Tuesday June 28, 2022

Dirty money ‘continuing to flow’ b/w Pakistan and UK

December 24, 2020

LONDON: A British government report has revealed that dirty money is continuing to flow from Pakistan to the UK and vice versa.

The UK government’s latest “National risk assessment of money laundering and terrorist financing 2020” report says that “corrupt foreign elites continue to be attracted to the UK property market, especially in London, to disguise their corruption proceeds”.

The report, put together by the Treasury and the Home Office, has named Pakistan, China, Hong Kong, Russia and United Arab Emirates (UAE) as the hotspot countries from where the most flow of money takes place.

Prime Minister Imran Khan came into power with the pledge of rooting out money-laundering and illicit methods but findings of the report suggest that illicit flow of money both ways between both the countries has held on well – without any obstacles.

About Pakistan, the report said that the UK continues to have close economic links to Pakistan, including significant remittance flows between both jurisdictions, which according to estimates equated to approximately $1.7 billion in 2017.

The report noted that these economic and cultural ties “also enable and disguise illicit funds to be transferred between the UK and Pakistan, including through illegal informal value transfers”. The report said that elements from Pakistan are buying high value assets in the UK and elements from the UK are buying high value assets in Pakistan, using cash and dirty money.

The report said: “Criminals continue to purchase high value assets, such as real estate, precious gems and jewellery to launder illicit funds which are transferred from Pakistan to the UK and vice versa. This includes proceeds from corruption and drug trafficking. The risk from cash-based money laundering from the UK to Pakistan via smuggled cash and Money Service Business (MSBs) also persists.”

The report said that in 2018 Pakistan was nominated to the Financial Action Task Force (FATF) list of jurisdictions with strategic anti-money laundering and counter-terrorist financing (AML/CTF) deficiencies, known as the ‘grey list’, due to widespread CTF deficiencies.

While FATF acknowledged notable improvements in the months following, they also warned “should significant and sustainable progress not be made when next reviewed then the FATF could call on its members to advise their financial institutions to give special attention to business relations and transactions with Pakistan”.

The report said that the UK, as a member of FATF, continues to closely monitor for sustained and timely efforts. It said: “The UK also continues to support Pakistan, including with capacity building assistance, to help Pakistani authorities meet their commitments. Joint operations between the National Crime Agency (NCA) and Pakistani authorities to tackle illicit finance threats have benefitted from good levels of cooperation. For example, in December 2019, the NCA negotiated a settlement with a Pakistani national to return funds and property valued at approximately £190 million to Pakistan. This success would not have been possible without the close cooperation between UK and Pakistan law enforcement agencies.”

The report said that serious and organised crime undermines the legitimacy and authority of the state and pose a fundamental threat to the country’s future security. Organised crimes, said the report, cost the UK economy an estimated £37 billion per year.

The report said that money launderers from Russia exploited UK’s company set up system and professional services to buy expensive properties. The UAE is an attractive location for those who also wish to launder the proceeds of crime from abroad and these deficiencies expose the UAE, and other countries, to abuse by international controller networks which continue to launder the proceeds of crime to and from countries including the UK.

The report said that a significant volume of proceeds of crime flow in and out of China annually, particularly through the use of informal value transfer systems (IVTS). Hong Kong continues to be used as a financial gateway into and out of mainland China for both legitimate and illicit funds, it said.