Public/private partnerships – an opportunity or risk for anti-corruption?
Public/private partnerships – an opportunity or risk for anti-corruption?
Nick J Maxwell
Any effort to understand new approaches in tackling corruption would not be complete without considering the growth of public/private information-sharing partnerships: the latest and perhaps most promising manifestations of ‘collective action’.
As with a number of innovations in anti-corruption, interesting references and policy ambition can be found in the UK government’s anti-corruption 2017-2022 strategy. The UK strategy draws strong links between tackling money laundering, supporting the integrity of the financial sector and addressing corruption. As part of this mission, the strategy highlights the central role of “stronger public/private partnership, to share information and improve targeting of those who pose greatest risk”.
The fields of bribery, corruption and money laundering are intimately linked. Efforts to improve the detection of money laundering through the financial system should, in theory, help ‘follow the money’ of the proceeds of corruption and ultimately bring perpetrators to justice. However, efforts to tackle financial crime, and corruption more broadly, have struggled to keep pace with the threat. The UNODC estimates that less than 1% of criminal funds believed to be flowing through the international financial system are subject to seizure and recovery.
So what are public/private information-sharing partnerships and what innovation do they bring to the fight against corruption?
Over the last three years, to try and have a greater effect against financial crime, new public/private financial information-sharing partnerships between major financial institutions and law enforcement agencies have been established in the UK, US, Canada, Australia, the Netherlands, Malaysia, Singapore, Hong Kong, New Zealand and Ireland. They allow law enforcement better to utilise data and expertise from financial institutions, providing for exchange of insight (and sometimes case information) between law enforcement investigators and analysts from compliance intelligence teams in financial, professional and research firms. The recorded impacts of this partnership approach have been significant. 65 arrests were attributed to the Hong Kong partnerships within only 4 months. Over 100 arrests have been attributed to the UK partnership over three years and the Australian partnership, which is just over a year old, has been applied to crime threats as varied as counter terrorism to missing persons.
However, currently only the UK partnership – the “Joint Money Laundering Intelligence Taskforce (JMLIT)” – includes corruption as a specific priority theme.
Part of the value of the partnership approach is that law enforcement and private sector compliance analysts can work together, to understand and evaluate financial crime threats and their footprint in the financial system. Typologies can then be developed, with indicators of suspicious activity that can be searched against massive datasets of transactions held by major banking institutions. Relevant reports of ‘suspicious activity’ can then be filed. Partnerships are also bringing to the forefront the need for sectors, outside of banking, to work together to understand complex financial crime threats. For example, Transparency International UK supports the UK ‘Bribery and Corruption’ expert working group in the UK JMLIT, alongside banks.
When combined with law enforcement resources to take forward suspicious reporting from the private sector to criminal justice outcomes, this rise in the quantity, quality and relevance of reporting represents a significant step-change in the capability to address serious and complex economic crimes.
In the UK, this capability is matched with policy and operational focus on anti-corruption. The UK’s Anti-Corruption Strategy and the National Crime Agency prioritise the role of public/private partnerships and the dismantling of the facilitation networks that support money laundering and profiteering from the proceeds of corruption.
The UK, though, is distinctive compared to its international peers in having corruption as a priority theme for its public/private partnership. More commonly, jurisdictions are dedicating their partnerships to combating terrorist financing.
Corruption remains a very challenging area to investigate, especially grand corruption. A suspect of grand corruption and associated money laundering may still use their connections in their home jurisdiction to obfuscate and undermine an international investigation against them. However, more countries may follow the UK’s lead in actively prioritising corruption investigations in their public/private partnership. Independent anti-corruption research into the effectiveness of the partnership approach will be important in informing others about the value of the UK’s approach.
Anti-corruption researchers may also have a broader lens. As this new information-sharing approach develops, there may be new opportunities for abuse of power. Anti-corruption researchers should be mindful of the potential for abuse when the most powerful financial institutions in a country and law enforcement agencies work in close collaboration on investigations (sometimes co-located). The partnerships run the risk of blurring the line of public responsibility for criminal investigations. Law enforcement agencies will need to maintain controls that enable them to not be compromised from taking forward investigations against those that they are also in partnership with.
As the growth of data analytics and artificial intelligence transforms the speed of interaction within a public/private partnership, then civil liberties and privacy researchers should also be interested in the implications for financial intelligence to grow as a surveillance tool, akin to communications intelligence. There will need to be robust scrutiny as to the levels and adequacy of public oversight for those powers.
Public/private financial information-sharing partnerships represent an exciting area of policy and practice in fighting financial crime, and taking action against the proceeds of corruption. Early results are promising, but the impact will need to be evaluated over time. It remains to be seen how far the partnerships approach can contribute to tackling corruption and recovering assets for victims of corruption. If the partnerships continue to grow as an extra tool in the arsenal of law enforcement, then continuous attention should be applied to the governance and oversight of these arrangements to ensure they are proportionate and adequately protect civil liberties.
With innovation comes opportunity, but also risks. The anti-corruption research community should be at the forefront of understanding and evaluating both.
Nick J Maxwell leads the Future of Financial Intelligence Sharing (FFIS) research programme, a research partnership between NJM Advisory and the Royal United Services Institute (RUSI) Centre for Financial Crime and Security Studies.