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Gatekeepers asleep on the job

The week in corruption, 12 June 2020

Photo by bartram on iStock (Copyright)

Transparency Int'l

Reporting of major corruption scandals usually puts the high-profile kleptocrats front and centre, and rightly so. But, more often than not, the criminal and corrupt couldn’t launder their ill-gotten gains without a variety of professional services, including those of accountants, notaries, real estate agents and bankers.

These professions are subject to specific anti-money laundering obligations, and are meant to be the first line of defence protecting the global financial system against dirty money.

However, when they engage in wilful, complicit or negligent conduct, as illustrated in numerous cases, they earn another nickname: professional enablers of money-laundering.

The latest investigation into the business dealings of a politically connected family from Azerbaijan adds to the long list of examples where intermediaries appear to have helped obscure the origins of the suspect funds.

Pink graffiti spells 'End This Kleptocracy' on a grey wall

A new investigation by the Organized Crime and Corruption Reporting Project has exposed the real estate and business empires of the children of Eldar Mahmudov, Azerbaijan's Minister of National Security between 2003 and 2015.

Who is opening gates for kleptocrats?

A lack of due diligence and reporting of suspicious transactions by professionals in Spain and the United Kingdom, in particular, seem to have helped the family in question make investments in luxurious real estate and legitimate businesses, despite major red flags.

Authorities in the countries involved, including in the United Kingdom, should take note of the new evidence and thoroughly investigate whether the professional intermediaries conducted the necessary checks. There should also be stronger anti-money laundering supervision and tougher sanctions for the professional enablers who open the gates of the financial system to kleptocrats.

This is especially crucial now. These gatekeepers should play a key role in preventing the post-COVID-19 recovery from being undermined by corruption.

Our new study finds evidence that during previous crises, professional enablers facilitated economic crime. The particular features of the COVID-19 crises may create more opportunities for economic crime as the crisis unfolds.

Evidence shows that professional enablers have facilitated economic crime during previous crises. For instance, drug money was laundered through banks during the 2008 global financial crisis, and funds disbursed in previous humanitarian crises, such as the Ebola outbreak, were lost and laundered with assistance from professional enablers.

Professional enablers of economic crime during crises

More than ever, we need these professional service providers to do their jobs and keep the gates of the financial system shut for the kleptocrats.

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