London property boom built on dirty money

Billions of pounds of corruptly gained money has been laundered by criminals and foreign officials buying upmarket London properties through anonymous offshore front companies – making the city arguably the world capital of money laundering.

Some 36,342 properties in London have been bought through hidden companies in offshore havens and while a majority of those will have been kept secret for legitimate privacy purposes, vast numbers are thought to have been bought anonymously to hide stolen money.

The flow of corrupt cash has driven up average prices with a “widespread ripple effect down the property price chain and beyond London”, according to property experts cited in the most comprehensive study ever carried out into the long-suspected money laundering route through central London real estate, by the respected anti-corruption organisation Transparency International.

Some sources claim it has skewed developers towards building high-priced flats and houses rather than ones ordinary people can afford. While corruption and tax evasion are likely to be the biggest sources of the illicit money, drug dealing, people trafficking and sanctions busting are also common, police say.



TI’s research, which includes previously unreleased internal figures from the Metropolitan Police Proceeds of Corruption Unit, found that 75 per cent of properties owned by people under criminal investigation for corruption are held through secret offshore companies.

London has become a global magnet for corrupt funds, TI said, due to the high prices of property – enabling millions of pounds to be laundered at a time – and Britain’s notoriously lax rules on the disclosure of property ownership.

Any anonymous company in a secret location, such as the British Virgin Islands, can buy and sell houses in the UK with no disclosure of who the actual purchaser is. Meanwhile, TI said, estate agents only have to carry out anti-money-laundering checks on the person selling the property, leaving the buyers bringing their money into the country facing little, if any scrutiny.

Anti-corruption activists including Boris Nemtsov, the Russian opposition figure murdered in Moscow last Friday, have repeatedly expressed frustration that the UK does so little to stem the flow of money stolen from their countries

Robert Barrington, executive director of TI, said: “This has a devastating effect on the countries from which the money has been stolen and it’s hard to see how welcoming the world’s corrupt elite is beneficial to communities in the UK.”

Over £180m of UK property has been investigated by police in the past decade, but this is likely to be only a small proportion of the actual amount, the report says. UN figures suggest only 1 per cent of money laundering flows are detected.

Detective Chief Inspector Jon Benton, director of operations at the Proceeds of Corruption Unit, said: “Properties that are purchased with illicit money, which is often stolen from some of the poorest people in the world, are nearly always layered through offshore structures.

“In nearly all the grand corruption cases we investigate, we find – what we suspect is – proceeds of corruption being used to purchase high-value properties.”

Companies set up in the Crown Dependencies and British Overseas Territories such as Jersey, British Virgin Islands and Gibraltar are the preferred option for concealment of corrupt property purchases.

More than a third of company-owned London houses are held by effectively anonymous firms in the British Virgin Islands. Jersey companies own 14 per cent and the Isle of Man and Guernsey 8.5 per cent and 8 per cent.

Mr Benton said: “The lack of access to beneficial ownership information about offshore companies that hold property in the UK is a major barrier for our investigations.”

The TI report highlights how little reporting of potential corruption there is from estate agents. Along with financial services firms, lawyers and art dealers, they are designated as “gatekeepers” who must file reports to the National Crime Agency if they see anything suspicious.

However, property agents only filed 0.05 per cent of all such Suspicious Activity Reports last year – a mere 179 across the whole of the UK.

Not for nothing is The Bishops Avenue in north London known as “billionaires’ row”.

The average selling price over the past three years of the vast mansions that dot this suburban street was £16m. The most recent sale registered on the Zoopla tracking website was for £33.7m.

More at: http://www.independent.co.uk/news/uk/home-news/london-property-boom-built-on-dirty-money-10083527.html

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