The writer oversees the Human Rights Foundation’s combating kleptocracy programme
A year ago, with a new administration rising in Washington, it was clear that the US had taken the lead in the transatlantic fight against kleptocracy. But over the past few months, London has begun laying a blueprint to regain that pole position, and started to challenge its western allies to expand their own fight against illicit wealth and international money laundering.
These moves were already long overdue. Spurred by Russia’s invasion of Ukraine, the government finally brought in regulations so that even if “Londongrad” is not, as the Conservatives claim, fully closed, the days of illicit Russian wealth flooding into the UK are finally coming to an end.
The most notable of these new developments targets owners of British property hidden behind foreign shell companies. Thanks to last year’s Economic Crime Act, the offshore companies masking real estate ownership will now need to disclose their real, beneficial owners. Most remarkably, the regulations appear to be working. As researchers found, these kinds of property purchases have plummeted in recent months, part of a decline that predates the most recent Russia sanctions.
There are encouraging signs of further action. Britain’s shell company registry, which has been largely unenforced, has so far allowed “Adolf Tooth Fairy Hitler” and “Donald Duck” to be listed among company names and directors. But once the forthcoming economic crime and corporate transparency bill passes, the registry will come with verification requirements, meaning the days of these cartoon monikers masking duplicitous companies should be behind us.
It’s not just government policies that give reasons for optimism. Spying an opening, the Labour leadership has transformed the fight against kleptocracy into a primary election plank. Shadow foreign secretary David Lammy recently described the fight against kleptocracy as “not just a job for the police. This is foreign policy.”
Rooting out dirty money and opposing dictatorship should indeed be one and the same. Lammy has begun outlining the need for a “progressive moment”, co-ordinating with allies in Washington and elsewhere to align counter-kleptocracy efforts more broadly.
To those on Capitol Hill, this rhetoric plus the other developments have been a welcome boost of confidence that London is, at long last, recognising the threats of kleptocracy and its own responsibilities in driving out corruption. As an American, I welcome this jolt of much-needed energy for US officials, especially those in the White House, who are flagging in the fight.
Even though the current administration is a clear step up from a Trumpian alternative, it is not living up to its early promise. Over two years into President Joe Biden’s tenure, the US has hardly improved transparency for real estate or private investment — two well-known sanctuaries for illicit, kleptocratic wealth. We’ve likewise seen little movement towards regulating how US lawyers help kleptocrats move and launder their wealth. Most embarrassingly, when Biden’s Treasury department recently outlined plans for America’s own shell company registry, the proposals included an option for leaving company owners “unknown” — undermining the entire purpose of the registry.
Thankfully, these requirements are now being redrafted. But the initial optimism about Washington’s leadership is fading, buried in partisanship and distractions elsewhere. London’s recent momentum in this space is not only welcome, but may be a means of galvanising its allies on the other side of the Atlantic.
Last year the US challenged Britain to step up its fight. Now, the tables have turned. It’s time American partners followed the UK’s lead.
Source: Financial Times