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UK’s anti-money laundering measures need complete reset, says report

Un-policed and often unenforceable anti-corruption laws have made the UK the global money-laundering capital for a post-Soviet Union elite, severely damaging Britain’s international reputation and the rule of law, the London-based thinktank Chatham House says in a report.


Un-policed and often unenforceable anti-corruption laws have made the UK the global money-laundering capital for a post-Soviet Union elite, severely damaging Britain’s international reputation and the rule of law, the London-based thinktank Chatham House says in a report.

The research calls for new measures to constrain what it described as a near-self-regulated army of professional enablers – accountants, lawyers and reputation managers – that service Russian criminals in the UK.

Urging a complete reset in the government’s laws to combat money laundering, the report by coincidence will be published later on the day that the foreign secretary, Liz Truss, is due to address the thinktank about the UK’s foreign policy priorities. It was authored by leading researchers from the universities of Exeter, Oxford, Cambridge and Columbia (New York) and was funded by the Foreign Office’s own anti-corruption evidence programme.

The report urges ministers to recognise that Britain’s laws do not simply help organised crime, but are a way for kleptocratic authoritarians to launder their illegal assets and remain in power.

“The British government has placed combating serious organised crime at the centre of its foreign policy, but often fails to recognise the intimate connections UK society and institutions have with kleptocratic states and their elites, the latter of which continue to find a home-from-home in London,” it says.

It finds there is “a failure of enforcement by the National Crime Agency (NCA) and other UK state bodies, as expensive and capable lawyers (hired by members of transnational elites or their advisers) defeat or deter the regulators’ often weak and under-resourced attempts to prosecute politically exposed persons”.

The report unpicks the failure of the key anti-corruption pillars on the statute book, and finds most of them wanting, especially the requirement for regulated industries to flag potential corruption to the NCA by filing suspicious activity reports.

In 2020, regulated industries filed 573,085 SARs – 20% more than in 2019 – the vast majority of which (75.4%) were issued by banks. The report describes this level of reports as a risk-averse response that is also risk-insensitive, pointing out that the NCA Financial Intelligence Unit has only 118 employees to scrutinise SARs. By contrast, only 861 SARs were issued by estate agents in 2021, compared with approximately 1,500 issued by legal professionals in relation to property deals.

Proposing a slew of changes to the law, the report concluds: “Without actively complicit service providers facing prison and negligent ones facing punitive fines, it is hard to see how transnational kleptocracy can be arrested in the UK, however well-drafted the law.”

The report highlights the adoption of only four “unexplained wealth orders” since the measure was introduced with fanfare in the Criminal Finances Act 2017. An UWO allows for assets to be seized if, on the balance of probabilities, the wealth has been obtained illegally. None have been issued since 2019. One reason for the failure, the report says, is that seizure is permitted only if the assets are thought to have been acquired through an activity that is illegal in the original country. If the original country is itself a kleptocracy, the activity is unlikely to have been deemed illegal.

The report also points out that the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) – a UK government body set up to oversee the professional bodies that supervise legal and accountancy firms and companies in regard to their anti-money-laundering procedures – found that the vast majority (81%) of the 22 professional bodies had not implemented an effective risk-based approach, and only one-third of them were effective in developing and recording adequate risk profiles for their sector.

The authors say the only success has been the little-known arrest freezing orders that allow UK law enforcement bodies to freeze the contents of a bank account if they can show reasonable grounds to suspect that money in an account was obtained through unlawful conduct or is intended for unlawful use.



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The United Arab Emirates, a hub of international commerce, announced Tuesday that it would shift its weekends to bring them more in line with the Western calendar and global markets, once again showing its willingness to part ways with its Arab neighbors. The government declared a four-and-a-half day workweek, moving the weekend from Friday and Saturday to Saturday and Sunday. It made Friday, the Muslim holy day, a half-day of work that ends at noon, just in time for the communal prayer that is normally held in mosques and customarily observed by Muslims. Like Sunday for Christian communities in the West, Friday is customarily the day Muslims take off to worship and unite with family and friends, and in most Arab countries, the standard workweek is Sunday through Thursday. Changing that practice, experts say, shows just how ready the U.A.E. is to forgo tradition in order to attract foreign investment and talent. In a statement, the Emirati government said the new weekend, which will begin on Jan. 1, “enhances the integration of the national economy with the various economies and global markets and ensures the matching of the days of exchanges and commercial and financial transactions.” Private businesses can set their own workweeks, but the new schedule, which applies to government agencies, creates a new set of expectations. The U.A.E., an oil-rich state on the Persian Gulf, has long been a commercial and tourism center, heavily dependent on a foreign work force that outnumbers its citizens. It attracts international workers with high wages and low taxes and a relatively safe and socially liberal atmosphere that circumvents religious traditions such as prohibitions on alcohol and conservative dress codes. Last year the country made a striking new set of changes to offset the impact of the pandemic on the economy and continue to cast the U.A.E. as a desirable place to live and work for foreigners. It introduced tougher laws against the harassment of women, allowed unmarried couples to live together and completely decriminalized the consumption of alcohol. And in January, it opened a pathway to citizenship for expatriates. “Once again, the Emirates sets itself as a pioneering country that’s looking to the future in a brave and flexible way,” said Nabil al-Qadi, president of Khawarizmi International College, a private university in Abu Dhabi, the Emirati capital. “I don’t see any conflict between the decision and religion or the fact that Friday is a holy day.” While the U.A.E. has become more liberal socially, politics are a very different matter. The country is a federation of seven monarchies, where dissenting voices are rarely heard or tolerated. Top-down decision-making gives the ruling sheikhs unchallenged control over policy, which can yield sharp turns that surprise U.A.E. residents and the rest of the region. One landmark moment came in September 2020 when the emirates announced they would normalize relations with Israel, a step that most other Arab countries — and all other Gulf states — have opposed, or at least been reluctant to take. “The Emirates has always had its own vision and way,” said Abdullah Baabood, an Omani academic and former director of the Gulf Research Center at Cambridge, pointing primarily to its decision and the speed with which it pursued normalizing relations with Israel. “And many of these matters are somewhat perplexing for the average Arab citizen.” But for many living in the U.A.E., Tuesday’s announcement introduced another tantalizing prospect. At a time when the pandemic has prompted renewed conversations around flexible working styles and four-day workweeks, changing the weekend and making Friday a half day appears to offer a more manageable schedule and a longer break. “I like it because I work with my foreign offices in Europe and now we’re aligned,” said Yasmeen Seif, an American-Egyptian communications director for a luxury fashion company. She moved to Dubai, the largest city in the Emirates, 13 years ago, and found a place that embraced elements of both sides of her identity — a place that was Arab and has appeal and good marketing, she added. “All I hear people talking about now is what are we going to do about the Friday brunch,” she said.

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