The intertwining of financial globalization
and deregulation with the post-Soviet transition has, since the 1990s, created a new international political and economic environment. In this context, the UK’s relations with Russia and Eurasian states are characterized in part by features of transnational kleptocracy, where British professional service providers enable post-Soviet elites to launder their money and reputations.
The UK adopts a risk-based approach to anti-money laundering which relies on private sector professionals conducting appropriate checks. However, evidence indicates that the system is effectively risk-insensitive, with banks over-reporting suspicious activity, and thereby creating a deluge of reports for UK authorities to process. Other, non-financial service providers often under-report such activity and are inconsistent in whether they undertake effective due diligence.
Failures of investigation and enforcement by the National Crime Agency and other UK state bodies have led to flawed judgments by UK courts, especially regarding post-Soviet elites. Capable and expensive lawyers (hired by members of transnational elites or their advisers) defeat or deter the regulators’ often weak and under-resourced attempts to prosecute politically exposed persons.
The provision of aggressive reputation management services by UK professionals includes libel actions, quasi-defamation cases, and the use of public relations agents against journalists and researchers. These services also transplant authoritarian agendas and rivalries to the UK, which has become a leading site of legal action and political conflict between post-Soviet elites.
Opportunities for reputation laundering are placing the integrity of a range of important domestic institutions at risk. Philanthropy to UK universities and charities is one method by which post-Soviet elites clean up their reputations – but these donations are processed in secret, and several cases suggest that their due diligence has been flawed. Westminster – and the Conservative parliamentary party in particular – may be open to influence from wealthy donors who originate from post-Soviet kleptocracies, and who may retain fealty to these regimes.
This situation is materially and reputationally damaging for the UK’s rule of law and to the UK’s professed role as an opponent of international corruption. It demands a new approach by the UK government focused on creating a hostile environment for the world’s kleptocrats. An effective anti-kleptocracy drive would close legal loopholes, demand transparency from public institutions, deploy anti-corruption sanctions against post-Soviet elites and prosecute British professionals who enable money laundering by kleptocrats.
transition has, since the 1990s, created a new international political and economic environment. In this context, the UK’s relations with Russia and Eurasian states are characterized in part by features of transnational kleptocracy, where British professional service providers enable post-Soviet elites to launder their money and reputations.