The report warned that weaknesses in the UK’s anti money laundering system make it vulnerable to corrupt money flowing into the economy, and also cause problems in terms of detection, freezing, seizure and repatriation of corruptly-obtained assets.
Uncertainty about future applicability of EU rules in respect of money laundering and sanctions, as well as questions concerning international cooperation currently facilitated by EU mechanisms such as Europol and Eurojust have added to existing concerns over the UK’s ability to tackle foreign bribery.
The report also highlights a number indirect impacts leaving the EU could have on foreign bribery enforcement in the UK.
“A tightening of the economy could result in significant strain on public resources, including for law enforcement, and in pressure to weaken the Bribery Act or its enforcement to attract business,” the report warned, adding that leaving the EU could also “clog up the executive and legislative timetable and delay announced initiatives that could facilitate investigation and prosecution of economic crime”.
The report stressed that the UK needs to improve interagency cooperation and ensure the independence of investigations and prosecutions in the fight against foreign bribery.
While the OECD said the UK has taken significant steps to increase enforcement of the foreign bribery offence since its previous evaluation in March 2012, the Working Group identified a number of issues that could undermine the effective enforcement of foreign bribery laws in the UK in the future.
The report highlighted that the UK economy occupies a central position in the broader world economy, with foreign bribery risks “undoubtedly present”.
It warned that the attractiveness of the UK’s financial sector, combined with close links to offshore centres, expose the UK to significant risks of corruption and foreign bribery-related money laundering.
The report recommended that Scotland’s practices and frameworks for foreign bribery enforcement should be improved and brought in line with those in place in England and Wales, particularly in light of the high concentration in Scotland of companies operating in corruption-sensitive sectors.
The Working Group added that there is also scope to improve communication between law enforcement authorities from England and Wales and those in Scotland.
It stressed that the effective approach taken by the Serious Fraud Office (SFO) to investigate and resolve foreign bribery cases has had a positive impact on the UK’s anti-bribery efforts and the think tank encouraged the UK government to maintain the role of the SFO in foreign bribery cases and ensure it continues to have the resources needed to function effectively.
It also warned that the “persistent uncertainty about the SFO’s existence and budget is harmful, especially given the SFO’s prioritisation of foreign bribery cases and its demonstrated expertise in such cases”.
The think tank called on the UK to improve interagency cooperation, and to ensure effective measures are in place to safeguard the independence of investigations and prosecutions.
The report also made a number of additional recommendations including enhancing the UK’s anti money laundering reporting framework to improve detection of foreign bribery, including adopting the Criminal Finance Bill; and strengthening engagement with the Crown Dependencies and Overseas Territories regarding the detection and enforcement of foreign bribery.
According to the report, misuse of corporate vehicles, trusts and foundations registered in the Crown Dependencies (CDs) and Overseas Territories (OTs) is a risk feature.
The Working Group also called on HMRC to conduct a comprehensive review, “as a matter of priority” of its methods and capacity to detect and report foreign bribery.
The report highlighted positive steps taken by the UK since 2012 including the conclusion of nine additional foreign bribery cases involving criminal liability of ten individuals and six companies, imposing civil remedies in three cases, and administrative sanctions in a further two foreign bribery-related cases.
“A number of foreign bribery prosecutions and pre-charge investigations are also underway. Important legislative reforms, including the introduction of deferred prosecution agreements, and high-level political commitments, such as those made at the May 2016 London Anti-Corruption Summit, have supported these enforcement efforts, and the UK has further restated its continued commitment to fighting foreign bribery,” the report said.
Among the Summit commitments, the UK committed to developing the first ever national Anti-Corruption Strategy, to be published in 2017.
The UK also announced beneficial ownership initiatives that may facilitate investigation of the complex web of financial structures commonly associated with foreign bribery cases as well as increased transparency and information sharing in other areas.
In addition, the UK has taken significant steps to enhance its detection capabilities, including through intelligence analysis by the SFO, improved whistleblowing channels, and mobilisation of some of its government agencies.
According to the report, the UK is now one of the major enforcers among the Working Group countries.