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The UK has had an unfortunate history of corruption finding its way into the Capital’s property market and financial services. Leading London to be called the “laundromat” of dirty money. Therefore, it is important to understand, what is the problem? How did it arise? And what is being done?
Firstly, kleptocracy refers to (according to the Journal of democracy) a system in which public institutions are used to enable a network of ruling elites to steal public funds for their own private gain.
The UK’s legal and financial system has allowed for corrupt individuals to launder their money and maintain their reputation. This is due to the laws relying on private-sector companies to conduct the checks for potential money laundering. Further aggravated by banks over-reporting suspicious activity, which creates a bureaucratic stockpile for the UK authorities to process. This in turn allows for non-financial companies to under-report any dubious activity, and potentially turn a blind eye to unethical practices. When researchers and journalists have managed to discover such cases, the draconian libel laws have added a further layer of protection.
How Did This Arise?
This resulted during the coinciding events of the collapse of the Soviet Union and the UK’s repurposing of its oversea outposts, such as the British Virgin Islands. Kleptocrats used the collapse of the Soviet Empire to snatch the entire wealth of these countries to create a new class of oligarchs. At the same time, the UK turned its territories into hubs where actors could, in the wake of the economy globalising, place their money without being traced. This all meets in London, in which Financial Times investigative reporter, Tom Burgis, calls “where dirty money comes to party”.
What Is Being Done?
The poisoning of two innocent Russian individuals in Salisbury by Russian agents in 2018, and Vladimir Putin’s invasion of Ukraine in 2022, has finally caused the alarm bells to ring for the British government. This led to the government passing the Economic Crime (Transparency and Enforcement) Act in March 2022. This aimed to create greater transparency and provide greater power and information to investigative authorities to tackle wealth related crimes. However, it seems the effectiveness of this law has been called into question. This results as reports of Uzbekistan’s former dictator’s daughter, Gulnara Karimova, used UK companies to buy properties and jets with money she gained via corruption and bribery.
The growing geopolitical instability begs the question of how the UK is going to protect itself and allies from enabling its adversaries.
Image link: https://www.flickr.com/photos/11201702@N06/6254841679/in/dateposted/
Edited by: Freya Holland
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