'Financial crime is an epidemic' – exclusive interview with Oliver Bullough

Ahead of RiskConnect, The Virtual Risk & Compliance Conference, The Paypers sat with Oliver Bullough, author, and freelance journalist, who writes about financial crime to find out what Moneyland is

Oliver Bullough will be a keynote speaker at the upcoming RiskConnect conference, scheduled for 26 October, organised, and brought online by Web Shield. RiskConnect is the conference for the unsung heroes of payments: the risk professionals, compliance officers, and anti-fraud experts.

Oliver, could you please share with our readers who are you and how does your professional background tie into the fight against financial crime?

I moved to Russia in the late 1990s when I finished university, with a vague plan of learning Russian and becoming a journalist. More by accident than design, that’s exactly what happened, and I ended up working for Reuters in Moscow, reporting on the disasters, scandals and upheavals that seem to happen far more frequently in Russia than elsewhere.

I had always been aware of corruption, simply because it’s impossible to live in Russia for any length of time without being harassed by dishonest police officers, who would – for example – refuse to return your passport when you entered the country until you paid a ‘fine’, or would insist your registration papers were faulty, etc. My professional background therefore was just an accident, when it came to becoming concerned about financial crime; it’s more that financial crime was concerned about me.

I only really came to explore how corruption worked as a system after the revolution in Ukraine in 2014, when I started to investigate how shell companies worked. I became increasingly aware of the role that Western countries play in laundering the proceeds of corruption, and decided to explore that dynamic in my third book – Moneyland.

In 2018 you published Moneyland: Why Thieves and Crooks Now Rule the World and How to Take it Back. What ideas would you like your readers to stay with after reading it?

My main argument in the book is that the traditional division of the world between poor-and-corrupt countries, and rich-and-honest countries, is false. Corruption may once have been something that operated within countries, but that has not been the case for decades. These days, corrupt officials are deeply embedded within the international financial system, and use its darkest corners to hide their loot. The UK is as much to blame when a Ukrainian official spends stolen money on a house in Kensington, as Ukraine is; and all the other countries that the money passed through – Estonia, Denmark, Germany – on its way, have a share in the blame too. Kleptocracy is the dark side of the globalisation, and can only be tackled by transnational action.

How big is financial crime? Is the average citizen affected?

Financial crime is an epidemic, which is crippling people’s lives all over the world. I spent a long time interviewing a man in Russia who opened a café, which had long been his dream, and who refused to pay protection money to the local police. So, the police came every day and ordered everything on the menu, ate it, then walked out without paying, week after week after week. Eventually, he went bust of course. He tried to complain in court, so they arrested him for tax evasion, and had him jailed. That is an everyday story in Russia, probably everyone knows someone who has suffered in that way (though most people will pay up in the first case, rather than stand on principle the way he did), and that is the reality of corruption.

It may all seem a bit of fun when a Russian oligarch buys a house in West London, but the money is extorted from people like him, who just want a decent life, but who end up paying off officials who are indistinguishable from the mafia.

Narrowing down the topic to corruption, can you reveal some examples that underpin this ecosystem? How relevant is the corruption rating for each country (does it matter)?

The rating of countries for corruption is not just irrelevant, in that corruption is transnational by its nature, but also deeply misleading. If you follow the lead of the Corruption Perceptions Index, you are only looking at half of what corruption is – the acceptance of bribes - and ignoring the other half, which relates to where those bribes are spent. It’s a bit like only looking at where drug addicts live, and ignoring where drug cartels come from. This means that the victims of corruption end up being blamed, while its beneficiaries are congratulated.

I have very strong feeling about the Corruptions Perfections Index, and they’re all negative.

Who or what can help us prevent the damaging activity of offshore structures? Regulators, financial institutions, technology providers, others?

The problems at the moment result from two separate but related issues: opaque ownership of assets, and underfunded police forces. Now, it is ludicrously easy to hide your ownership of stolen money, property, luxury goods, planes, or whatever, behind shell structures that will keep your secret pretty much for ever. This makes corruption and financial crime largely risk-free, since no one will realise how rich you are. Logically, if they can’t see you’re rich, they won’t suspect you of theft, and then you’ll never be investigated. The second issue is that, in most of the world, police agencies are so underfunded that they can only investigate a fraction of the crimes that are committed, and often officers take bribes to supplement their incomes, and don’t investigate any crimes at all.

In order to solve the problems of financial crime and corruption, we need transparency of ownership everywhere, and properly resourced law enforcement agencies able to track down the culprits (and their enablers) and put them in jail.

In one of your videos, you mentioned the importance of seizing the opportunity of a new Bretton Woods moment. IMF Managing Director, Kristalina Georgieva also called for action in a speech last year. If you were to join her message, what would you add/stress upon, so that we have a less corrupt financial system?

Action needs to start in rich countries, in the places where corrupt wealth ends up: the UK, the United States, Canada, France and a few other places. These countries have honest courts, and police agencies, that would be capable of standing up to corrupt officials and financial criminals if they but had the political will to do so. If it became impossible to spend stolen wealth in West London, in Manhattan, in Paris, or in other Western centres, then people won’t steal it anymore. The point of theft is to enjoy the proceeds, and if that becomes impossible, there won’t be so much theft. Once there is less theft, then poor countries will gain the breathing space they need to build honest institutions, which can help drive sustainable development for everyone. That is the goal we should all be aiming for.

About Oliver Bullough

Oliver Bullough is an award-winning author and journalist, who writes about corruption, financial crime and the former USSR in the Guardian, the New York Times, GQ magazine, and other places. His most recent book was Moneyland, which detailed how kleptocracy works, and his next book will be out in March 2022.