Report on Illicit Finance Helps Influence Government

The UK’s Kleptocracy’s Problem, led by Professor John Heathershaw, is a major report which shows how the UK has been exposed to money laundering and reputation laundering by the political elite from Russia and the post-Soviet states.

Regardless of public concerns, the government states that we have one of the best anti-money laundering systems in the world. However, according to The UK’s Kleptocracy Problem report, published by Chatham House, the UK’s system is ‘risk insensitive’.

The research, supported by ESRC IAA funding, shows how failing to enforce and implement anti-money laundering laws – along with exploiting loopholes by professional enablers – has led to little being done to prevent kleptocratic wealth and political agendas from entering Britain from Russia and post-Soviet states.

Professor John Heathershaw explained, “The problem is the UK has a very large financial services industry, which is open to money from all over the world.

“Some of that wealth has dubious sources, and it comes from people who have agendas to get their interests represented by politicians and big public institutions.”

The report notes that a significant problem includes banks over-reporting suspicious activity, making it difficult for UK authorities to process the number of accounts. In contrast, non-financial services under-report activities and are inconsistent in undertaking adequate due diligence.

These substandard investigations have led to poor judgements by UK courts, especially concerning post-Soviet elites who can hire expensive lawyers to beat or deter British regulators.

In turn, this increases our kleptocracy problem and damages the UK’s reputation as an opponent of international corruption.

“The UK needs a legal system which is able to check whether those agendas are there and if the sources of wealth are legitimate,” said Professor Heathershaw.

The project brought together some of the leading experts on anti-money laundering and, specifically, the political aspects of that. In creating the report, Professor Heathershaw and his team worked together with political leaders, kleptocrats, businesspeople, journalists, and people in civil society.

Since publishing, Professor Heathershaw has worked with the government and parliament to raise awareness and change the law, advising on the UK government’s Economic Crime Act in April 2022.

The press picked up the report many times, and it has been the subject of a Guardian editorial.

“Our research has helped reform the laws on economic crime and has ensured that the UK must now take the problem of money laundering more seriously”, said Professor Heathershaw.

Read The UK’s Kleptocracy Problem report here.

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