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Pakistan’s recently elected Prime Minister Imran Khan speaks at the conference ‘Rule of Law: The Case of Pakistan’ in Berlin, 26 November 2009. Courtesy of Stephan Röhl / Wikimedia Commons.

High Expectations: The UK’s Role in Pakistan’s Fight Against Corruption

Tom Keatinge and Anton Moiseienko
Commentary, 26 November 2018
Centre for Financial Crime and Security Studies, Counter-Proliferation Finance, Pakistan, AML/CTF, UK, Organised Crime
Pakistan’s new government came to power 100 days ago vowing to fight corruption and recover looted national wealth. But the UK is integral to Pakistan’s anti-corruption effort, and London would be well-advised to help Pakistan achieve its objectives.

As the government of Pakistan’s Prime Minister Imran Khan marks its first 100 days in office, progress on one particular issue will be closely scrutinised: tackling corruption and, specifically, the recovery of previously looted national wealth.

In his electoral campaign and many of his subsequent speeches, Mr Khan has railed against the looting of the nation’s wealth by ‘a corrupt and predatory elite’, highlighting the extent to which billions of rupees have been stashed abroad.

Some see Mr Khan’s rhetoric as populist, playing to ‘the galleries of [the] angry Pakistanis who believe that all the ills of the country are due to the lavish lifestyles of the elite’. And so his speeches may be. But there is an important and consistent message – or request – in them, and one of which the UK should take note.

Whilst corruption, tax evasion and weaknesses in national financial crime controls are issues that Pakistan itself must address, other countries – none more so than the UK – have an important role to play in helping Mr Khan achieve his objectives.

Historically, the UK’s illicit finance engagement with Pakistan has focused on the flow of money leaving the UK for Pakistan. These funds mostly represent the proceeds of drugs and earnings from other forms of organised crime flowing to Pakistan. In 2015, the UK’s first National Risk Assessment (NRA) of Money Laundering and Terrorist Financing noted that Pakistan is one of the top two outbound destinations from the UK for undeclared cash detected at the UK border, a large element of which is adjudged to be linked to criminality.

This NRA was followed by a more refined second edition in 2017. The politically unpopular ranking and accusatory tone was not repeated, and a more shared picture of risk was painted, noting the combined exposure the UK and Pakistan had to money laundering, given the considerable remittance and business links that exist between the two countries. Nevertheless, the focus of the UK’s engagement with Pakistan on criminal finances remained predicated on the threat posed by Pakistan-based organised crime groups to the UK.

In contrast, the role the UK – and London in particular as revealed by the Panama Papers – plays in attracting and hiding illicit finance (primarily the proceeds of corruption and tax evasion) from Pakistan is only sparingly addressed in UK risk assessments. In 2018, the UK’s National Strategic Assessment of Serious and Organised Crime has, for the first time, listed Pakistan as one of the top three source countries of politically exposed persons (PEPs) investing in the UK. The Assessment also acknowledges the uncomfortable truth that ‘[t]he UK is a prime destination for foreign corrupt PEPs to launder the proceeds of corruption’.

Many in Pakistan would agree. It is this flow of funds from Pakistan to the UK that Mr Khan is targeting. And as a recent field trip to Pakistan by the authors of this analysis indicated, it is this flow of funds that looms large in the view of many Pakistanis, from bankers to serving and retired government and military officials. London – and in particular its property market – has been the subject of extensive reporting in the Pakistani media and is seen as an irresponsible facilitator of the looting of the state’s assets by the corrupt elite. Inevitably, the role Pakistan plays as a destination for criminal finances from the UK is barely acknowledged.

Expectations of how the UK will assist the Khan government’s anti-corruption mission are high, and the UK authorities encourage these hopes. A visit to Islamabad by British Home Secretary Sajid Javid in September included the announcement of ‘a new UK-Pakistan partnership on accountability to tackle illicit finance’ including the provision of £500,000 to support Pakistan’s ability ‘to pursue money launderers and to recover assets’. 

Awareness of the UK’s new Unexplained Wealth Order powers, introduced via the UK’s Criminal Finances Act in 2017 and deployed cautiously since, is high in Pakistan, fuelling hope that the task force set up by Mr Khan to repatriate wealth looted from the country will achieve striking success where the UK is concerned. However, few people realise that Unexplained Wealth Orders are an investigative tool and, unlike Pakistan’s National Accountability Ordinance of 1999, UK law does not make it a criminal offence to have assets beyond means). Still, a recent visit to the UK by Mirza Shahzad Akbar, Special Assistant to Prime Minister Khan on Accountability, included discussions with the British Home Secretary and the UK Prime Minister's Anti-Corruption Champion John Penrose on curbing money laundering and the recovery of assets acquired through illegal means.

Mr Khan’s commitment on this topic – politically motivated or otherwise – is welcome, and no doubt framed to appeal to his followers as an indication of an early intent to meet one of his election commitments; progress is event-tracked by a smart new website. But it is the tip of a much larger problem that law enforcement authorities in the UK have been grappling with for years: the attractiveness of London as a destination for wealth looted from a wide range of countries with kleptocratic leaders and corrupt public officials. The UK has made firm commitments to tackle this well-deserved, if hardly attractive, reputation, an effort from which Pakistan’s authorities and its people fully expect to benefit.

Indeed, expectations of success are high in Pakistan; every newspaper is filled with reports and updates on the progress being made by the country’s various agencies charged with tackling corruption and the repatriation of funds hidden abroad. The success of these efforts will inevitably be linked to the willingness of the UK to be a cooperative partner, but also, crucially, the impartiality and credibility of Pakistan’s judicial processes. 

For the UK, the risks of not offering a helping hand are high; the UK’s reputation as a fruitful partner in the repatriation of stolen assets is poor. The British government’s rhetoric on illicit finance – most recently repeated at the launch of the Serious and Organised Crime Strategy – is unequivocal, yet in countries such as Pakistan the perception of Britain on this score is, at best, one of a hapless beneficiary, and at worst, an active facilitator of the theft of national wealth.

Thus, whilst UK law enforcement may wish Islamabad to cooperate on the role Pakistan plays as a source of threat to the UK and an outbound destination for organised crime finances, a failure to meet expectations on what the Khan government wants from London will almost certainly strengthen the case of those in Islamabad, Karachi and Lahore that view the UK as part of the problem, not part of the solution.

BANNER IMAGE: Pakistan’s recently elected Prime Minister Imran Khan speaks at the conference ‘Rule of Law: The Case of Pakistan’ in Berlin, 26 November 2009. Courtesy of Stephan Röhl / Wikimedia Commons.  

The views expressed in this Commentary are the authors’, and do not necessarily reflect those of RUSI or any other institution.

Author

Tom Keatinge
Director, Centre for Financial Crime and Security Studies, RUSI

Tom Keatinge is the Director of the Centre for Financial Crime and Security Studies at RUSI, where his research focuses on matters at... read more

Anton Moiseienko
Research Analyst, Centre for Financial Crime and Security Studies

Anton is a Research Analyst at RUSI’s Centre for Financial Crime and Security Studies. His current research covers a range of financial... read more

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