Form Over Substance? UK Anti-Corruption Sanctions Are No Substitute for Action
14 May 2021

To be a force for good, the UK’s anti-corruption sanctions must be paired with seizing and returning stolen assets to benefit deprived citizens.

One policy area in which the UK has been quick to seek to demonstrate its independence following Brexit is the issuance of sanctions.

For those inside the Foreign, Commonwealth and Development Office (FCDO) responsible for sanctions policy, it was first a sprint to convert a range of geographic and thematic sanctions regimes developed within the EU to ensure they continued to operate once EU law no longer applied. Only after the political situation stabilised following the December 2019 General Election did the FCDO turn its attention from ensuring continuity of existing sanctions regimes to the introduction of new regimes. First came a new human rights regime, introduced in July 2020, and last month followed on with corruption. In both cases, use of the regimes quickly ensued as the UK followed the lead set by US Global Magnitsky sanctions and joined forces with likeminded countries such as Canada to issue new sanctions.

For the government, and for Foreign Secretary Dominic Raab in particular, the creation of these regimes allowed the UK to demonstrate its ‘force for good’ agenda. On announcing the introduction of anti-corruption sanctions, Raab told the House of Commons that these sanctions will give the UK ‘an additional powerful tool to hold the corrupt to account’ and ‘will prevent corrupt actors from using the UK as a haven for dirty money while combating corruption around the world’.

From civil society groups to US senators and US Treasury Secretary Janet Yellen, onlookers applauded the move. As Raab noted, the UK is a global financial centre and preventing the corrupt from taking advantage of the financial (and other) services it offers is an important step. But while these sanctions will impose asset freezes (should there be any assets within UK jurisdiction to freeze) and travel bans, and prevent sanctioned individuals from using the UK financial system, they do not directly address the impact that the corrupt individuals’ actions have had on ‘their own people’ beyond a message that the UK recognises their plight. Raab emphasised to the House that corruption is not a victimless crime, and while the issuance of sanctions sends a clear message to those who are sanctioned that they are not welcome in the UK, he left unanswered how the new regime will support the victims of corruption.

This is where the disappointment lies, and where form precedes substance.

REGAINING A WANING LEADERSHIP

Since reaching a high-water mark in 2016, the UK’s global leadership on anti-corruption has waned, and while the introduction of anti-corruption sanctions is a welcome step forward, a bolder vision is needed. At the heart of that vision must be the recognition that without enforcement action, asset recovery and repatriation to the country from which funds have been stolen, the announcement of this new regime represents form over substance. As one commentator noted, the sanctions are a ‘win/win’. A win for a government that can point to action that suggests ‘Global Britain is leading the world as a force for good’, and a win for corrupt actors who, while inconvenienced, are unlikely to fear the loss of their ill-gotten gains at the hands of the UK.

Sanctions are a reactive tool, issued in response – in this case – to evidence of serious corruption. From that perspective, they are arguably a recognition of an inability to address the corrupt activity in the first place. It was thus striking that when offered the opportunity by the government’s own anti-corruption champion to commit to some of the important reforms that would strengthen the UK’s defences against the illicit finance of corrupt actors (such as reforming Companies House and requiring the ownership of UK property by overseas entities to be publicly registered), removing the tools they favour, the foreign secretary was unwilling to do so.

Finally, against the backdrop of a general cut in UK aid, and a notable cut in support for anti-corruption and good governance programmes, the issuance of anti-corruption sanctions risks being seen as a poor substitute for investment in a fulsome UK response.

Raab must therefore demonstrate that his toolbox in response to international illicit finance contains not only measures that signal disapproval, but also actions that will support the victims of corruption that he rightly notes suffer from the ‘untold damage and hardship to their countries and communities’.

THREE PILLARS OF REFORM

So, how might Raab do this? Three fundamental steps need to be taken, with the same enthusiasm with which he has embraced sanctions.

First, the foreign secretary must clearly acknowledge that his sanctions regime is part of a broad, cross-government plan to boost the UK’s efforts to tackle global corruption. In this regard, providing political backing for the thrust of the recent blog post from the Office of Financial Sanctions Implementation – the government’s sanctions enforcement unit – addressing the interconnection between sanctions and broader economic crime work would be helpful. He must also articulate and commit to the other important steps that the government must take to treat the causes of corruption and the facilitation role played by the UK in the laundering of the proceeds, not merely issue sanctions in response to identifying symptoms.

Second, Raab must fill the vacuum that currently exists among the UK’s political leadership and take ownership of the UK’s international illicit finance agenda. The recent Integrated Review acknowledged the importance of the government reinvigorating its efforts to tackle illicit finance and the way in which the role played by the UK in facilitating the laundering of the proceeds of global corruption tarnishes its reputation. This is a diplomatic challenge that his ministry must be tasked to address.

Third, having put himself forward as a ‘force for good’ champion, the foreign secretary must follow through on what he has started and recognise that to achieve that objective, those that suffer at the hands of the corrupt must feel a benefit from UK actions. Beyond providing a signal of recognition, the issuance of sanctions by the UK is of no financial consequence to those that have been denied a proper education, have suffered at the hands of rent-seeking politicians and officials, or have been dispossessed of their land and their homes. Where corrupt actors have succeeded in exploiting national wealth and resources, the UK must galvanise likeminded countries and invest itself in the enforcement capabilities – such as civil recovery capacity in the National Crime Agency and the financial investigation staff of the International Corruption Unit – necessary to take steps to identify, recover and repatriate stolen assets for the rightful benefit of deprived citizens. The commitment to use the current G7 presidency as a platform to boost asset recovery efforts and work with other major financial markets to maximise impact is welcome – but such plans have been made before and are no substitute for action.

Issuing sanctions may ‘send a signal’, but the UK must now prioritise substance over form. Only when it can clearly demonstrate that its actions are addressing the negative impact corruption has on economic growth and development will it be recognised as the ‘force for good’ that the foreign secretary promotes.

By Tom Keatinge, RUSI, 12 May 2021

Read the original article at RUSI

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