More transparency over UK prime property ownership needed to prevent fraud, campaigners say
Plans to create a public registry of the real owners of UK companies should be extended to make it clear who is behind the companies that own high-value London properties, Global Witness has said.
Plans to create a public registry of the real owners of UK companies should be extended to make it clear who is behind the companies that own high-value London properties, Global Witness has said.
The anti-corruption campaigning group said that it had uncovered evidence linking the ownership of “big chunks of Baker Street” to “a former Kazakh secret police chief accused of murder, torture and money-laundering”. It called on the UK government to investigate the ownership of these properties, and to make “systemic changes” to the way in which land ownership is registered in the UK.
Global Witness said that London’s high-
end property market was increasingly becoming “one of the go-to destinations to give questionable funds a veneer of respectability”. At least £122 billion worth of property in England and Wales is now owned by companies registered offshore, often in jurisdictions like the British Virgin Islands (BVI) and with only ‘nominee’ directors on file, it said.
“Our research shows property is a big blind spot in the UK’s anti-corruption fight, and that has dire consequences,” said Chido Dunn, a senior campaigner at Global Witness. “Some of the Gaddafi family’s stolen loot ended up in London – a famous example but far from a one-off. Unless we know who is behind these companies and where their money has come, the cash will keep pouring in.”
“This latest example shows the urgent need for transparency in the UK’s property market and its system of company ownership,” she said. “We need to be able to know who owns London’s properties and where the money to buy them came from.”
Global Witness called on the UK government to require companies that own UK property to tell the Land Registry who their beneficial owners are, and to work with the British Overseas Territories and Crown Dependencies on the creation of their own public registers of beneficial ownership. Real estate agents should also be made to carry out checks to make sure they know who is behind a company that is buying UK property, in addition to conducting anti-money laundering checks on sellers, it said.
The UK committed to the creation of a central registry of companies’ beneficial owners, meaning those that hold more than 25% of a company’s shares or voting rights, as part of its G8 presidency in 2013. The requirements will apply to all UK bodies corporate that currently register information on their members at Companies House, including limited liability partnerships, and the register will be made available for public inspection. It is due to be up and running next April.
Civil fraud and asset recovery expert Alan Sheeley of Pinsent Masons, the law firm behind Out-Law.com, said that the transparency improvements called for by Global Witness would “make it much more difficult for fraudsters to dissipate cash through offshore accounts and then, by way of offshore structures, buy assets including property in the UK and thereafter live off their ill-gotten gains”.
“Sophisticated civil fraud lawyers do know how to identify the ultimate beneficial owners through various types of disclosure orders in offshore jurisdictions, such as the British Virgin Islands,” he said. “However, this can be expensive as disclosure is usually sought from the offshore banks to ‘follow the money’ and thereafter the offshore trust companies that set up the trust structures directly to hold the onshore UK assets.”
“This all takes time and money; and in a modern society why should fraudsters be able to use these structures to place victims at a significant disadvantage and thereafter force them to spend their funds, which are usually scarce because of the fraud, to identify the ultimate whereabouts of funds that are possibly in the UK,” he said.
