Kleptocrats face new law, but enforcement will be key

Ever since Robert Peel as Home Secretary of Great Britain established the Metropolitan Police in 1829 and put 1,000 constables on the streets of London, politicians have been trying to come up with new solutions to crime.

Of course, crime has changed over the nearly 200 years since the formation of the Met and modern politicians have not always been as effective as Peel.  David Cameron as Prime Minister said he would make the beneficial ownership of property in the UK transparent in order to fight money laundering, but it hasn’t happened.

The National Crime Agency believes that up to £90 billion ($120 billion) is laundered through Britain every year.  The Economist magazine believes that “is probably an underestimate.”

So the Criminal Finances Act 2017 that came into effect in the UK on 30 September is to be welcomed.  In theory, it should make it easier to seize money stolen by kleptocratic politicians and bureaucrats and other high-end criminals.

The Act enables law enforcement authorities to issue “unexplained wealth orders.”  They will be able to apply to a judge for an order to demand evidence that property was legitimately acquired.

Three conditions must be met to obtain the order: the subject must be a politically exposed person (someone with a prominent public function, members of their family or close associates) from outside the European Economic Area or someone suspected of involvement in serious crime; their purchases must exceed their known income, and the asset identified as suspicious must have a value in excess of £50,000 ($66,000).

If the subjects of the orders cannot justify their purchases the assets may be frozen.

In March the anti-corruption group Transparency International cited £4.2 billion ($5.5 billion) worth of property it believes was bought by politicians and public officials with money of suspicious origins, so there is much to play for.

However, it is not yet clear whether foreign politicians will be able to claim diplomatic immunity from the new orders.  How seriously the government intends to pursue corruption will be measured by how quickly it brings a test case to court.