The writer oversees the Human Rights Foundation’s program to combat kleptocracy
A year ago, with a new government emerging in Washington, it was clear that the US had taken the lead in the transatlantic fight against the kleptocracy. But in recent months, London has begun laying out a blueprint to regain that pole position, and began challenging its Western allies to expand their own fight against illicit wealth and international money laundering.
These moves are long overdue. Spurred on by the Russian invasion of Ukraine, the government finally introduced rules so that even if “Londongrad” isn’t completely closed down as the Conservatives claim, the days of illicit Russian wealth pouring into the UK will finally come to an end.
The most notable of these new developments is aimed at owners of British properties hidden behind foreign shell companies. Thanks to last year’s Economic Crime Act, the offshore companies that mask property ownership are now required to disclose their real, beneficial owners. The most remarkable thing is that the regulations seem to be working. As researchers discoveredthese types of real estate purchases have fallen sharply in recent months, part of a decline that predates the most recent sanctions against Russia.
There are encouraging signs of further action. Britain’s shell company register, which is largely unenforced, has so far allowed “Adolf Tooth Fairy Hitler” and “Donald Duck” to be listed under company names and directors. But as soon as the upcoming law on economic crime and corporate transparency passes, the registry comes with verification requirements, which means the days of these cartoon monikers masking untrustworthy companies should be behind us.
It is not only government policy that gives rise to optimism. By spying on an opening, the Labor leadership has turned the fight against the kleptocracy into a primary election plank. Shadow Foreign Secretary David Lammy recently described the fight against kleptocracy as “not just a job for the police. This is foreign policy.”
Eradicating dirty money and fighting dictatorship should indeed be one and the same. Lammy has begun outlining the need for a “progressive moment”, working with allies in Washington and elsewhere to broaden the efforts of the counterkleptocracy.
For those on Capitol Hill, this rhetoric and the other developments were a welcome boost of confidence that London is finally acknowledging the threats of the kleptocracy and its own responsibilities in rooting out corruption. As an American, I welcome this energy surge so much needed by American officials, especially those in the White House, who are quitting the fight.
While the current administration is a clear step forward from a Trumpian alternative, it falls short of its early promise. More than two years into President Joe Biden’s tenure, the US has barely improved transparency property or private investment – two well-known havens for illicit, kleptocratic wealth. We’ve also seen little movement toward regulation of how U.S. lawyers help kleptocrats relocate and launder their wealth. Most embarrassingly, when Biden’s Treasury Department recently outlined plans for America’s own shell company registry, the proposals included an option to leave business owners “unknown” — undermining the entire purpose of the registry.
Fortunately, these requirements are now being drafted again. But initial optimism about Washington’s leadership is fading, buried in partisanship and distractions elsewhere. London’s recent momentum in this area is not only welcome, but could also be a means to boost its allies across the Atlantic.
Last year, the US challenged Britain to step up the fight. Now the roles are reversed. It’s time for US partners to follow the UK’s lead.