Nine out of ten overseas companies owning London property are registered in secrecy jurisdictions, according to new research from Thomson Reuters and Transparency International UK. Why does that matter?
By Rachel Davies Teka, Senior Advocacy Manager for Transparency International UK
Although the research crosschecked data from multiple sources – such as the Panama Papers, the Land Registry, OpenCorporates and World-Check – to work out the true owners, data on more than half of the 44,000 overseas-owned land titles was impossible to find.
This didn’t come as a surprise. The current system fosters secrecy – UK property can be bought in the name of a company, with no requirement for the identity of the human owner to be revealed. If the company is registered in the UK then that’s not a problem as all UK companies must tell the authorities who their ultimate owner is. However, if the company is registered in a secrecy jurisdiction such as the British Virgin Islands, then not only is that information not publicly available but – at present – it’s not even collected.
Layers of secrecy facilitated by the offshore company structure prevent effective investigations by police and checks by those working in sectors such as property. This means that property in the UK can be acquired anonymously and money laundered as anti-money laundering checks can be bypassed with relative ease. Potentially, this is money that’s been stolen from healthcare, education, and infrastructure, and UK property is providing fertile ground in which to bury it.
Of the data that we were able to unearth, we found that 986 of these properties are linked to people with political connections overseas, i.e. people who may have easy access to public funds. Over 75 percent of these politically-linked land titles are owned by companies based in Panama or the British Virgin Islands.
Of course, we’re not saying that all anonymously-owned properties have been bought with corrupt money, but what do the UK authorities know about the owners? In many cases, nothing. And that’s the problem. If you have corrupt money to spend, then the UK property market is a fairly safe bet – the secrecy facilitated by the offshore company structure offers impunity, and rising house prices guarantee a secure investment.
We think this needs to change. Transparency International is calling for transparency over who owns so much of Britain, and a lifting of the veil of secrecy for companies registered in the British Overseas Territories and Crown Dependencies.
At the Anti-Corruption Summit in May, the Government committed to introduce a public register of the real owners of overseas companies that own UK property. This is welcome, but now the words need to turn into action. Despite the positive rhetoric, the UK continues to be used as a safe haven for corrupt assets. The Government needs to make a public move towards implementation of its promises to send a clear message that the property market will no longer be a bolthole for stolen money.
The research, London property: A top destination for money launderers, is available here.