At least £325 billion ($419 billion) of corrupt or suspicious wealth has flowed through the U.K., according to new research from pressure group Transparency International. This sum is almost double the previous estimate of $220 billion.
This wealth is now known to include seven private jets worth £170 million ($219 million), three luxury yachts worth £237 million ($305 million) and over £5 billion ($6.4 billion) worth of real estate.
By analysing over 400 corruption cases Transparency International says it has identified 86 financial institutions, 81 law firms and 62 accountancy firms that have “unwittingly or otherwise” helped individuals move corrupt funds through the U.K.
“These are funds diverted or misused through rigged procurement, bribery, embezzlement and the unlawful acquisition of state assets,” says the report from Transparency International.
Culpable institutions include Standard Chartered Bank, which was fined £842 million ($1 billion) by U.S. and U.K. authorities in April for signing off on $213 billion worth of transactions between 2010 and 2013 with insufficient due diligence.
These funds laundered through financial firms eventually trickle down to asset purchases in the U.K., with a large percentage sunk into the real estate sector.
The former Nigerian petroleum minister Diezani Alison-Madueke has purchased three London properties using suspected bribes from oil deals. Alison-Madueke is currently being investigated in the U.K. for money laundering and a Nigerian court has issued a warrant for her arrest.
The Transparency report also identifies a former Gaddafi associate who owns four London properties through companies registered in the British Virgin Islands, and the son of a former Moldovan prime minister who rents a London penthouse.
Nigeria’s former Minister of Petroleum Diezani Alison-Madueke has purchased three London properties … [+]
It is inevitable that some of this money is spent on that great hallmark of corruption, luxury goods. Transparency International has tracked over £16 million ($20 million) spent on luxuries ranging from private jets to a Tom Ford crocodile skin jacket from Harrods department store costing £50,690 ($65,339).
A court in London recently heard how Zamira Hajiyeva spent £16 million ($20.6 million) at Harrods, including £3.5 million ($4.5 million) on Boucheron jewellery. Hajiyeva, who is married to a jailed Azerbaijani banker, was investigated using the first ever Unexplained Wealth Order, which enables authorities to question suspicious wealth.
Zamira Hajiyeva, wife of Jahangir Hajiyev, the former head of the International Bank of Azerbaijan, … [+]
Not all of the firms who have accepted suspicious funds are complicit, however. Using a tangle of offshore firms, where beneficial owners are not named, individuals are able to dube firms into doing business with them.
Dickie Bannenberg, owner of the London-based superyacht design company Bannenberg and Rowell, recently about a meeting with a Russian client at a Majorcan villa. Only after the yacht had been delivered was the client arrested by Spanish police.
“Legally in any industry you have a requirement to know as best you can the source of your client’s money, so in our contracts our lawyers require us to find the beneficial owner behind the project,” Bannenberg told the The New York Times.
Visitors walk by a yacht moored during the International Monaco Yacht Show.
The Long Battle Against Corruption
Knowing the beneficial owners behind offshore shell companies is an important step in mitigating money laundering. However, this is a slow-moving process.
The Cayman Islands has now started publishing the beneficial owners of companies registered on the Caribbean Island. However, attempts by the U.K. government to do the same with the Crown Dependencies, which include Guernsey, Jersey and the Isle of Man, were stonewalled by parliament in March.
Real estate firms that have helped corrupt individuals buy expensive London homes will also face tighter regulation. In March, the Treasury Committee recommended that HM Revenue and Customs (HMRC) takes a tougher stance on estate agents.
However, more needs to be done, says Transparency International. “These are not homogenous villains in suits, hell-bent on making a fast pound at anyone’s expense,” it says. Instead, these are international networks involving foreign jurisdictions, professional firms and secret accounts, which authorities are ill equipped to deal with.