In March the sleepy English city of Salisbury found itself at the centre of a global diplomatic crisis when the former Russian spy Sergei Skripal and his daughter were found poisoned by a deadly nerve agent. With the finger of blame pointing towards the Russian state, the conversation quickly turned to the volumes of suspected dirty money flowing from Russia into the UK.
In a statement to Parliament, Prime Minister Theresa May stated that “all the capabilities of law enforcement” would be brought to bear on serious criminals and corrupt elites, saying, “there is no place for these people, or their money, in our country.”
That the UK’s financial sector is being used to launder the ill-gotten gains of dodgy oligarchs is no surprise to us, time and again our investigations reveal how the UK is one the world’s premier destinations for the corrupt and their ill-gotten gains. And we’re talking about a lot of money: the National Crime Agency estimates that over £90bn of illicit money is flowing through the UK every single year.
But how can such breath-taking sums be washing through our systems unnoticed and unabated?
One answer lies in the British Overseas Territories. In places like the British Virgin Islands (BVI) crooks can incorporate so-called ‘anonymous companies’ – corporate structures which can’t be linked back to them. The secrecy on sale in these British jurisdictions provides the perfect getaway car for crooks looking to launder their corrupt profits and distance themselves from their criminal activities.
But aren’t we worried about Russia? What have the Overseas Territories got to do with it?
Funny you should ask.
Our new analysis shows that the flow of Russian money into the British Overseas Territories dwarfs that flowing into the UK itself.
According to the latest available data from the Russian Central Bank and the IMF, over the last ten years, more than 7 times more money has flowed from Russia to the Overseas Territories than has gone to the UK.
Over this time, £68 billion from Russia has been invested in them – and the BVI has the dubious accolade of being the second most popular destination for money leaving Russia.
Now, of course this isn’t all suspicious or dirty money. Large amounts will be accounted for by legitimate corporate deals. That said, in amongst this are the proceeds of crime and corruption.
In one mind-boggling case, a BVI company linked to the Russian government (according to US authorities) sent at least $900,000 to another BVI company owned by a Russian businessman. That Russian businessman was later found to have ties to Syria's chemical weapons programme.
As if that wasn’t enough, the owner of the first company fled to the UK where
he died in suspicious circumstances. A US government report alleged his murder was
personally sanctioned by Putin.
A cursory glance at recent scandals involving Russian money reveals how the Overseas Territories make several repeat appearances.
Do you remember the Russian Laundromat? This scheme, which was exposed by the Organised Crime and Corruption Reporting Project, laundered at least $20.8 billion out of Russia. Two of the three Russian businessmen referred to as ‘super-users’ of the scam used BVI companies to receive over $100 million of laundered money.
Next up, consider the ‘mirror trades’ scheme – this makes $100 million seem like small fry. One of the biggest Russian money laundering schemes ever exposed used BVI companies to move than $10 billion out of Russia.
Many, if not all, of these schemes relied on the fact that the true ownership of the companies involved was hidden from view. In lending the corrupt the opportunity to shroud their business dealings with a veil of secrecy, the Overseas Territories play a key role in the money launderer’s playbook.
So, if Theresa May is serious – if there really is no place for serious criminals and corrupt elites and their money in our country – the answer is pretty simple: stop the Overseas Territories from selling secrecy. She needs to support them to create public registers of beneficial ownership to reveal the real people behind the companies incorporated there.
Next week, MPs have an opportunity to back an amendment tabled to the Sanctions and Anti-Money Laundering Bill that would require the UK government to support the Overseas Territories to create these public registers by the end of 2019.
If these recent concerns about dirty money in the UK are sincere, politicians should support the amendment to end the secrecy that allows dirty money to flow around the world with such devastating - and troubling - ease.
The full report can be found here: http://bit.ly/2HXYj4a