UK professional service providers are helping to create a 'transnational kleptocracy' in which elite figures from post-Soviet states can launder their money and reputations, according to a study by international affairs thinktank Chatham House.
The research paper, The UK's Kleptocracy Problem, states that the anti-money laundering regime is 'risk-insensitive', with banks over-reporting suspicious activity while 'non-financial services providers' under-report. Failures of investigation have led to flawed judgments by the courts, while 'capable and expensive lawyers... defeat or deter the regulators' often weak and under-resourced attempts to prosecute'.
Meanwhile 'the provision of aggressive reputation management services by UK professionals includes libel actions, quasi-defamation cases, and the use of public relations agents against journalists and researchers.' These services 'transplant authoritarian agendas and rivalries to the UK'.
The report demands a new approach by the government to create a 'hostile environment for the world's kleptocrats'. This would include prosecuting professionals who enable money laundering.
Responding to the report, a Law Society spokesperson said: 'The legal profession is fully committed to supporting the fight against economic crime and the profession takes its anti-money laundering responsibilities very seriously.
'Law firms already play an important and significant role in tackling money laundering. This is demonstrated by the substantial costs and resources allocated by the profession to complying with its AML and financial crime obligations, resulting in a substantial public benefit.'
The Society noted that, in 2020 some 1,500 suspicious activity reports were filed by the legal profession. 'These numbers are proportionate for the number of transactions the legal sector undertakes compared to financial services and for how law firms operate.'