By Roberto Saviano

It’s probably remain’s least used argument, but isolated nations are unable to fight organised crime. Only real cooperation in Europe can have an impact

If I were to ask which country was the most corrupt in the world, you might say Afghanistan, Nigeria or Russia – maybe Mexico. I would say, the United Kingdom. True, the latest report from Transparency International, in 2015, put the UK in the top 10 cleanest countries in the world. Yet corruption has crept in, in the form of investments, many of which are the profits of illegal activity.

Another 2015 report, this time from the Tax Justice Network, which ranks countries according to the secrecy and scale of their offshore financial activities, had Switzerland at number one out of 100 countries; the UK was 15. However, British crown dependencies and offshore tax havens were ranked separately. A footnote in the report stated: “If Britain’s network had been assessed together, it would be at the top.”

Non-government organisations including Transparency, writers such as Nicholas Shaxson in his book Treasure Islands, and the National Crime Agency have all drawn attention to this issue. Recently activists from ActionAid UK, Oxfam and Christian Aid covered part of Trafalgar Square with sand, palm trees and deck chairs to draw attention to London’s role as one of the tax havens through which illegal profits are moved. But we are a long way from the public outrage one might expect.

The members of the tax haven club share certain guarantees: they ensure banking clients’ total secrecy, they release no information to other countries’ tax authorities, and they offer a low- or zero-level tax rate for people who are non-domiciled. Opening companies in tax havens is completely legal. The problem is the ends for which these companies are used.

The principal aim is tax avoidance, achieved for the most part through lawful mechanisms. But the same mechanisms are used to launder dirty money – that is, the proceeds of crime.

Drug trafficking money is laundered through perfectly legitimate mechanisms by using offshore accounts in the Caymans. Photograph: Jeff Greenberg/Alamy
One of the practices most commonly used by organised crime is buying and selling property at fake values. Let’s say a mafia boss buys an apartment in London for £500,000. Using a false name, he opens an offshore bank account, for instance on the Cayman Islands, and deposits the profits of, say, drug trafficking there. After a bit of work – a new kitchen, a paint job – he sells the apartment to the offshore company for £1m. The transaction, in itself apparently perfectly legitimate, has enabled him to show that his money is obtained through legal means. These laundered funds can now be invested.

In 2013 a study by the Italian transnational crime research centre Transcrime revealed that Italian mafias have taken over numerous UK businesses: the Sicilian Cosa Nostra has invested in gambling; the Naples Camorra in public building contracts, restaurants, and property development in Scotland; the Calabrian ’Ndrangheta in London property. A number of studies have shown that the City of London is the world capital for laundering the profits of drug trafficking. The

Russian mafia has contributed to the London housing bubble and inflated prices by investing in property.

Not only does the UK have no effective legal bar to money laundering, but here – as in other European countries – there is no crime of mafia association. And this makes matters worse. If you Google the restaurant Pavarotti’s Aberdeen, the website will tell you it’s closed. But it won’t tell you why. The owner, the alleged mafia boss Antonio La Torre, laundered the Camorra’s money from the 1980s onwards through various businesses in Aberdeen, including property and imported Italian foodstuffs. In 2003 he was the subject of an arrest warrant for mafia association and extortion.

Unfortunately the warrant was not recognised in the UK, and the boss continued his untroubled existence until a European arrest warrant could be issued for crimes committed in Italy. By the time the authorities caught up with him in Aberdeen, he had been sentenced in an Italian court to 13 years in prison.

Money laundering and tax evasion have been on the front pages of British papers recently, after the Guardian’s Panama Papers revelations. But it’s possible that if David Cameron’s name had not come up because he was a beneficiary of an offshore trust set up by his father, they would not have received nearly as much coverage.

Switzerland, Austria and many known tax havens have signed international agreements on the automatic sharing of information that should put an end to private banking: from 2018, they will be obliged to share with other signatories details about their clients, their deposits and their shares. Many of these clients will of course take their secret funds to other hidden locations, but a lot of their money will enter the system, quite legitimately, through the City of London. A report from the Boston Consulting Group predicts that in 2020 Switzerland, which currently holds a quarter of all offshore assets in the world, will still be the biggest offshore centre in the world, followed by Singapore and the UK.

It is probably the argument least used by the remain campaign, but the only chance the UK has of avoiding a flood of criminal capital is to stay in Europe. How can we deal with issues that are by definition international – money laundering, terrorism, organised crime, drug trafficking – using only national instruments? The walls of regulation needed to stop the flow of dirty money can be built and maintained only in cooperation with the rest of Europe.

IMAGES:
Illustration by Nate Kitch
Cayman Islands road sign pointing the way to a town called Hell Facebook Twitter Pinterest

For more on this story go to: https://www.theguardian.com/commentisfree/2016/jun/23/real-threat-britain-borders-flow-dirty-money-eu