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UK should bring in law against corrupt enrichment - watchdog

Source: Thomson Reuters Foundation - Mon, 9 Dec 2013 10:49 AM
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Wads of British Pound Sterling banknotes are stacked in piles at the GSA Austria (Money Service Austria) company's headquarters in Vienna July 22, 2013. REUTERS/Leonhard Foeger
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LONDON (Thomson Reuters Foundation) – Britain is a major safe haven for corrupt assets and should fundamentally rethink the way it detects, freezes, seizes and repatriates the illegally acquired assets of politicians and public officials, anti-graft watchdog Transparency International-UK (TI-UK) said on Monday.

In a report published on United Nations’ International Anti-Corruption Day, TI-UK made 21 recommendations that could help Britain improve asset recovery rates.

One of the report’s headline recommendations is for a law to be enacted to allow UK law enforcement to seize the suspicious assets of a public official when those assets clearly exceed the official’s legitimate income. The onus would then be on the official to prove the assets had been acquired legitimately.   

The now defunct UK Financial Services Authority estimated on its website that between 23-45 billion pounds ($37.5-$73.5 billion) was being laundered through the UK every year.

“At present, corrupt individuals are able to hide their stolen money here in the UK. The rate of detection and seizure are so low, that there is effectively a culture of impunity," Robert Barrington, head of TI-UK, said in a statement.

"The UK has an opportunity to provide global leadership in this area, complementing its existing efforts in aid transparency and promoting good governance,” he added.

TI said the wave of protests and demonstrations that swept Arab nations starting in December 2010, forcing rulers from power, had given a boost to asset recovery efforts but more needed to be done.

“While we acknowledge that the Arab Spring has given a new impetus to asset recovery efforts in the UK, we believe that more fundamental changes are necessary,” Barrington said.

The report cites UN estimates that the detection of illicit funds globally is as low as one percent and that the seizure rate is only 0.2 percent.

While the UK has a better track record of asset recovery than most of its peers, the global prominence of the UK financial industry and the UK’s relationship with a number of tax havens through its Crown Dependencies and Overseas Territories, means that the role of the UK in global asset recovery is particularly important, the report said.

The report also recommended that:

- The UK should make better use of the private sector, in particular banks, lawyers and accountants to help detect suspicious movements of assets into and out of the UK and ensure there are powerful sanctions against those who facilitate the movement and hiding of illicit assets.

- In order to ensure that UK asset recovery teams are properly resourced, the UK should be reimbursed a percentage of any assets recovered before returning the assets to their country of origin.

- The UK should follow the example of Switzerland and Canada where authorities are permitted to freeze suspicious assets of public officials and politicians when the origin state is considered to have “a non-functioning judiciary.”  

- UK authorities should not rely on the support of the country from which the alleged corrupt assets originate before they attempt to freeze and seize the assets. This is particularly important if the suspected corrupt official is still in a position of power in that country.

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