UK ‘Reluctant to Investigate Suspect Transactions’

Despite becoming a cornerstone of prime minister David Cameron’s agenda, the UK still struggles with preventing, stopping and recovering corrupt assets laundered in the country, alleges a report by Transparency International-UK.

The report cites the UK’s legal regime, which prevents it from being an effective player in the area of asset recovery, despite estimates from the National Crime Agency (NCA) that about £100bn (US$153bn) is laundered through the country annually.

Relatively few suspicious activity reports are acted on by authorities, who overly rely on convictions in the origin country before seizing and repatriating assets, the report said.

TI-UK convened a task force of experts from academia, legal practice and academia, who analysed 14,000 ‘consent’ suspicious activity reports filed in 2014. According to the study, these require UK law enforcement to approve a suspicious transaction before the financial institution completes it because the reporting firm believes doing so would invite regulatory or criminal punishment.

UK law enforcement refused consent on seven suspicious activity reports relating to grand corruption, out of the 94 filed in 2014, the report said. The TI-UK task force found that many of the suspicious activity reports are not refused consent “simply due to a lack of resources” to investigate within the available timeframe, which is seven days to refuse consent, and 31 days to get a court order to freeze the account.

The task force found, after talking with law enforcement and legal experts, that the 31-day time period is insufficient for investigating complex corruption cases.

“We think the UK approach to recovering proceeds of corruption isn’t really delivering the required results, and the current legal powers aren’t fit for purpose,” said Nick Maxwell, head of research at TI-UK.

Strengthened legal and regulatory authority would improve UK efforts in recovering corrupt assets, according to the report, which suggests that the UK asset recovery regime relies too much on the country from which the money was stolen convicting the individual who stole it. This reliance, the report said, makes completing a UK case difficult, not least because it can take years, even decades, before the alleged money laundering comes to light.

“Waiting for political will on both sides, and for well-resourced and independent investigative and judicial capacity in the origin state, is producing a mere trickle of results against a torrent of corrupt illicit funds,” the report said.


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