Hunting for bad money amid the good



The political upheaval in Egypt and Tunisia has triggered a surge in money flowing out of both countries.

But now that Hosni Mubarak, the Egyptian president, has followed the Tunisian head of state Zine al Abidine Ben Ali and stepped down, European "safe havens" are preparing to examine his assets abroad.

Widespread protests finally saw Mr Mubarak leave office over the weekend and his decision to go will renew scrutiny over the legitimacy of some Middle East assets sitting in bank accounts in places such as London and Zurich.

Suspicion that certain politicians in Egypt and Tunisia were benefiting unfairly from their positions in government was one of the reasons behind the mass protests.

"Economic growth can be a driver of illicit flows," says Karly Curcio, an economist at Global Financial Integrity (GFI), a think tank in Washington. "When there's more cookies in the cookie jar more people want to get their hands in there."

Globally, illicit flows of cash totalled US$1.26 trillion (Dh4.62tn) in 2008, a rise of 18 per cent from the start of the decade, according to GFI. Much of that money flowed from developing to developed economies. China was the biggest source of such funds.

One of the problems for financial crime investigators is trying to differentiate the good money from the bad. Much of the funds, called hot money, flowing from the region in recent weeks has been from citizens merely wanting to safeguard their savings or investors retreating from equity markets. But authorities are worried some of the cash being moved may be suspect.

"It's not always easy to tell the difference between what's dirty and what's not. It becomes even more difficult once it's invested in blue-chip stocks, expensive cars or real estate," says Richard Blaksley, a partner at the corporate investigative firm GPW in London, which has received a flood of calls about potential financial detective work connected to recent north African events.

Analysts say, however, there is a marked difference between illicit flows and hot money looking for higher returns in emerging markets. The movement of money, however, has fuelled recent global tensions, with China blaming quantitative easing by the US for stoking inflation in the developing world.

The Gulf is no stranger to this money. A flood of speculative cash entered the region in 2007 as investors brought in funds on the expectation that local currencies would be revalued. The revaluation did not happen and the financial crisis sparked a sudden outflow of capital, exacerbating the credit crunch.

But while such flows are considered unstable because of their short-term nature they are still legal.

On the other hand, illicit money is cash obtained unlawfully from public sources, or through bribery, tax evasion or other crimes.

Ms Curcio is clear about the role money laundering plays in generating social unrest.

"Illicit money flows play a part in perpetuating instability," she says. "Because of illicit outflows you see a widening of income deficits: the rich getting richer and the poor getting poorer."

But while the developing world may be responsible for much of the problem, regulators also blame leading financial centres sucking the money in.

"More transparent and accountable legal and financial governance is required in the world's financial centres to stop the outflow of stolen assets," wrote Transparency International, the global anti-corruption group, in a working paper on the subject in 2009.

Such centres have been quick to act following the emergence of worries about the assets of Egyptian and Tunisian government officials.

The Swiss government has frozen all funds held by Mr Ben Ali and is examining whether Mr Mubarak has assets in the country. Authorities in both countries are investigating the finances of former key political figures.

If any of the money is proven to have been taken unlawfully, and is recovered, it would provide a much-needed boost to the economies of both countries.

Stamp duty timeline

December 2014: Former UK finance minister George Osbourne reforms stamp duty, replacing the slab system with a blended rate scheme, with the top rate increasing to 12 per cent from 10 per cent:
Up to £125,000 - 0%; £125,000 to £250,000 – 2%; £250,000 to £925,000 – 5%; £925,000 to £1.5m: 10%; Over £1.5m – 12%

April 2016: New 3% surcharge applied to any buy-to-let properties or additional homes purchased.

July 2020: Rishi Sunak unveils SDLT holiday, with no tax to pay on the first £500,000, with buyers saving up to £15,000.

March 2021: Mr Sunak decides the fate of SDLT holiday at his March 3 budget, with expectations he will extend the perk unti June.

April 2021: 2% SDLT surcharge added to property transactions made by overseas buyers.

If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.

When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.

How to get there: Emirates currently flies from Dubai to Orlando five times a week.
The%C2%A0specs%20
%3Cp%3E%3Cstrong%3EEngine%3A%3C%2Fstrong%3E%204-cylinder%202.0L%20TSI%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%3C%2Fstrong%3E%20Dual%20clutch%207-speed%0D%3Cbr%3E%3Cstrong%3EPower%3A%3C%2Fstrong%3E%20320HP%20%2F%20235kW%0D%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20400Nm%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3Efrom%20%2449%2C709%20%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20now%3C%2Fp%3E%0A
What is 'Soft Power'?

Soft power was first mentioned in 1990 by former US Defence Secretary Joseph Nye. 
He believed that there were alternative ways of cultivating support from other countries, instead of achieving goals using military strength. 
Soft power is, at its root, the ability to convince other states to do what you want without force. 
This is traditionally achieved by proving that you share morals and values.

UAE SQUAD FOR ASIAN JIU-JITSU CHAMPIONSHIP

Men’s squad: Faisal Al Ketbi, Omar Al Fadhli, Zayed Al Kathiri, Thiab Al Nuaimi, Khaled Al Shehhi, Mohamed Ali Al Suwaidi, Farraj Khaled Al Awlaqi, Muhammad Al Ameri, Mahdi Al Awlaqi, Saeed Al Qubaisi, Abdullah Al Qubaisi and Hazaa Farhan

Women's squad: Hamda Al Shekheili, Shouq Al Dhanhani, Balqis Abdullah, Sharifa Al Namani, Asma Al Hosani, Maitha Sultan, Bashayer Al Matrooshi, Maha Al Hanaei, Shamma Al Kalbani, Haya Al Jahuri, Mahra Mahfouz, Marwa Al Hosani, Tasneem Al Jahoori and Maryam Al Amri

Wicked
Director: Jon M Chu
Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey
Rating: 4/5
The specs
 
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)