HOTLINE KLEPTOCRACY UWO Unexplained Wealth Orders

Is the U.K. Finally Getting Serious About Cracking Down on Dirty Money?

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The United Kingdom has long been infa­mous as a mon­ey-laun­der­ing haven, with hun­dreds of bil­lions of dol­lars in dirty mon­ey pass­ing through its finan­cial sys­tem just in recent years. In 2017, the British gov­ern­ment decid­ed to deal with all this dirty mon­ey by enact­ing the Unexplained Wealth Orders, a series of reg­u­la­tions allow­ing author­i­ties to iden­ti­fy and seize assets relat­ed to poten­tial cor­rup­tion and mon­ey-laun­der­ing cas­es. But in their three years of exis­tence, the gov­ern­ment has pur­sued a grand total of just one case under the orders, against the wife of a promi­nent for­mer banker from Azerbaijan, who had fall­en afoul of the regime in Baku. It iden­ti­fied less than $50 mil­lion in sus­pect pay­ments—a small frac­tion of the total sus­pi­cious trans­ac­tions processed by British finan­cial insti­tu­tions.

Yet the promise of the Unexplained Wealth Orders may now be com­ing to fruition. Last month, British inves­ti­ga­tors from the National Crime Agency began legal pro­ceed­ings to seize assets belong­ing to two rel­a­tives of Kazakhstan’s for­mer dic­ta­tor, Nursultan Nazarbayev: His daugh­ter, Dariga Nazarbayeva, and his grand­son, Nurali Aliyev. According to British author­i­ties, the two own some of London’s toni­est properties—a huge Chelsea apart­ment, a man­sion in Highgate over­look­ing one of the most exclu­sive golf clubs in all of Europe, and anoth­er man­sion near­by along one of the most expen­sive stretch­es of real estate in Britain, on what is known as the city’s “Billionaires’ Row”—all acquired with ques­tion­able financ­ing. British inves­ti­ga­tors claim that the hous­es were financed with pro­ceeds from crimes com­mit­ted by Aliyev’s father, Rakhat Aliyev, a for­mer deputy head of Kazakhstan’s state secu­ri­ty ser­vices.

There is any num­ber of sim­i­lar prop­er­ties scat­tered across London. Corrupt fig­ures from around the world—including post-Soviet states, the Persian Gulf and sub-Saharan Africa—use high-end real estate as a way to give their ill-got­ten gains a veneer of legit­i­ma­cy, and to keep their pil­fered loot safe from the pop­u­la­tions they’re pil­lag­ing. Tens of thou­sands of prop­er­ties in London alone are con­trolled by off­shore com­pa­nies. For years, the oli­garchs and klep­to­crats behind those extrav­a­gant prop­er­ty pur­chas­es faced no con­se­quences for hid­ing their dirty mon­ey. But the pro­ceed­ings against Aliyev and Nazarbayeva are now a major step for­ward for Britain’s anti-cor­rup­tion efforts.

They are also sig­nif­i­cant because of Aliyev and Nazarbayeva’s pro­file. While Nazarbayev for­mal­ly resigned as pres­i­dent of Kazakhstan last year, he has con­tin­ued to steer pol­i­cy from behind the scenes. Nazarbayeva, Aliyev’s moth­er, is the cur­rent chair­woman of Kazakhstan’s Senate, and has long been seen as a poten­tial future leader of the coun­try.

The British government’s will­ing­ness to tar­get Kazakhstan’s first fam­i­ly, espe­cial­ly after years of effec­tive­ly turn­ing a blind eye to its own role in facil­i­tat­ing cor­rupt trans­ac­tions, sends a pow­er­ful sig­nal that no cor­rupt fig­ure is untouch­able. One British inves­ti­ga­tor even out­right accused Aliyev, who is esti­mat­ed to be worth hun­dreds of mil­lions of dol­lars, of hav­ing “been involved in mon­ey laun­der­ing.”

The move is espe­cial­ly remark­able con­sid­er­ing that Nazarbayev and his regime have for years relied on white-shoe PR firms in both London and Washington to pro­mote Nazarbayev’s image as a benev­o­lent leader who is steer­ing his coun­try toward some kind of a lib­er­al democ­ra­cy. In real­i­ty, Nazarbayev presided over a repres­sive police state that locks up jour­nal­ists and dis­si­dents. Former Prime Minister Tony Blair became the poster-child for Nazarbayev’s efforts at laun­der­ing his rep­u­ta­tion, with Blair pock­et­ing mil­lions of dol­lars as a con­sul­tant to help white­wash Nazarbayev’s bru­tal­i­ty. Blair even served as Nazarbayev’s speech­writer after Kazakh secu­ri­ty forces gunned down at least 14 unarmed pro­test­ers in the city of Zhanaozen, in west­ern Kazakhstan, in 2011.

There seems to be a shifting understanding in London about its damaging role in global money-laundering webs, which has allowed kleptocratic networks to flourish.

As it is, Aliyev’s alleged off­shoring of his mon­ey first sur­faced in 2016 when the so-called Panama Papers leaked. Among the assets linked to Aliyev in those mil­lions of doc­u­ments from the Panamanian law firm Mossack Fonseca was a 23-meter-long yacht called “Nomad.”

Unsurprisingly, Aliyev used a num­ber of Caribbean-based shell com­pa­nies to pur­chase the osten­ta­tious London prop­er­ties, one of which includes an in-house cin­e­ma and an under­ground pool. According to doc­u­ments obtained by mon­ey-laun­der­ing inves­ti­ga­tors, British lender Barclays approved a mort­gage for these shell com­pa­nies in 2014, with Aliyev and his wife named as the occu­pants of one of the London man­sions. “The com­plex­i­ty and delib­er­ate obscu­ri­ty of the way in which the Aliyev assets were han­dled… indi­cates they had a crim­i­nal ori­gin,” one British inves­ti­ga­tor claimed in writ­ten tes­ti­mo­ny.

Lawyers for Aliyev and Nazarbayeva have denied the charges thus far, claim­ing, some­what ludi­crous­ly, that Nazarbayeva had earned her wealth through legit­i­mate means. Last week, the U.K. High Court denied the government’s request to seize the prop­er­ties, find­ing that there was insuf­fi­cient evi­dence to sup­port the claim that the hous­es had been bought with Rakhat Aliyev’s mon­ey. The National Crime Agency plans to appeal the case.

But even if Nazarbayeva and Aliyev man­age to escape with their prop­er­ties intact, the rep­u­ta­tion­al dam­age has been swift, both at home and abroad. Not only has Kazakhstan’s lead­ing fam­i­ly now been accused of out­right mon­ey laun­der­ing by British inves­ti­ga­tors, but Kazakhs them­selves—who face jail time, or worse, for try­ing to inves­ti­gate Nazarbayev’s family’s assets—now have brand new clues about how the first fam­i­ly has moved their mon­ey. Nazarbayeva has report­ed­ly enlist­ed mul­ti­ple cri­sis com­mu­ni­ca­tions firms to han­dle the fall­out. The case also shows that British author­i­ties are now will­ing to use the Unexplained Wealth Orders to tar­get polit­i­cal­ly con­nect­ed fig­ures. There are report­ed­ly mul­ti­ple oth­er anti-cor­rup­tion cas­es in the pipeline, whose tar­gets include for­mer offi­cials from Russia and cor­rupt gov­ern­ments in Africa.

The Unexplained Wealth Orders are one of the most promis­ing tools in Britain’s efforts to crack down on flows of dirty mon­ey through its finan­cial sys­tem, and they should be repli­cat­ed else­where. A sim­i­lar pol­i­cy in the U.S., for exam­ple, would be an effec­tive com­ple­ment to the Treasury Department’s Geographic Targeting Orders, which force prop­er­ty pur­chasers to reveal their iden­ti­ty in sev­er­al juris­dic­tions across the coun­try.

Regardless of what comes next in the case against Aliyev and Nazarbayeva, there seems to be a shift­ing under­stand­ing in London about its dam­ag­ing role in glob­al mon­ey-laun­der­ing webs, which has allowed klep­to­crat­ic net­works to flour­ish and propped up regimes in places like Kazakhstan and Azerbaijan. If the case against Aliyev and Nazarbayeva is the first of many to come, oth­er polit­i­cal­ly pow­er­ful, cor­rupt fig­ures will begin to feel the heat.

Casey Michel is a writer, ana­lyst and for­mer inves­tiga­tive reporter at ThinkProgress. His writ­ing has also appeared in The New Republic, Foreign Policy and The Atlantic, among oth­er pub­li­ca­tions. Follow him on Twitter at @cjcmichel.

Original source: WPR World Politics Review

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