RUSI at House of Commons Foreign Affairs Committee

Tom Keatinge, Director of the Centre for Financial Crime and Security Studies at RUSI, gave evidence to the House of Commons Foreign Affairs Committee on the future of UK sanctions policy.

Highlights from the Committee:

(To view the full transcript click here)

Mr Seely: I have a couple of questions on this, because I think it goes to the heart of the matter. Do we slightly stumble into sanctions in an unstructured and maybe unthought-through way in terms of what the best sort of sanctions to work are? I know we are part of the European Union and so have a common sanctions policy with them. You are saying it is not well thought through.

Tom Keatinge: I would take a step back and say this. Within the European Union, the UK offers a particular lever for the EU machine, which is the City of London as a financial centre, so the question is: how are we going to use the financial power of this country once we are outside the European Union?

Of course, London will remain one of the biggest financial centres in the world. Therefore, if you believe that financial sanctions are a valuable tool, we have one of the most powerful sanctions tools in the world following Brexit, and we can use that, potentially, as we see fit outside the European Union. So the question is how we would plan to use it, and not just as it relates to sanctions.

As I have also written about, what, just generally, is the economic statecraft of the UK when we are outside the European Union? We will remain a major financial centre. How are we going to use that financial power?



Royston Smith: Forgive me if you have mentioned this already; I was late coming back. I wanted to ask about the EU post Brexit. You mentioned that if you want to get Brussels to step up to the mark, it sometimes takes something significant like the downing of an airliner rather than anything else. If we struggle sometimes to influence the rest of the EU to act in concert with us, how will we do that beyond Brexit? Do you think that is going to make a difference?

Tom Keatinge: First, it is worth considering what the EU will lose from a sanctions perspective when the UK leaves the European Union. It is not just the City of London as a financial lever to pull; according to the Government, 50% of EU sanctions regimes are informed by UK intelligence. The question is how the EU will fill that gap.

That is not to say that we are the only people who can provide that information, but I wonder whether that might be a way in which the UK continues to engage with the European Union, as a way of keeping a hand in what is going on in terms of sanctions in the European Union—not sitting round the table voting on the consensus, but at least feeding the machine in Brussels with information that perhaps can be acted upon by the European Union. I am absolutely sure the US were fed with information by the UK when it came to some of the decisions that they made on sanctions on Russia last year.

Assuming we do not break those links as well, that is a way that we can continue to be involved—plus the fact that the bottom line is that the Europeans respect the UK when it comes to engagement with the sanctions topic. If you speak to people in Brussels, the UK not being part of that sanctions machine anymore is a loss to them, full stop. They will, I think, have a reason to continue to engage with the UK, albeit not necessarily to do what we would like on sanctions.

Chair: This is my final question. Mr Keatinge, how can the sanctions policy be more effectively co-ordinated with the anti-money laundering efforts and instruments? You said in your submission that the UK should set out “a clear plan for its use of economic tools (including sanctions and new financial crime-fighting powers such as unexplained wealth orders) as part of its ongoing commitment to tackle illicit finance and corrupt actors”. Do you think the Government have such a plan?

Tom Keatinge: As I have said a couple of times, it is not obvious. I think that the Government have to be credited for having put their shoulder to the illicit finance wheel. I think I have said to the Committee before that the challenge we face is that we are trying to catch up with 20 years of neglect, so there is a tremendous amount of work to do.

The only way that we are going to tackle the UK’s reputation as a hub of facilitating illicit finance in general is by having a clear strategy across the piece. We have a serious organised crime strategy that was published back in November—a smorgasbord of horrors that might befall any of us at any minute is certainly the way that I read it—and an anti-corruption plan. There are a bunch of plans and strategies out there.

What we are missing is one person who is accountable, 24 hours a day, for ensuring that that is delivered. It is spread across so many different Ministries and Departments on different sides of the river. Until one person wakes up each morning and says, “It’s my job today and every day to address this issue in the UK,” we will continue to suffer from fragmentation.

I will make one very small point: we talked a lot about banks and charities in relation to sanctions. It is very important to remember that, as sectoral sanctions develop, we are talking about a whole load of other industries as well—oil industries, technology companies—and this is an across-the-board UK plc issue. Of course, the banks are in the crosshairs, because they facilitate transactions, but let’s not forget that there is industry out there that is not doing business, not just because of problems in securing finance, but because their sectors are being targeted by sanctions as well.

Chair: Thank you very much, Mr Keatinge and Dr Walker. This has been an extremely useful session. We are sorry about the interruptions by the Division bell. We have had a lot of information from you. If there is anything that you think you wanted to say but did not get the chance to, please write to us. We may well come back to you with one or two follow-up questions in writing if we think we have missed something. We are extremely grateful. Thank you very much.


Tom Keatinge

Director, CFCS

Centre for Financial Crime and Security Studies

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