How the US and UK Can Respond to International Illicit Finance


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To protect democracy, the US and UK need to tackle international illicit finance at home and abroad. Doing so will require expectations to be managed.

As highlighted by the recent Pandora Papers, the US and UK play an important role in the way illicit finance moves around the world – either travelling through their financial and professional services hubs or finding its ultimate destination.

The US and UK have both committed to tackling this problem and have identified illicit finance as a threat to both countries’ national security. To tackle it, however, the US and UK must appreciate their role in facilitating international illicit finance and the extent to which they can help third countries that fall victim to illicit finance.

At RUSI, our Transatlantic Response to Illicit Finance Taskforce (TARIF) met for its second meeting in November to consider how the US and UK can reduce their role in enabling international illicit finance and assist third countries in strengthening their own defences against this threat. TARIF members made it clear that the key to a US/UK response to international illicit finance will be to manage the expectations of stakeholders across three fronts.

Managing Our Own Expectations

For the US and UK to have a substantive role in combatting illicit finance, they need to assess their roles and capabilities in both facilitating and frustrating these flows. This must begin with admitting their own shortcomings in this sphere. Historical and recent commitments to tackling corruption – such as those made at the Summit for Democracy – and illicit finance must be compiled in one place and deconflicted. Next, governments must decide how much political capital they are willing to expend on these efforts. Once commitments are streamlined and the political will to tackle this problem is acquired, policymakers must then determine what can be achieved with the resources that are available.

Managing Expectations of Partners

Once the US and UK have established their individual capabilities and willingness, they must then settle on what they can expect from each other. If the US and UK are to be a united front in tackling international illicit finance, they must commit to joint messaging on key topics. This should include the importance of transparent Ultimate Beneficial Ownership Registers, robust supervision of the professions, and well-resourced law enforcement. Together they should aim to standardise information sharing mechanisms to enable freer-flowing information on illicit finance between the two jurisdictions and with third countries. They should also lead the international community’s efforts in reinvigorating the work on asset recovery, streamlining current mechanisms. In any partnership, however, it will be crucial to acknowledge where differences may present a challenge to joint messaging or activities. Here, different legal cultures on key topics such as data privacy could be problematic.

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At the crux of the US and UK response to international illicit finance must be an appreciation that expectations on all sides need to be set and managed

Managing Expectations of Third Countries

Lastly, the US and UK must set the expectations of those they wish to help. An effective relationship with third countries requires that the scales first be rebalanced – moving from transactional interactions to effective and realistic partnerships, as reflected in the recent US Strategy to Counter Corruption. The US and UK must acknowledge the role they play in negatively affecting third countries, and in return, third countries need to reassess how practical their asks and expectations of the US/UK are in terms of the type of monetary and substantive assistance they request. Equally important, the US and UK should look at implementing measures aimed at emboldening civil society organisations and journalists. Civil society plays an important role in gathering information in third countries on illicit finance, but in doing so individuals may expose themselves to high personal risk, especially when sharing information with the US/UK. To assist civil society, the US and UK need to strengthen education on the international frameworks and norms by which elites should abide, and in return, civil society organisations and journalists could be granted access to various protective measures. By managing the expectations on all sides, the partnership can advance in a way that is beneficial to all.

Conclusion

A real danger in the fight against illicit finance is the loss of steam by those who have substantial roles to play. Ambitions fall prey to the undulations of continual reprioritisation of national needs and objectives. A truly effective approach to combatting illicit finance on an international level requires parties to spend more effort on ‘walking the walk as opposed to talking the talk’ – replacing hollow promises with substantive reforms that can hold their own against a reality check. Leaders must step up and remain accountable for their promises of assistance, ensuring that any prolonged actions can realistically remain funded and staffed, and withstand administration changes at home as well as in partner countries.

At the crux of the US and UK response to international illicit finance must be an appreciation that expectations on all sides need to be set and managed. The US and UK must build back their credibility in the international sphere by acknowledging their role in the problem. They must also be realistic in the extent to which they can commit resources to tackling this problem. Next, each country must understand what they can expect from the other. Finally, the US and UK must pursue partnerships with third countries when assisting them. By managing expectations on all three fronts, the US, UK and international community will have a more realistic chance of tackling international illicit finance.

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

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WRITTEN BY

Isabella Chase

Senior Research Fellow

Centre for Financial Crime and Security Studies

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Olivia Kearney

Community Building Officer

Centre for Financial Crime and Security Studies

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Maria Nizzero

Research Fellow

Centre for Financial Crime and Security Studies

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