Accountancy is among the professions under examination in a major new study of worldwide corruption to identify trends in enabler behaviour. Announced on 12 February, the project will seek out and highlight red flags for behaviours that help to foster so-called ‘kleptocracies’. Its objective is to propose a new set of rules to combat those actions.

The study is the result of a tie-up between the University of Exeter, the University of Oxford and expert body the Organized Crime and Corruption Reporting Project (OCCRP), and will harness the power of OCCRP’s Aleph database. Described as a ‘follow-the-money’ platform, Aleph contains a record of around four billion entities – including detailed information on corporate ownership webs and financial transactions.

As part of the study, political scientists and journalists will join forces to gather data on ‘professional actors’ who work on behalf of high-risk, politically exposed persons (PEPs). Scholars will then analyse that data to identify enabler networks, plus trends in enabler behaviour.

Illicit wealth

The UK government’s Economic Crime Plan 2 (ECP2) published last March defines a kleptocracy as “a highly corrupted political regime where power has been consolidated for the benefit of a small elite. It is characterised by widespread theft of national wealth and resources to subvert domestic political systems.”

Kleptocrats, the plan warns, exploit open financial centres and professional services in developed economies to help corrupt elites overseas enjoy ill-gotten gains. That, in turn, enables ‘grand corruption’.

University of Exeter Professor John Heathershaw, one of the project’s lead researchers, says: “Lawyers, accountants, company service providers and other professionals often play essential roles in the movement of illicit wealth. They can be enormously powerful and effective at resisting both scrutiny and regulation.” That influence, and the general complexity of this terrain, has led to a lack of consensus around what counts as ‘enabling’ activity and which consequences should follow.

Heathershaw says that because enablers come in many different guises and work all over the world, reporting on and regulating them is complex, requiring effort from numerous different bodies. And, as enablers often conduct their work away from the public eye, reporting and oversight is even more difficult.

“For more effective systems of deterrence and accountability to emerge, we need a stronger evidence base about enabler activity, and more advanced understandings of the risks and vulnerabilities of their transactions. Our work will help the anti-corruption community acquire the information and motivation it needs to meet this opportunity,” he says.

Heathershaw’s thoughts were echoed by Global Anti-Corruption Consortium Director Alexandra Gillies – the study’s lead for OCCRP. “Armies of professionals around the world are helping corrupt individuals conduct their dirty business,” she says. “Given the massive scale and secrecy of their work, we need silo-busting partnerships like this one to understand how these global networks function, and to chip away at the harm they cause.”

Bad apples

Alongside the main study, OCCRP will work with the University of Exeter on using artificial intelligence to extract enabler data from existing media reports and archived documents.

Together, the two projects will expand the amount of relevant data available to anti-corruption specialists around the world. That data will support ongoing research and advocacy work from civil society groups such as Transparency International – already partnered with OCCRP in the Global Anti-Corruption Consortium.

Michelle Giddings, ICAEW Head of Anti-Money Laundering and Operations, Professional Standards, says: “Enabling is now formally defined in ECP2. To be an enabler, the plan notes, the accountant must be complicit and/or willing. In other words, they are aware that the requested activity is illegal and are either turning a blind eye, or actively taking part. In other cases, they may simply be negligent, failing to meet their regulatory and professional obligations.”

However, just because an accountant has acted on behalf of a high-risk PEP does not mean that they have engaged in enabling behaviour, she says: “They could have carried out a significant amount of customer due diligence (CDD), but nothing came to light that suggested illegal activity.”

Given ECP2’s definition, Giddings says, the new study is likely to underline the importance of professional scepticism, or asking the right questions. “It may also highlight the value of effective CDD – picking out risks and gathering evidence to show that they have been mitigated, so that firms can ensure they don’t fall into the ‘negligent’ camp.

“There will of course always be bad apples. But the regulatory regime should be able to find those through effective information-sharing between law enforcement and supervisory bodies. Indeed, ECP2 includes measures that aim to further improve data sharing between those parties.”