Transparency International UK (TI-UK) have added a new term to the AML vocabulary namely, Reputation Laundering.
What is reputation laundering?
Reputation laundering is the process of concealing the corrupt actions, past or present, of an individual, government or corporate entity, and presenting their character and behaviour in a positive light.
This is done in order to gain legitimacy, privilege, influence and impunity from justice. It helps to disguise individual acts of corruption like bribes, kickbacks, extortion and embezzlement, or endemic corruption which can go on for a number of years on a national scale.
There is no law against reputation laundering, but it will often be funded by laundered illicit funds and is nonetheless ethically questionable.
Who is involved?
We have identified a number of ways in which corrupt individuals have sought to cleanse their reputation and hide their past. This includes various sectors and products including:
- hiring public relations firms to manage their external image
- proactively developing political connections to gain influence in parliaments and governments
- engaging law firms to pursue allegations about their corrupt conduct or past
- using respectable banks to gain introductions to élite networks
- giving philanthropic donations to cultural, educational and charitable institutions to give an aura of
- respectability
- sending their children through élite education to develop their profile and connections
- buying or investing in prestigious companies and sports clubs to raise their profile as a reputable
- businessperson
- hosting at or sponsoring sporting events to gain status
- buying high-end property and luxury goods to flaunt their illicit wealth
- engaging in the arts and culture to give an air of refinement
- using the respectability of the London Stock Exchange to raise capital on international markets
- paying retainers to professional advisors to gain status
Why does it happen in the UK?
The UK is a global centre for political influence, arts, culture and commerce, making it an attractive place for the world’s global corrupt. Its public relations firms are world-renowned, able to give unparalleled access to influential journalists and politicians. Meanwhile the UK’s universities and schools are amongst the most prestigious in the world, providing excellent education and networking opportunities. These are the same factors that make the UK attractive to those seeking to launder their reputations.
Although we have seen this as an increasingly important issue in the fight against corruption, more research is needed to understand how it affects the UK and what should be done about it.
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