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The City of London as seen from the Thames. Courtesy of Kim Hansen/Wikimedia

Unexplained Strategy: Putting Unexplained Wealth Orders to Work

Tom Keatinge
Commentary, 11 January 2019
Centre for Financial Crime and Security Studies, UK, Organised Crime, Europe
The government should use unexplained wealth orders to reduce harm, not reap headlines.

The eye-catching element of the British government’s response to economic crime has, during the course of 2018, been the much-anticipated debut of unexplained wealth orders (UWOs). These were designed, in part, to target the extensive wealth of corrupt and kleptocratic ‘politically exposed persons’ (PEPs) from non-European Economic Area countries that has been stashed in real estate and other valuable assets in the UK. Anti-corruption campaigners have high expectations of the way in which these new powers will be deployed – Transparency International UK claims to have identified £4.4 billion-worth of UK properties bought with suspicious wealth and has even offered a handy list of targets for the police to consider.

The government has done little to temper these expectations. In early 2018, as UWO powers went ‘live’ – and in the wake of the hit BBC TV series McMafia – Security and Economic Crime Minister Ben Wallace said ‘I have put pressure on the law enforcement agencies to use [UWOs] soon because too many government measures get passed but no one gets into the habit of using them’. Later in the year, following the successful defence of the first UWOs in the High Court in October, the National Crime Agency (NCA) committed to ‘seek to quickly move others to the High Court’ adding that the agency is ‘determined to use the powers available to … their fullest extent where we have concerns that we cannot determine legitimate sources of wealth’.

Yet is this (thus far not particularly well demonstrated) commitment to target the tools – such as enablers and Scottish limited liability partnerships – and the proceeds of corrupt and kleptocratic foreign officials, hidden often in plain sight in the UK, what is really required? Should valuable and scarce resources and funding be tied up in long, complex and expensive investigations where the chances of success and – most importantly – impact on UK criminality and the related harm inflicted on UK citizens, are so low? Would it not make more sense to commit these resources to tackling the proceeds of the serious and organised crime that, we are told by the home secretary, represent ‘the most deadly national security threat faced by the UK’?

At the launch of the UK government’s latest Serious and Organised Crime Strategy in November, the contradiction in the government’s policy was laid bare. Hosted in a five-star hotel with the City of London as its backdrop, supported by the ample references made by the minister to (again) the BBC series McMafia, the message seemed clear. The focus of government efforts is to be on ‘high-end money launderers’, their assets, laundered through complex corporate structures, and their facilitators (lawyers, accountants, corporate service providers and estate agents).

Yet in response to a question from this author as to whom will hold the government accountable for this effort, his response was, ‘my constituents’. A review of press reporting and crime statistics for the minister’s Wyre and Preston North constituency in Lancashire suggests that the activities of organised crime groups – particularly drugs trafficking – are almost certainly a far more pressing issue of concern for the minister’s constituents than high-end money laundering by ‘well-cut suits’ swanning around London.

Prioritising the deployment of scarce resources and funding against the unexplained wealth of organised crime groups not only makes political sense; it also makes strategic, tactical and economic sense. Firstly, on top of addressing the genuine concerns of voters, who on the whole are not directly affected by oligarchs and kleptocrats, the threat posed and harm inflicted by organised crime is real and – distasteful though it may be to admit – is in contrast to the relatively benign impact (from a harm perspective) of questionable wealth parked in London real estate or passing through the tills at retail establishments such as Harrods. Taking property and other assets off organised crime groups has a real impact. The house(s), car(s), holiday(s) and status bought with the proceeds of crime matter to the organised crime group bosses and to their wives (most often) and families that benefit too. Secondly, whereas targeting the corrupt gains of oligarchs and public officials will inevitably involve law-enforcement agencies in extended and expensive legal battles they can ill afford, members of organised crime groups are far less likely to engage or be able to afford lengthy legal representation.

While it may be eye-catching to target a £20-million house in Mayfair, the impact on ‘the most deadly national security threat faced by the UK’ and the lives of MPs’ constituents would be far better-served – and more likely to achieve meaningful outcomes – if the UK focused our law enforcement attention on the £250,000 house in Belfast, Manchester or Birmingham and empowered police forces outside the M25 to use these new tools against targets – used to living above the law – that are all-too well-known to them.

Should we turn a blind eye to those corrupt PEPs that take advantage of the financial and investment services that London has to offer to enjoy the standards of living available here? Absolutely not. But if we are serious about taking the fight to the criminals and removing the proceeds of the crime that allow them to live off other people’s misfortunes and hard-earned wages then the strategy promoted by the government should empower and support police forces across the country to do just that, in particular by building expertise in civil confiscation in wider UK policing beyond the NCA where the focus is confined to the high-end, multi-million targets. This should be the year when, finally, new and existing asset-freezing and confiscation powers are used against the criminality that threatens the lives of UK citizens every day in real life, not on TV.

Tom Keatinge is Director of RUSI’s Centre for Financial Crime and Security Studies.

BANNER IMAGE: The City of London as seen from the Thames. Courtesy of Kim Hansen/Wikimedia

The views expressed in this Commentary are the author’s, and do not necessarily represent 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

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