WIREDGOV

EXPERT COMMENT

The UK has strong laws and regulations with regards to money laundering, but they are ineffective in tackling the ‘grey’ proceeds of kleptocracy.

In response to the recent revelations of the Pandora Papers, the UK’s Chancellor of the Exchequer Rishi Sunak claimed the UK is one of the best in the world at tackling money laundering – a debatable claim given, while the UK laws are robust, enforcement of them is often lacking.

But Sunak’s point misses the main issue anyway, because the majority of the Pandora stories are not about money laundering – the transference of illicit funds – but the proceeds of grand corruption or ‘kleptocracy’.

Such proceeds may include some illegal funds but most is money which is technically earned ‘legally’. For example a company owned by a family member of the country’s president may receive proceeds from a mining project – corruptly obtained but not necessarily illegal according to the law of that country.

According to Transparency International, in 2019 the value of this kind of money flowing into the UK could be in excess of £325 billion, a figure which is no surprise as the UK is the world’s largest net exporter of financial services. The ‘greyness’ of this capital allows it to pass into the UK’s financial institutions, real estate markets, universities, and even into the coffers of political parties.

Click here to continue reading the full version of this Expert Comment on the Chatham House website.