Security minister Tom Tugendhat is working on a new anti-corruption strategy to stop the laundering of criminal money in the UK, and to help British businesses that trade internationally to do so compliantly and more cost-effectively.
The new approach will “defend our economy, strengthen our society and safeguard our national security”, he claims.
The Economic Crime and Corporate Transparency Bill, which is currently making its way through Parliament, will also “improve transparency around corporate entities and give law enforcement new powers to seize cryptoassets”.
‘Enemy to trade’
Tugendhat wrote about the new strategy in a comment piece in the Telegraph today (14 August), in which he also referred to the recent imprisonment of Gulnara Karimova – the daughter of a former Uzbekistani leader who was found guilty of money laundering, among other crimes.
He called corruption a “threat to our national security” and an “enemy to trade”, claiming that it can add as much as 10% to the cost of doing business internationally.
“The UN estimates that between 2 and 5% of all global finance is laundered criminal money,” he wrote. “That’s about £1.6trn – roughly equivalent to the GDP of Italy.”
Social impact
Chara de Lacey, the head of business integrity at Transparency International UK, told the IOE&IT Daily Update that corruption has a “corrosive social impact” on societies and that British businesses should be vigilant to ensure they do no contribute to corruption, even by “inadvertently facilitating” it.
Transparency International UK has been making recommendations to the government on what the new anti-corruption strategy should include and de Lacey believes that legislation needs to be accompanied by proper enforcement.
“Robust legislation is needed and enforcement bodies need to be sufficiently resourced so that they can play an effective role,” she said.
She added that government needs to appoint an anti-corruption champion who has the role of ensuring corruption remains a priority. Part of this role would include ensuring the implementation of the government’s anti-corruption agenda when the Economic Crime and Corporate Transparency Bill becomes law, including the prevention of criminal money entering the UK.
Trade deals
Tugendhat also mentioned the role that the UK’s post-Brexit trade deals have already played in setting “a new global standard”.
De Lacey agrees that “good progress” has been made by the UK to prioritise anti-corruption in trade agreements and says that future negotiations provide the government with a “real opportunity”.
“These international agreements are important legal instruments for solidifying and codifying a commitment against corruption,” she said.
Need for vigilance
De Lacey also said that businesses need to be vigilant to ensure both their direct and indirect suppliers are compliant with the UK’s anti-corruption and bribery laws, saying that this ought to be recorded and “made part of the business relationship”.
Graham Welland, the CEO of risk management firm GW Consultancy International (GWCI), agrees.
He told the IOE&IT Daily Update that firms needed to conduct thorough due diligence on existing or potential suppliers and that, in many cases, this is a legal requirement.
“Whilst the level of corruption risk does fluctuate depending on the country and business sector, no supply chain is completely without risks,” he said.
“Managing these risks involves taking a proactive approach. This can be done through carrying out due diligence on existing or potential suppliers, shortening the supply chain, and sourcing ethical or local suppliers.
“By not addressing corruption within the supply chain, companies can fall victim to reputational and financial damage. This is notwithstanding the fact that for many countries – such as the UK with the Modern Slavery Act – there is a legal obligation for companies to carry out due diligence in order to fulfil the requirements of the regulation.”
Further support
Welland recently spoke on an IOE&IT webinar about due diligence, during which his colleague, Simon Dexter, said that businesses needed to view reputation management as being “as important as profit margins”.
GWCI also works with IOE&IT to support IOE&IT members with their risk management strategies.
The consultancy is offering a free 45-minute consultation and 10% discount on its products and services, which you can find out more about here.
Transparency International UK has also published guidance on best practice for business in the UK and abroad in regard to complying with anti-bribery laws, which you can find here.