Testing and evidencing the effectiveness of beneficial ownership checks: investigating the laundering of monies and reputations by African and Central Asian elites
The project will assess the effectiveness of the international Anti-Money Laundering regime with respect to banking, real estate purchases, and charitable investments via anonymous shell companies. It builds on earlier research by the team and our extensive links to global civil society, international organizations and regulators, including in Africa and Central Asia. In particular, it will focus on money laundering by the elites of six to-be-determined Central Asian and African states. However, our theoretical and empirical focus is not on the regional elites themselves but the global service providers or ‘enablers’, i.e. professionals often based in liberal democracies which enable money and reputation laundering in their exploitation of ‘loop holes’ in anti-money laundering rules and weak adherence to due diligence requirements. Methodologically, the study will combine a field experiment of banking, the building of a database of overseas real estate purchases via unexplained wealth, and use qualitative comparisons to assess due diligence by international institutions and charities of investments via anonymous companies.
Why this project? Why now? Money laundering is a serious impediment to the effectiveness of official development assistance (ODA) in creating a more prosperous world and helping to build functional democratic governance. Money laundering is characterised by complex international web that involves placements, layering of shell companies, and wire transfers. The disclosure of the Panama Papers in 2016 highlighted the need for greater interrogation of beneficial ownership and unexplained wealth by financial services companies and real estate agents. A surge of new policies came forth including the EU’s Fourth AML Directive and the UK became the first of the G20 countries to introduce a beneficial ownership register for UK companies, and the first in the world to extend this to trusts. However, these more stringent requirements and commitments to enforcement must be interrogated in order to assess compliance to this new AML regime by banks and real estate agents.
When politically exposed persons (PEPs, i.e. senior public officials) are involved in these activities they must also seek to clean their reputations to provide cover for their kleptocratic regimes. In order to do so, they contract lawyers, bankers, company service providers and reputation managers to support this cleaning of their monies and reputations. This project studies and assesses the effectiveness of beneficial ownership and due diligence checks by the intermediaries against the laundering of money and reputations internationally.
The research team includes:
John Heathershaw, University of Exeter (Principal Investigator)
Alexander Cooley, Barnard College / Columbia University, New York
David Lewis, University of Exeter
Jason Sharman, University of Cambridge
Ricardo Soares de Olivera, University of Oxford
We will be supported by research assistants and fellows and be accountable to an international advisory board composed of academics and civil society representatives from Africa, Central Asia and beyond. The project will include four workshops organised with our partners in the US, UK, Africa and Central Asia.
The project is funded under the DFID-Global Integrity Anti-Corruption Evidence Partnership and began on 1 January, 2019, running for two years.