Dan Secretan, co-founder of Xapien, discusses the need for UK Government reform in light of the recent Pandora Papers data leak
Bad things supposedly come in threes so, despite several years passing since the unprecedented Panama and Paradise Papers data leaks, the next batch of damning evidence of offshore tax regime exploitation never felt far off.
This month’s release of the Pandora Papers has once again focused the spotlight on the United Kingdom and its lax approach to financial transparency. The bombshell documents highlight, once more, how the financial and other allied elites use the world of offshore accounts and shell companies to obscure the movement or origin of their wealth.
Money laundering
A 2019 parliamentary report said the UK system attracts people “such as money launderers, who may wish to use property to conceal illicit funds”. The report also said criminal investigations are often “hindered” because police cannot see who ultimately owns properties. It is no wonder that the UK has faced accusations of being the money-laundering capital of the world.
Just last week it emerged that the UK government’s own venture capital fund, which has poured money into thousands of companies as part of its efforts to support the UK economy during the pandemic, had failed to perform commercial due diligence on its investments.
As people who advise corporations, universities, and investors on risk and how to mitigate it, we wish Britain would do more to strengthen its disclosure regime. Put simply: Britain must be more transparent.
Transparency
Transparency allows businesses to make informed decisions on their partnerships and collaborations; it gives businesses confidence by offering protection from potential reputation-ruining scandals. More importantly, transparency can drive revenue by burnishing reputations and allowing companies to conduct more effective business development.
Thankfully, the Conservative government published draft legislation in 2018 that would greatly improve disclosure and transparency on financial matters. Sadly, the current administration has yet to act on its draft plans. For its part, the government says it will act when ‘Parliamentary time allows’. After the latest ‘Pandora’s box’ opening, let’s hope they act soon.
Getting the ball rolling should not prove too difficult a task. As Tom Keatinge of the Centre for Financial Crime and Security Studies at RUSI has written, two measures- Companies House reform and implementing offshore property ownership transparency- would, “almost at a stroke”, prevent the UK’s role in scandals such as the Pandora Papers.
A first thought on #PandoraPapers. There will be outrage about the names involved – from a UK perspective the greatest outrage should be directed at the Johnson government for sitting on legislative reform that would – almost at a stroke – prevent the UK’s role in such scandals.
— Tom Keatinge (@keatingetom) October 3, 2021
A lack of action from the government certainly invites questions about their sincerity in tackling financial crime. Surely post-Brexit Britain is an attractive location to live, work or invest in…
AI technology
But even radical transparency wouldn’t fix every problem, not in the digital age. The Pandora Papers highlight another barrier to establishing trust in the online era: the sheer volume of records.
Dwarfing even the monumental 2016 Panama Papers release, the Pandora disclosure consists of some 12 million files made up of 6.4 million documents, almost three million images, more than a million emails and almost half-a-million spreadsheets. It has taken a team of 600 investigative journalists, in 117 countries, 14 months to process an astonishing 2.94 TB of data. The internet is not only a giant haystack with many mystery needles, but it also adds haystack upon haystack of new information every day.
Thankfully, new advances in AI technology can help separate, search, evaluate and collate the information businesses need to make informed decisions. So, to the government we say: bring it on. Enact the transparency reforms that will drown us in even more information. We can, and must, handle it.
