UK 'should tighten controls on those with dubious sources of wealth'

http://www.theguardian.com/business/2013/dec/11/uk-controls-wealth-transparency-international-russia

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British authorities should tighten controls on foreigners with suspiciously large fortunes, according to a Russian anti-corruption campaigner.

In a speech at a City law firm on Wednesday, Elena Panfilova, director of Transparency International Russia, will say that the UK government should be asking more questions about individuals with dubious sources of wealth.

"My problem is that the UK keeps accepting people with very questionable money from my country. A lot of purchases in the real estate market and a lot of investment are being done from those who should be asked what is the nature of their wealth and that is not happening."

She stressed this applies not only to Russians but any public officials, whose salary would not enable them to buy London property, lead a luxurious lifestyle or make other lucrative investments in the UK.

Between 1994 and 2011, $212 bn (£130bn) in illicit transfers and evaded taxes left Russia, according to the New York-based watchdog Global Financial Integrity. "Quite a lot" ended up in London, said Panfilova. "People who launder money, launder money in very dark corners, but they like to live in nice places like London."

In a report this week Transparency International accused the UK financial sector – banks, lawyers and accountants – of wasting millions on ineffective anti-money laundering procedures. The campaign group are calling for a new law against corrupt enrichment, that would make it easier to seize suspicious assets.

Panfilova said the top priority was stronger enforcement of existing laws. "They have all the instruments in the UK if they would exercise stricter control on the banking sector and inflow of money." She would like to see more control over trusts that help foreigners bring money into the UK and checks on their ultimate beneficiaries.

The transparency campaigner was speaking after a Moscow court on Tuesday ruled that Transparency International Russia would have to register as a "foreign agent" – a term synonymous with spying in the Soviet Union.

Vowing to appeal the court's ruling, Panfilova said no Russian NGO could accept being called a foreign agent, and warned that the crackdown against civil society in Russia was making it harder to fight corruption. "There is a definite and very serious crackdown against civil society including anti-corruption organisations like ours … and without parallel anti-corruption controls nothing is possible. There should be a watchdog, there should be a system of checks and balances."

Russia is ranked 127th in Transparency's latest index of corruption perceptions, behind other emerging economies including Brazil, China and India. Endemic graft will come under the spotlight at the Sochi Winter Olympics, where half of the $51bn cost is estimated to have been swallowed up in kickbacks and dodgy building contracts. One 18-mile road reported to have cost $8.6bn – an amount that campaigners say would have allowed it to be paved in gold or caviar – has become emblematic of a deep-rooted culture of bribes and kickbacks.

Panfilova said corruption could topple Russia's political system: "I can imagine corruption reaches a level where it really endangers the sustainability of everything including the current regime. Corrupt officials, corrupt police officers, corrupt business they want more and more … and that is difficult in a situation of very strict budgeting. I don't know who is stronger, those who have habits of having everything or our political institutions."

In her lecture she will also say that the least corrupt countries – including the UK (ranked 14th by Transparency) – need to do more to curb "greyskimming", allowing firms to create shell companies and other "strange schemes" that might be legal in one jurisdiction and illegal in another.

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