Lessons from Down Under: The Soft Power Dividend of Financial Crime Technical Assistance

Over the past 18–24 months, under the pressure of its impending evaluation by the Financial Action Task Force (FATF) – the global standard setter for anti-money laundering and counter-terror finance(AML/CTF) – the UK has attempted (with some emerging success) a root-and-branch upgrade of its financial crime-fighting capabilities. New laws have been introduced with new powers (such as the Criminal Finances Act, notably, including unexplained wealth orders). Commitments have been made to ‘significantly increase’ the resources of the UK’s financial intelligence unit (FIU) (albeit 10 years after the commitment was originally made last time the FATF evaluated the UK) and public–private partnership has been embraced as a means of leveraging the capabilities of the banking sector to boost the nation’s efforts to identify and disrupt criminal finances.

This endeavour by the British government is to be welcomed, although it was triggered by the exogenous pressure of a detailed and revealing assessment – the pressure of impending interrogation focuses the mind.

Yet for all the new acronyms, strategies and focus, thus far the bulk of the effort applied by the UK has been domestically focused, to ensure the UK is a ‘hostile environment’ for criminal finances; and more specifically, the effort was undertaken to ensure the best possible review by the FATF whose report will be published in early December.

But, at a time when the government is striving to demonstrate a vision for ‘Global Britain’ and to ‘deliver on’ its international ambition, what contribution is the UK making to strengthen the integrity of the global financial system, not just its own defences? As the leading global financial centre with a multitude of historic international ties, the UK has a responsibility to assist those countries around the world whose financial crime-fighting capabilities fall short of global standards – the provision of ‘technical assistance’ in the jargon of the business. Supporting countries to meet their FATF obligations and take remedial action where required has proved to be a highly effective soft power tool for the UK’s peer nations around the world and would align with the government’s March 2018 National Security Capability Review that committed the UK to ‘deploying the full suite of [its] security, economic and influence capabilities to protect and promote [its] security, economic and influence interests’.

Furthermore, at a time when ministers including the new home secretary, the chancellor and most notably the secretary of state for international development in her ‘Mission for Global Britain’ speech are calling for ‘joint work on international crime’, a ‘global crackdown on dirty money’ and ‘a new area of co-operation to stop illicit financial flows’, a strategy to promote and support financial crime-fighting technical assistance for partner countries seems apt. A review of the FATF’s ongoing evaluations certainly suggests that many of the UK’s historic relations fall short of global expectations.

How is the UK doing that in this field? How do these efforts compare to our peers around the world?

Consider for example Australia. Its FIU, AUSTRAC (Australian Transaction Reports and Analysis Centre), has an international strategy that includes capacity-building and partnership programmes for key regional FIU partners with AUSTRAC analysts embedded in, or forward-deployed to, a range of jurisdictions. In addition, Australia’s Home Affairs department includes an Anti-Money Laundering Assistance Team that ‘partners with countries in the Asia-Pacific region to strengthen laws and processes on anti-money laundering, counter financing of terrorism and proceeds of crime in line with international standards’, leveraging Australia’s significant contribution to the running of the FATF-style regional body in the Asia-Pacific region.

These sentiments are reflected not only in press releases. The recipients across the Asia-Pacific region – this author has had the opportunity to speak with many of them recently – have viewed Australia’s efforts favourably. This form of soft power has delivered results and strengthened relationships.

These programmes require the long-term commitment of (limited) funding, resources and, above all, leadership. The changes do not happen overnight. AUSTRAC has been committed to the delivery of technical assistance and training to Indonesia's FIU since 2002.

The UK’s international aid budget of almost £14 billion is generous, but its delivery in the fields of illicit finance and financial crime appears fragmented. Whereas Australia has a clearly articulated, coordinated and strategic vision for its financial crime technical assistance programme – from which it benefits directly too – the UK’s profile is complex, fragmented and lacks impact. Funds are provided to a variety of bodies – international organisations, NGOs and consultants – but coordination, strategy and leadership are absent. Australia’s leadership garners a high profile in relevant regional forums and initiatives in its quadrant of the globe spanning Asia and the Pacific Islands; in contrast, technical assistance leadership from the UK in similar forums is rare. This can be seen in a simple question: who is the UK government’s director of AML technical assistance?

This is a wasted opportunity for the UK. Britain is a key architect of the norms and standards of bodies such as the FATF that many lower-capacity countries find challenging to meet. Supporting these countries in strengthening the integrity of their financial systems to meet these standards brings immense benefit for both the country in question and the UK, particularly where the country represents a threat to the UK via financial crime or related predicate offences such as human trafficking or drug smuggling.

And success is not purely a function of funding. At a time when government budgets remain tight, simply displaying leadership and taking visible ownership in assisting those countries facing challenges can go a long way.

Many countries with which the UK has historic ties are facing significant illicit finance challenges, problems that would benefit from a planned, coordinated and supported response; and challenges where UK expertise and experience could add immense value and generate a considerable soft power dividend for the UK as it seeks to create a new role for itself as ‘Global Britain’.

Tom Keatinge is Director of the Centre for Financial Crime and Security Studies at RUSI.

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