Concern over PEPs buying UK properties, regulators failing in due diligence

LONDON: Concerns have been expressed that former Pakistani government official Farhan Junejo was able to buy expensive properties in Britain after his identity was publicised linked with the alleged corruption in Pakistan and made public after an investigation by Pakistan’s Federal Investigation Agency (FIA).

Its alleged that Farhan Junejo bought properties in Britain – now being investigated by the National Crime Agency (NCA) – months after fleeing Pakistan while the investigation was active and the couple had become Politically Exposed Persons (PEPs).

On September 24, 2013 this newspaper published a detailed report on how Farhan Junejo, while working with PPP’s then minister Amin Faheem in the Pakistan People’s Party government, was involved in alleged corruption of tens of millions through Hundi and Hawala.

Anti-corruption campaigners have said that there are major weaknesses in Britain's anti-money laundering system, generally. The National Crime Agency (NCA) officers arrested Junejo on Monday and released him on bail - hours after Home Secretary Sajid Javid struck an agreement to cooperate with Pakistan on countering corruption.

The NCA said Junejo controls “a UK property portfolio worth more than £8m for which he appears to have no legitimate source of income” and that the "alleged money laundering in the United Kingdom believed to be the result of corruption in Pakistan”.

The FIA claims that Farhan Junejo bought these properties after the FIA had launched a major probe into the scam in early 2013. Pakistani authorities froze his assets after launching the investigation. Farhan Junejo sent money abroad to various countries and all of that then landed into his UK bank accounts, claims the FIA.

UK’s Anti-Money Laundering Regulations state that the PEPs are individuals – including their relatives and dependants - whose prominent position in public life may make them vulnerable to corruption and financial crimes. It's expected that the PEPs should be subjected to enhanced due diligence by banks, building societies and estate agents during the purchase of properties. The PEPs are asked a range of questions and the banking societies may ask them to show income proof going back to at least six years.

Anti-money laundering checks are carried out by the solicitors while processing the claims of their clients when buying properties. The solicitors in England and Wales have a legal duty to file a suspicious activity report (SAR) when they reasons to suspect they are being asked to handle the proceeds of crime.

"Corruption allegations against politically exposed persons are a big red flag and it's astonishing that these individuals were able to purchase numerous properties, open UK companies and set up multiple bank accounts," said Rachel Davies-Teka, Head of Advocacy at Transparency International.

"It underlines just how lax defences against money laundering in key sectors have been, and why the UK remains a destination of choice for those looking to hide dirty money." Campaigners have hoped that the signing of an agreement between the UK and Pakistan against money-laundering is designed to ensure evidence is shared between anti-corruption and money laundering investigators in both countries.

The News tried to contact Farhan Junjeo but was unable to get in touch with him. However, a close relative of Junejo got in touch and denied allegations made in the NCA press release. He said that Junejo has not been involved in any wrongdoing and that he has a legitimate source of income in Britain which was used to buy the properties. The source said that Farhan Junejo is respectable businessman and he has been targeted unfairly and action against him is politically motivated.