, Unexplained Wealth Orders risk being a dis­trac­tion. They only help https://www.opendemocracy.net law enforce­ment to inves­ti­gate wealth – they don’t actu­al­ly enable any­one to con­fis­cate these assets, which is a sep­a­rate process. If the gov­ern­ment is seri­ous about actu­al­ly help­ing law enforce­ment to seize cor­rupt assets, these pro­tec­tions need to be expand­ed across all the dif­fer­ent tools that law enforce­ment uses to tack­le dirty money.

And final­ly – sanc­tions. The prime min­is­ter is keen on say­ing that the UK is impos­ing the sever­est sanc­tions on Russia after its hor­rif­ic inva­sion of Ukraine. Sadly, say­ing so does not make it so.

By Tuesday, the EU had imposed sanc­tions on 493 Russian indi­vid­u­als and enti­ties, includ­ing sev­er­al London-based oli­garchs. On Wednesday, it was impound­ing a super-yacht belong­ing to Alisher Usmanov, an oli­garch with sev­er­al UK man­sions. On Thursday, Igor Sechin – the CEO of Russia’s sec­ond-largest state-owned oil com­pa­ny Rosneft, and one of Putin’s clos­est allies – had his supery­acht seized in France.

But the UK has yet to sanc­tion major oli­garchs now on the EU’s list – includ­ing Igor Sechin and Nikolay Tokarev, the chief exec­u­tive of the Russian state-con­trolled oil and gas com­pa­ny, Transneft.

It’s all very well putting new bills on the statute book, but the UK’s track record on enforc­ing them is dismal

Meanwhile, UK sanc­tions enforce­ment is min­i­mal. In the past six years, the UK’s Office of Financial Sanctions Implementation (OFSI) has imposed just six fines, totalling £20.7m, despite reports of poten­tial sanc­tions breach­es of up to £1bn in 2019–20 alone. The UK hasn’t imposed a crim­i­nal penal­ty for sanc­tions eva­sion for 12 years. By con­trast, in the US’s sanc­tions body, OFAC has imposed 87 fines worth £1.5bn since 2017.

The bill will make it eas­i­er for OFSI to bring enforce­ment. But OFSI is going to require increased fire-pow­er if it’s going to make any dif­fer­ence – with just 40 inves­ti­ga­tors, it is dwarfed by OFAC in the US, which has more than 250.

It’s all very well putting new bills on the statute book, but the UK’s track record on enforc­ing them is dismal. 

Recent aid cuts and a 4.2% decline in the NCA bud­get over the past five years, along­side seri­ous cuts at the Crown Prosecution Service, mean that law enforce­ment is vast­ly out­gunned and out­ma­noeu­vred by wealthy klep­to­crats in the fight against corruption.

Unless the gov­ern­ment mas­sive­ly boosts invest­ment in law enforce­ment by cre­at­ing a new Economic Crime Fighting Fund, no num­ber of big new announce­ments and no amount of fan­cy new leg­is­la­tion is going to pre­vent London remain­ing the laun­der­er’s ulti­mate des­ti­na­tion of choice.

Original source: Author Susan Hawley, Open Democracy