Britain shows little enthusiasm for cracking down on financial crime

In the UK, we may say we hunt white collar criminals down but we do not do it with anything like the alacrity and zeal displayed elsewhere.

Unexplained Wealth Orders are rarely used in the UK (Reuters)

My reaction to the news only three Unexplained Wealth Orders have been served in the six months since the instrument’s introduction is to ask, why am I not surprised?

Hailed as the great weapon in the fight against Britain being used as a destination for dirty money, enabling the crushing of organised crime bosses and corrupt foreign politicians, the UWO, as it’s known, has proved anything but.

Five enforcement and investigation bodies – the National Crime Agency, HM Revenue & Customs, the Serious Fraud Office, Financial Conduct Authority and Crown Prosecution Service – were granted special powers to freeze assets and require the super rich to explain the origin of their wealth. So far only one, the National Crime Agency, has used them, and that was in relation to just one person, the wife of an allegedly corrupt banker.

This despite claims by ministers the new powers would see them mount a “full spectrum” assault on McMafia-type criminals and corrupt oligarchs. Ben Wallace, security minister, said in February: “When we get to you, we will come for you – your assets – and we will make the environment that you live in difficult.” He maintained he had “put pressure on the law enforcement agencies” to use the orders.

Wallace is not alone. After the novichok attack in Salisbury, the government declared the use of such orders would be intensified, to bring Russia to heel.

The sense of deja vu, of ministers making bold promises related to the super rich and their assets alongside an official machine that does very little about it, is overwhelming.

Remember David Cameron, in November 2014 at the G20 Brisbane summit? The then-prime minister, we were told, was “determined to bring tax avoidance to the top of the agenda”.

This was the same prime minister who, in 2012, said “aggressive” tax avoidance was “morally wrong”. His chancellor echoed that view, George Osborne describing “aggressive” tax avoidance as “morally repugnant”.

Even those comments, however, had more than a tinge of “been here before” about them. Try going back to 1994, and the Labour Party conference at which a ringing declaration led to a standing ovation for Gordon Brown, the then-shadow chancellor, who had announced a Labour administration would crack down on the use of loopholes to avoid tax.

Two decades later, Britain still counts among its dependencies several of the world’s most aggressive tax havens, and we actively promote our appeal as a low taxation regime for wealthy foreigners, to encourage them to settle here.

Writ large over this is our attitude to financial crime generally. Other countries, notably the US, are active pursuers of white collar criminals. In the UK, we may say we hunt them down but we do not do it with anything like the alacrity and zeal displayed elsewhere.

Given our collective adherence to the principle of fair play, quite why this should be is a surprise. But it is very real. Consider the US sanctions list against the moneyed friends and associates of Vladimir Putin. We share the same foreign policy goals as our “special friend”, yet all the running, in this regard at least, is made by the Americans. There are sanctions lists published by the UK and EU but you could be forgiven for supposing the initiative came only from Washington, such is the fanfare attached to the US version.

We simply do not share the same desire, commitment and purpose. We’ve never given our prosecutors tools regarded as standard in other jurisdictions. In the US, sentences are longer and the “perp walk”, of the suspect being led away in chains in front of the cameras, is standard. That threat can be combined with the offer of a plea bargain. In our often complex financial cases, sentences are shorter and the inducement of a plea bargain is forbidden.

The City of London, too, is full of lawyers, accountants and financial advisers who specialise in defeating investigators and hiding wealth. To assist them, we have a hideously detailed tax code – more convoluted than that of India – which is full of get-outs and exclusions. And the UK has ready access to those vestiges of empire we continue to protect, and are now international boltholes for those seeking secrecy, or wishing to avoid tax.

On the back of this as well, is the policy of successive governments of enticing the wealthy to settle in the UK and invest here. Imagine what modern London would be had it not been the recipient of Russian oligarch and Chinese, Indian, Arab, Latin American and African cash. Swathes of property, of luxury apartments and mansions, would simply not have been built. Private schools would have gaping holes in their rolls. The thousands of folk who spend their days servicing the super rich – driving their cars, nannying their children, guarding their doors, supplying their clothes – would be out of work. Legal services, frequently cited by foreigners as a reason for being here, would suffer.

In all, Transparency International says it has identified £4.4bn worth of British properties linked to criminals or “politically exposed persons”. Hit them with UWOs and it’s easy to see the property market collapsing. So far, not even one of the three issued has been enacted. It faces legal challenges galore before it can begin to be enforced.

UWO is in danger of becoming the financial equivalent of that other no-show, the UFO.

Chris Blackhurst is a former editor of The Independent, and a director of C|T|F Partners, the campaigns and strategic communications advisory firm.