Just how much does the UK recover from corruption? Annual asset recovery statistics published last week show some modest progress in the UK’s asset recovery performance, with a strong showing on the 6-year average.
However, the £339.1m recovered last year represents just 0.34% of the £100bn the NCA estimates is laundered through the UK annually. The vast majority of funds recovered in relation to grand corruption meanwhile were based on US rather than UK enforcement action. And despite the overall increase in recovered assets, the amount of assets returned to the countries from which they were stolen as a result of corruption is at a three year low.
To really ramp up asset recovery and tackle corruption we need to see far greater reinvestment into law enforcement of:
- recovered assets (except when assigned for victim compensation including in cases of grand corruption when they should be returned to their origin countries), and
- the millions in economic crime fines and penalties such as in Deferred Prosecution Agreements.
While those funds need to be ring-fenced for multi-year investment in key law enforcement agencies, more money will only go so far. We also need a comprehensive review of salaries, training pathways, recruitment and retention to create an attractive asset recovery career path in law enforcement.
What has the UK committed to do on asset recovery?
The UK has made extensive commitments to target the finances of criminals and kleptocrats through asset recovery. A priority of the Integrated Review refresh 2023 is to “reinvigorate progress” towards the UN Sustainable Development Goals, including by ensuring that “revenues and assets lost to illicit finance are identified and recovered” (SDG 16.4).
Meanwhile, one of three pillars in this year’s Economic Crime Plan 2023-26 (ECP) is to “reduce money laundering and recover more criminal assets”. Under the ECP, the government is committed to:
- strengthening international asset recovery standards to tackle “enablers of kleptocracy” and “reduce the threat” of international illicit finance to the UK, and
- reducing impunity for grand corruption in developing countries by recovering and returning stolen assets.
Is the UK on course to meet these commitments?
The latest Asset Recovery Statistical Bulletin indicates that while the UK is making some modest progress there is a lot more to do when it comes to recovering the proceeds of corruption and kleptocracy.
In a very welcome move, the government for the first time published data on asset recovery relating to “grand corruption”, defined by the government as “acts of corruption involving the misuse or abuse of high-level entrusted power by senior public officials”.
According to the bulletin:
- The total value of the proceeds of grand corruption restrained, seized or frozen in 2022/23 was £275m. However, £228m of this was through a Prohibition Order (a freezing order imposed for an overseas law enforcement agency) on behalf of the US DoJ as part of its investigation into the 1MDB money laundering scandal.
- The total value of the proceeds of grand corruption actually recovered in 2022 to 2023 was £95.4 million. Most of this was from the record £93.5m confiscation order imposed following the SFO’s prosecution of mining giant Glencore for bribery in Africa.
While it’s useful to have this breakdown, it would be even better if the government:
- publishes data on grand corruption that covers a longer time period, and
- ensures that data includes details on specific cases.
Returning corrupt assets
Recovering corrupt assets is only half the job – these assets should also be returned to the country from which they were stolen in an accountable and transparent way to compensate victims of corruption.
Only a small amount of assets recovered from international corruption have been returned to their countries of origin:
- Of the £1.2 billion in corrupt funds frozen or confiscated by the UK between 2006 and 2023, by our estimates only around £307 million (25%) has actually been returned over that period (and this includes the controversial £199m settlement between the UK government and Malik Riaz in Pakistan).
- By comparison, of the $3.4bn assets frozen by the US between 2010 and 2022, $1.6bn have been returned (47%) as part of its Kleptocracy Asset Recovery Initiative which recovers the proceeds of corruption. The KARI is part of the Asset Forfeiture Program, which sees recovered assets (where they are not returned to origin countries or used to compensate victims) reinvested in asset recovery work.
- In 2022/23 meanwhile the UK only returned £0.2m of assets recovered from corruption, less than the £0.45m in 2021/22 and £4.2m the year before that.
To sum up
To ensure the UK prioritises the recovery and return of stolen assets, we need to see:
- Much more proactive use of the Framework for transparent and accountable asset return published last year.
- A comprehensive review of salaries, training pathways, recruitment and retention to create an attractive economic crime career path in law enforcement.
- Far greater reinvestment of recovered assets (when they are not used to compensate victims including of overseas corruption), as well as economic crime fines, ringfenced for asset recovery work.
- Better protection from huge costs bills when law enforcement agencies bring reasonable asset recovery proceedings in the High Court.