World’s Top Criminal Money Haven: Maybe It’s Because I’m A Launderer… That I Love London Town

World’s Top Criminal Money Haven: Maybe It’s Because I’m A Launderer… That I Love London Town

World’s top criminal money haven: Maybe it’s because I’m a launderer… that I love London Town

First they used to pocket millions, then tens, then hundreds of millions. Today, no white-collar racketeer in the world will consider himself worthy of the trade if his illicit gains do not count in billions of pounds, euros or dollars. On top of the chart remains the scheme involving former Kazakh banker Mukhtar Ablyazov and former Almaty mayor Viktor Khrapunov and their respective families (inter-married for all it matters), estimates of which vary from 4 to 12 billion greenbacks. You can only spend a small fraction of such amounts on real estate; therefore, the City of London with its multiple financial entries  is being courted by criminals and their agents to launder much larger amounts in corporate securities and stock. Whistleblowers are confronted with red tape and indifference when trying to draw the attention of the authorities – whoever they may be because there is an ingenious system of dead-end bureaucracy in place that is not prepared to face the new invasion of money launderers in the City. 

by Charles van der Leeuw, writer, news analyst

World’s Top Criminal Money Haven: Maybe It’s Because I’m A Launderer… That I Love London Town

In a recent article, the Daily Mail (which can hardly be suspected of so-called leftwing sympathies) claims that one in 10 properties in Kensington, 7% per cent of those in Westminster and 5 per cent in the City are owned by companies registered in “secrecy jurisdictions”.

“They have become the very symbol of corruptly acquired wealth: the luxurious mansions in London and the Home Counties of developing world potentates, their deeds registered to secretive offshore companies, providing assets and boltholes if times for their real owners get tough,” the article read. “They also have a direct effect on ordinary people trying to buy a home – driving up prices and destroying any sense of community. At a global anti-corruption summit at Lancaster House in London this week, the Prime Minister will claim Britain is at the forefront of efforts to clamp down on embezzlement and money-laundering. But critics say David Cameron is not doing enough – starting with his failure to order Britain’s own tax-haven colonies to open up their books, and so confirm who really owns some of the palaces pictured here. The sums involved are vast.”

“A report last year by the global anti-corruption group Transparency International, based on data supplied by Scotland Yard, revealed that real estate worth more than £180 million has been subject to criminal investigation since 2004. Yet this represents just one per cent of the proceeds of corruption invested in the UK property market, making the true total £18 billion.

It added that more than three-quarters of the owners of such property use offshore secrecy to hide their identities. The ‘preferred option for concealment’ were British Crown Dependencies and Overseas Territories, such as the British Virgin Islands (BVI), Gibraltar and the Caymans.

Eleanor Nichol, anti-corruption campaign leader of international investigation group Global Witness, was quoted by the newspaper as stating that an area three times the size of Greater London is already owned by foreign companies. “The Government has the power to force the dependencies like the BVI to set up public registries, but seems unwilling to do so. We shouldn’t have to rely on leaks to know who is hiding behind shell companies to dodge tax, sell weapons or sponsor terrorism. We need swift, robust legislation to get dirty money out of the property market, and action to ensure we’re not granting visas or citizenship to the corrupt,” Nichol was quoted as declaring.

One  experienced (and cheated) investor from England whose name is known to KazWorld but who requested to remain anonymous to the public eye for now, relates how he dug into the levels of competence of Britain’s brave investigators in relation to the Ablyazov/Khrapunov files and similar ca es, he first struck a formidable bureaucratic barrier in a blunt refusal by the Serious Fraud Office which, as it appeared, is not dependent on Scotland Yard but operates on its own without any clear subordination to either the Home Office or the Prosecutor’s office, to take note, let alone action, in relation to cases where billions of criminal cash have been whitewashed within English jurisdiction in broad daylight. When asking for an explanation , he got a reply which is already remarkable since in countries such as France, The Netherlands or Luxemburg authorities would not even have bothered to reply at all. The reply itself, having said that, is nonetheless astounding.

“The SFO is a specialist prosecuting authority tackling the top level of serious or complex fraud, bribery and corruption,” its letter read. “It investigates a small number of large economic crime cases which, in the opinion of the Director of the SFO, call for the multi-disciplinary approach and legislative powers available to the SFO. In deciding which cases to adopt for investigation, the Director applies his Statement of Principle, which includes consideration of: whether the apparent criminality undermines UK PLC commercial or financial interests in general and the City of London in particular; whether the actual or potential financial loss involved is high; whether actual or potential economic harm is significant; whether there is a very significant public interest element; and whether there is new species of fraud. All information received by the Intelligence Unit is assessed objectively to identify if there are reasonable grounds to suspect an offence has been committed which involves serious or complex fraud, bribery and corruption that falls within the Statement of Principle. We must stress that this is not the same as making a determination on whether there is a criminal case to answer, but rather that the SFO is not the appropriate agency to pursue this.”

In other words: bugger off and bother someone else. For victims of financial crime, the SFO’s apparent attitude means being sent from the cooking pot to the frying pan, and from there to the soup kettle, further to the barbecue grill and back to square one.  “Based on the information you have provided, you may wish to report this issue to the Financial Conduct Authority (FCA).  The FCA is responsible for regulating financial services providers in the UK, and is able to investigate and punish wrongdoing which may, or may not, also constitute criminality,” the letter continues.  “Their work involves investigating, disrupting and punishing a wide range of investment and pension scams. You can report this issue to them online here.  Alternatively, you can speak to one of their advisors by calling 0300 123 2040. Alternatively, you may also wish to report this to Action Fraud.  As the UK’s national fraud reporting centre, it is the first point of contact for all reports of fraud, regardless of their scale or complexity.  Action Fraud will issue you with a police crime reference number and the case will be referred on to the National Fraud Intelligence Bureau run by the police.  You can report this issue to them online.  Alternatively, you can speak to their fraud specialists by calling 0300 123 2040.

“The funds involved in money laundering are increasing rapidly and the most recent estimate provided by the FATF [Financial Action Task Force under the UN – ChvdL] suggests that the aggregate size of global money laundering is between 2% and 5% of world economic output, or between $590 billion and $1.5 trillion, most of which is gained from illicit drug trafficking, but also from corruption, fraud and organised crime,” a recent report posted by the University of Exeter read.

Figures provided by the government affirm Britain’s “prominent role” in laundering the gains of racketeering and swindle in broad daylight. “The UK remains the largest centre for cross-border banking, accounting for 17% of the total global value of international bank lending and 41% of global foreign exchange trading. The size of the UK’s financial and professional services sector, our open economy, and the attractiveness of the London property market to overseas investors makes the UK unusually exposed to international money laundering risks. Substantial sums from crimes committed overseas are laundered through the UK. There is no definitive measure of the scale of money laundering, but the best available international estimate of amounts laundered globally would be equivalent to some 2.7% of global GDP or US$1.6 trillion in 2009.4,” a plan drafted jointly by the Home Office and the state treasury and posted back in 2016 was to read.

The document adds: “Since 2010 we have taken important steps to strengthen our response. In 2011, the CONTEST counter terrorism strategy was refreshed. In 2013, the Government founded the NCA [National Crime Agency – ChvdL] to lead, co-ordinate and support the national response to serious and organised crime, including money laundering. At the same time, it published a new Serious and Organised Crime Strategy that made attacking criminal finances central to our efforts to tackle serious and organised crime. Since then, more assets have been recovered from criminals than ever before, with a record £199m recovered in 2014/15, and hundreds of millions more frozen and put beyond the reach of criminals.”

“This Action Plan represents the most significant change to our anti-money laundering and terrorist finance regime in over a decade. It sends a clear message: that we will not stand for money laundering or the funding of terrorism through UK institutions. We are determined to protect the security and prosperity of our citizens, and the integrity of our world-leading financial system, and will vigorously pursue those who abuse it for illicit means,” the plan’s introduction reads.

“This Action Plan is principally concerned with three priorities. First, we need a more robust law enforcement response to the threats we face. That means creating aggressive new legal powers and building new capabilities in our law enforcement agencies to enable the relentless disruption of criminals and terrorists. This is in addition to the cross-agency taskforce recently announced by the Prime Minister to investigate any evidence of illegality that may be found in the ‘Mossack Fonseca’ papers.”

“Second, to reform the supervisory regime and ensure that those few companies who facilitate or enable money laundering are brought to task. The Government wants to ensure a risk-based approach to tackling money laundering and terrorist finance. We expect the banks and other firms subject to the Money Laundering Regulations to take a proportionate approach, focusing their efforts on the highest risks, without troubling low risk clients with unnecessary red-tape. We will continue to maintain our strong regulatory regime to ensure that our financial services industry is the best regulated in the world. Third, to increase our international reach to tackle money laundering and terrorist financing threats by working with international groups, such as the G20 and Financial Action Task Force, to take action overseas.”

“Underpinning these three priorities, and central to the success of the Action Plan, is a new way of working with the private sector. We need radically more information to be shared between law enforcement agencies, supervisors, and the private sector; and we need to take joint action to disrupt criminals and terrorists. The pilot Joint Money Laundering Intelligence Taskforce (JMLIT), which has brought together law enforcement agencies and ten banks under the leadership of the National Crime Agency (NCA) to share information on money laundering and terrorist financing, has demonstrated the opportunities offered by this type of approach.” Given the anonymous hapless  investor’s experience, not quite so…

Indeed, the government, though in heavy understatements, admits that the entangled web’s response to public outcries and complaints by and large consists of a deaf ear. “The NRA [National Risk Assessment for Money Laundering and Terrorist Financing, an earlier, equally lengthy document published in October 2015 – ChvdL] found that the law enforcement response to money laundering has been weak for an extended period of time,” the document reads further down. “The NCA was launched in 2013 to lead, coordinate and support UK law enforcement agencies’ response to serious and organised crime including money laundering, bribery and corruption.12 Other law enforcement agencies, in particular Serious Fraud Office (SFO) and HMRC have expert officers and access to a wide range of legal powers. Law enforcement agencies will pool their resources in order to take on the high-end money laundering cases that pose the greatest risk to the UK. High-end money laundering is complex, and can involve the misuse of the accountancy service providers and legal professionals such as TCSPs to provide legitimacy and access to other regulated sectors without detection. Proceeds can be held in bank accounts, real estate and other investments. Ownership is disguised behind multiple corporate structures, often registered overseas. To respond adequately to this threat, it is necessary for UK law enforcement agencies to review their existing financial investigation capabilities and to develop the expert intelligence, analytical, investigative and legal skills needed, while drawing on the specialist knowledge available in the private sector.”

“Actions” to be taken, in the report’s words, include to “ensure an effective multi-agency investigation response, drawing on private sector expertise, to target the most complex high-end money laundering cases, create a programme to upskill intelligence, analytical, investigative and legal staff to take on complex money laundering cases”. “The regional policing tier is critical if the UK is to provide an effective pursue response to money laundering. Whilst national agencies will be expected to take on the most serious threats, there will remain a significant number of money laundering cases for which specialist capabilities will be required.” In other words: jobs for the boys…

“The Strategic Policing Requirement is the Home Secretary’s statement of the national threats and the national policing capabilities which are required to counter them. Police and crime commissioners (PCCs) are required to have regard to the SPR when issuing their police and crime plans, and Chief Constables must have regard to both the police and crime plan and the SPR when exercising their functions. It helps PCCs plan for threats that span local force boundaries. Serious and organised crime is one of the six national threats in the 2015 SPR.13. Regional Asset Recovery Teams (RARTs) sit within Regional Organised Crime Units (ROCUs) and develop financial intelligence in aid of the investigation and disruption of criminal entities. They also utilise financial investigation to conduct money laundering investigations, disrupt subjects and recover assets using the powers provided in the Proceeds of Crime Act. Their core financial intelligence and investigation capabilities must be maintained and developed to fulfil this purpose, as well as to respond to requirements set through the national tasking and coordination arrangements. Most funding for the ROCUs comes from the PCCs of the forces in each region. The Home Office provides additional funding for ROCUs (£25 million in 2015/16). The 2015 Conservative Party Manifesto included a commitment to allow police forces to retain a greater percentage of the value of assets they seize from criminals. Under the Asset Recovery Incentivisation Scheme (ARIS) half of all recovered assets are returned to operational partners.” What happens to the other half is not mentioned…

It is not the sheer amounts at stake which distinguish traditional money laundering methods from newly emerging ones Traditionally, a bank, an investment fund or any other financial enterprise would be alarmed in case there were large amounts flowing in with the request to convert it into paper even if it would mean a high risk or even a plain loss. Then, you could tell that there was a launderer at work. Today, launderers have not just stopped losing money in or dr to whitewash illicit gains, but are actually earning money on them, thereby making it or e difficult to distinguish their operations from regular ones.

It is amidst this incredible red tape web that those who for whatever reason seek justice to counter the new wave of criminal cash overflowing the City find themselves at a complete loss. “The reply from the Serious Fraud Office demonstrates that Scotland Yard (i.e. the Metropolitan Police Service or Met) has little part to play in what is essentially a financial crime scene, our source observes. “Because of its history the City of London police, a separate force from the Met, traditionally leads on financial crime in London. There is also now a UK equivalent of the US FBI. It is called the National Crime Agency and it deals with the big issues of organised crime, international corruption, economic crime, online child abuse and drug trafficking. Then there is the Financial Conduct Authority as described in the SFO rejection email and, of course, the SFO itself.  Jersey has  a financial police unit and a FCA equivalent too. There is clearly no shortage of British agencies to deal with this issue if there is the collective will to do it.”