A report from Transparency International reveals that the London property boom has been boosted by global money laundering.
The anti-corruption NGO’s publication ‘How Corrupt Capital is Used to Buy Property in the UK’ reveals that some 36,342 London properties have been acquired via hidden companies based in offshore havens and that it is inevitable that some proportion of these have been purchased anonymously to launder ill-gotten gains.
The Met Police has welcomed Transparency International’s report, which it says ‘shines a light on how the UK property market is exploited by corrupt officials, in order to launder money stolen from civilians across the globe.’
This is the most comprehensive inquiry into the money laundering route through central London real estate.
The Report argues that estate agencies which are best placed to identify suspicious transactions are under-reporting ‘property laundering’:
… estate agents contributed to only 0.05% of all Suspicious Activity Reports (SARs) submitted. This figure does not match the risks posed by money launderers to the UK property market.
A key recommendation of the report is that transparency should be established over who owns so much property in the UK through a Land Registry obligation.
The number of offshore-owned homes per London borough has been graphically displayed on a website titled: ukunmaskthecorrupt.org
The police say investigating grand corruption is a complex process requiring protracted cross-jurisdiction work with authorities around the world.
Met detectives specialising in the movement of money by organised crime contributed to the research for Transparency International’s report.
Since the MPS launched the Proceeds of Corruption Unit (POCU) in 2007, it has investigated ownership of 144 properties worth over an estimated £180 million.
These sensitive operations are ongoing.
The POCU currently has assets worth £88.5 million under restraint.
It has confiscated £8.5 million, of which over £6 million relates to properties purchased in the UK.
It has repatriated £1.27 million and continues to work on the repatriation of other monies.
The Met Police says:
It can take years to unpick the layers of corruption and secrecy which ultimately result in the purchase of UK properties.
Such properties are often owned by companies registered in foreign jurisdictions and while secrecy jurisdictions have been cooperative with our investigations, obtaining evidence can take years.
We also face challenges in other forms. For example, relationships with some jurisdictions can be set back by a change in regime, and the influence of corrupt politicians on a country’s own anti-corruption organisation can hamper access to crucial evidence.
The MPS is committed to working with partners across the globe to overcome these issues, and we would welcome any regulation which makes it harder for corrupt officials to hide money that has been stolen from civilians across the world, in our own neighbourhoods.
Other experts contributing to the study say that the corruption has encouraged developers to build high-priced flats and houses rather than contributing to social housing and the needs of London’s indigenous communities and workers.
Mayor for London Boris Johnson told ITV News that one solution to ward off ‘property laundering’ is to raise the tax paid on ‘enveloped dwellings’ — homes valued at more than £2 million and owned by trusts or companies:
Many of these people are simply paying that tax rather than revealing their identity. Well if they want to pay for the luxury of anonymity, let them pay through the nose. Whack it up.