Rt Hon Greg Hands MP Chief Secretary to the Treasury HM Treasury 1 Horseguards Road London SW1A 2HQ
th
17 August 2015
Dear Greg It was a pleasure to meet you as part of the group of international development NGOs convened by Bond. I was particularly encouraged by two points you mentioned. First, that your experience of developing countries had led you to conclude that corruption, governance and transparency were important components in achieving development, and in securing value for money for ODA budgets. Secondly, on the subject of corrupt capital flowing through London and being invested in the UK, that there is now a debate to be had about the social and economic benefits for the UK of accepting dirty money into the system. In Transparency International's view, although the flows of corrupt capital are very large - and therefore damaging - for most developing economies, the transaction fees and investment value they bring to the City and UK are marginal in the context of the size of the UK economy and financial markets. We are therefore putting at risk the reputation of the City and the UK for only marginal gain. Our recent research into the London property market can be found at: http://www.transparency.org.uk/publications/15-publications/1230-corruption-on-your-doorstep. This reports highlights the secrecy around property ownership in London, and its link to funds of corrupt origin. As in other areas, we believe that transparency over beneficial ownership through effective public registries is essential to help reduce the scale of the problem, both in the UK itself, and in the Crown Dependencies and Overseas Territories. TI believes there are other relatively simple technical fixes that can be put in place to alleviate this problem, as well as the possibility of more significant action such as the introduction of Unexplained Wealth Orders. We and others have identified gaps in the UK's anti-money laundering defences, which we expect will be reflected in the National Risk Assessment. As we discussed, I look forward to hearing back from your officials about your plans to publish this. Ironically, when talking of value for money, the current AML regime is costly, and much of the cost is borne by the private sector; yet it is generally reckoned to be ineffective. A related issue is that of enforcement. It is important that the new International Corruption Unit at the NCA, and the Serious Fraud Office, are confident that they have political support and the necessary funding. Just as the NCA receives ODA, we feel it would be useful to explore whether other enforcement agencies could use such funding within the ODA rules, as long as that did not unduly restrict their geographical areas of investigation. Either way, increasing the SFO's budget to the required ÂŁ70 million is a small investment for a potentially large gain in creating a level playing field for responsible businesses and in enhancing the UK's reputation overseas.
REG OFFICE: CAN MEZZANINE – 7-14 GREAT DOVER STREET, LONDON, SE1 4YR, UK TEL: 020 7922 7906 FAX: 020 7922 7907 INFO@TRANSPARENCY.ORG.UK WWW.TRANSPARENCY.ORG.UK REGISTERED IN ENGLAND AND WALES, NUMBER 2903386 REGISTERED CHARITY, NUMBER 1112842
We also feel that Treasury Ministers could play a constructive role in being more vocal and public in their support for the UK having a strong and effective anti-money laundering regime and with regard to anti-corruption legislation that contributes to the rule of law, notably the Bribery Act. It is rare for the Chancellor or Ministers to speak publicly on this issue, and yet the issues of money laundering and corrupt capital fall squarely within HMT's remit. Many of these issues are likely to emerge as key themes in the discussions around next year's AntiCorruption Summit, announced by the Prime Minister at the G7 meeting. We hope that HMT is planning to be fully engaged in the planning and deliverables for this summit, and would welcome an opportunity to brief you and your officials on what we think can be achieved and the role that HMT might play. With kind regards, Yours sincerely
Robert Barrington Executive Director
REG OFFICE: CAN MEZZANINE – 7-14 GREAT DOVER STREET, LONDON, SE1 4YR, UK TEL: 020 7922 7906 FAX: 020 7922 7907 INFO@TRANSPARENCY.ORG.UK WWW.TRANSPARENCY.ORG.UK REGISTERED IN ENGLAND AND WALES, NUMBER 2903386 REGISTERED CHARITY, NUMBER 1112842