The Guardian Article

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Background

Critical application of the Systems Model Change to the Brexit anti-money launderings case’s background implies that Britain must implement changes to the entire system as opposed to piecemeal implementation. There are, therefore, key areas of priority including: 1) reduction of insider threat in high-risk domestic sectors, 2) strengthen the country as a financial hub, 3) minimise corruption in public grants and procurement, 4) promote integrity in private and public sectors, 5) work with other countries to fight corruption, and 6) improve the global business environment. The model will only be successful if it collaboratively includes six independent but inextricably interdependent variables as illustrated below:

  • People: the individuals working in organisations
  • Task: related to the nature of responsibility handled by the people
  • Design: organisational structure, authority, control and system of communication
  • Strategy: action roadmap to realise goals
  • Technology: new methods and automation to enhance progress towards goals
  • Culture: shared norms, values beliefs, practices and expectations (Scott & Davis 2015, p. 69)

With the exception of technology, differences in all the other variables are still a considerable barrier to achieving the prioritised goals.

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PESTLE

  • Political: The political debate cut across the traditional political alignments and positioned sovereignty against efficiency, therefore, securing London as a safe business environment may take longer than anticipated.
  • Economic: Over 62% of Britain’s exports are to EU Member States, yet London runs a continuous trade debit with the EU. Depending on the trade agreements arrived at, businesses in London will be affected considerably.
  • Social: Increase pressure to protect EU nationals’ rights in London post-Brexit. Aggression towards EU nationals may negatively hamper business
  • Technological: Only workers and businesses within the IT domain may be affected by labour restrictions.
  • Legal: Britain has the lowest rate of regulatory port examination but completion of Brexit will force new businesses in London to prove everything.
  • Environmental: Increased environmental compliance requirements will stretch port facilities and compromise efficiency.

SWOT

  • Strength: Highly developed business networks and support structures
  • Weakness: Cultural diversity and large gaps in labour skills
  • Opportunity: Strong city brand
  • Threat: Regional competition for investment and talent
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Money Laundering in UK and Funds of Dubious Nature

The authorities are aware of the UK’s trading position with the EU and what London stands to lose if all financial ties with the bloc, including dubious ones, are terminated. In fact, no report can claim that all funds that 100% of the trade transactions conducted in London are “clean” (Scholten 2017, p. 1349). Therefore, the authorities are aware of what might happen to London’s position as a financial hub is all sources of funds are sanitised. The UK is arguably a country with low vulnerabilities of affinity. Although it is institutionally strong, the UK does not appear to be especially concerned about challenges presented by other regimes or jurisdictions such as Russia. Consequently, such regimes simply hope to exploit the UK. While there is increasing pressure to address the position of the City of London as a leading depository for dubious funds from openly known corrupt regimes, the UK still remains a tempting hub for such regimes, most notably Russia (Christensen & Levi 2017, p. 72). This serves two purposes: it secures the corrupt regimes’ position at home as it provides safety valves for corrupt officials who would otherwise be disadvantaged by confrontational policies when the global financial system locks them out. Second, it also buys the corrupt regimes influence not only in the UK but elsewhere too. Therefore, the underlying reason why authorities may turn a blind eye to dubious funds is include the agents, financiers, lawyers and all the stakeholders who stand to gain from such dubious regimes. Journalists have described this as the power of “friendly voices” in business lobbies. While these voices may not have any cultural or political affinity with the dubious regimes, they may simply be motivated by pure self-interest to act in ways advantageous to such regimes, making the UK a hub for dubious funds (Ambos 2017, p. 63).

Liberal Tradition and Dubious Nature of Business Interest

Traditional liberal thinking is best defined in terms of the priority it gives to individual freedom. Owing to the aspect of individual freedom, the liberal thinking tradition may have been the driving force behind the development of the City of London but is also associated with policies that facilitate the establishment of dubious business interests (Wonders 2017, p. 14). This may be explained in the context of human beings having a wide range of values spanning, to the very least, family, honesty, security and loyalty. However, when this is extended to the social, economic and political spheres, maximizing these individual freedoms effectively renders the liberal thinking tradition counteractive to business interests (Ouwerkerk 2015, p. 24).

The essence of the liberal thinking tradition is that people should live as they wish with only the necessary minimal restraint from authorities and other individuals. In that very sense, traditional liberalism is negative because it is essentially about not being restrained by the interference, threats or coercions of others, specifically the institutions (Grigoriadis 2016, p. 132). Traditional liberal thinking is motivated by varied core principles, the most essential being freedom. However, what should be considered as most important are the consequences of such freedom, which include favouring deregulation, lower taxes and privatisation. In these consequences, dubious business interests arise (Miettinen, S., 2015, p. 74). For example, corporations may overlook the larger social benefits of deregulation, lower taxes and privatisation and instead use them to pursue the shareholders’ personal enrichment and empowerment.

Within the structures of individual freedom that traditional liberal thinking advocates for, there will inevitably be conflicts between the free people on matters of ownership. Therefore, in the interest of upholding peace, an impartial justice system is needed to discourage dubious interests that lead to aggression, yet the traditional liberal thinkers are against the coercive force through which such impartial systems must operate. It is therefore evident that while traditional liberal thinking was instrumental in developing the City of London, it is no longer viable in the current business environment, which must necessarily be regulated through some degree of force and coercion. Indeed, individuals who can give up essential freedom in order to obtain some safety in dubious interests will also compromise the freedom of other citizens.

Task Force Modus Operandi

Working with international partners, operation of law and the use of the Financial Conduct Authority (FCA) Serious Fraud Office (SFO) (for complex fraud) and Her Majesty’s Revenue and Customs (HMRC) (for tax fraud) are some of the key ways the new authority may use in the realm of international financial transactions (Willems 2016, p. 211). However, not only the capacity of the law enforcers but also the abovementioned regulators to address the threat of fraudulent international financial transactions is constantly under challenge. Notably, the FCA adopted a “credible deterrence” policy to deal with aspects that threaten the integrity of financial markets (CITATION). This took the view that strong regulatory action is a weapon against breaching regulation while criminal prosecution has a deterrent effect against financial misconduct. However, the existing and ever dynamic challenges, especially within the cybercrime domain, are significant barriers to law enforcement. Further, the speed of change and external influences, most notably the Brexit consequences, future EU constitution and increasing power of economies such as China, will all potentially create new opportunities the UK’s criminal disadvantage.

It is dangerous to make any assumptions as to how the economic world will conduct itself when presented with regulatory changes and how regulators and law enforcers will respond to such conduct (Jimeno-Bulnes 2017, p. 346). The response/reaction by regulators and law enforcers may only be effective if actual crime in the international financial transactions is proven to have been committed within the authority’s geographical jurisdiction. Otherwise, there is likelihood that the other concerned parties will be subjected to the laws of their respective jurisdiction, unless the agreement between the UK and those jurisdictions state otherwise. A possible future influence is the coming up of a variety of quasi-criminal charges, comparable to regulatory breaches that may not attract custodial sentences but result in confiscations, fines or prohibitions. With regards to the credible deterrence approach by the FCA, these consequences may not work with financial crimes of an international caliber. There is also the possibility of alternative dispute resolution, which may effectively but inadvertently point towards leniency and imply that fraud in international transactions is not a serious matter after all (Christensen & Levi 2017, p. 102).

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Pros and Cons

The proposed arrangement goes a long way to demonstrate Britain’s commitment to maintaining its reputation not only as a self-reliant entity but also as a safe, global business hub. Agreeably, Britain is a country of its own resources and will, consequently, be able to make its own trade decisions without first having to “go through” EU regulations. On the other hand, however, it may correctly be argued than no country can claim to be 100% self-sufficient and prosper without international partners. While this is not to mean that the Brexit means Britain is eliminating all links with international partners, the gains the country made from the EU membership cannot be overlooked. The most immediate example is sending 62% of its exports to the EU yet running a constant trade deficit with the bloc. Therefore, while Brexit might translate into enhanced autonomy for Britain, it will essentially take more work to realise its benefits.

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  1. Ambos, K., 2017. Brexit and European Criminal Law.
  2. Christensen, M.J. and Levi, R. eds., 2017. International Practices of Criminal Justice: Social and Legal Perspectives. Routledge.
  3. Grigoriadis, I.N., 2016. On the Europeanization of minority rights protection. The Europeanization of Turkish Public Policies: A Scorecard, pp.130-142.
  4. Jimeno-Bulnes, M., 2017, June. Brexit and the Future of European Criminal Law–A Spanish Perspective. In Criminal Law Forum (Vol. 28, No. 2, pp. 325-347). Springer Netherlands.
  5. Lavenex, S., 2017. Revival: The Europeanisation of Refugee Policies (2001): Between Human Rights and Internal Security. Routledge.
  6. Miettinen, S., 2015. The Europeanization of Criminal Law: Competence and its control in the Lisbon era.
  7. Ouwerkerk, J., 2015. Criminal Justice beyond National Sovereignty. An Alternative Perspective on the Europeanisation of Criminal Law. European Journal of Crime, Criminal Law and Criminal Justice, 23(1), pp.11-31.
  8. Scholten, M., 2017. Mind the trend! Enforcement of EU law has been moving to ‘Brussels’. Journal of European Public Policy, 24(9), pp.1348-1366.
  9. Scott, W.R. and Davis, G.F., 2015. Organizations and organizing: Rational, natural and open systems perspectives. Routledge.
  10. Willems, A., 2016. Mutual trust as a term of art in EU criminal law: revealing its hybrid character. Eur. J. Legal Stud., 9, p.211.
  11. Wonders, N.A., 2017. Sitting on the fence–Spain’s delicate balance: Bordering, multiscalar challenges, and crimmigration. European Journal of Criminology, 14(1), pp.7-26.
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