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From Russia With Cash

Written by Nick Maxwell on Tuesday, 7 July 2015

The “From Russia with Cash” landmark documentary by Channel 4 and Amos Productions highlights the need to prevent money laundering through the UK property market.


 

Tonight at 10pm on Channel 4 “Boris” – the imposter oligarch created by Channel 4 and Amos Pictures – will show the world just how willing some London estate agents are to turn a blind eye to theft and corruption as long as the individual is a high-end property buyer.

In the undercover investigative documentary “From Russia with Cash” Boris claims to be buying for his London girlfriend, confides that he has stolen money from his country’s corruption-resources-corruption-resources-healthcare budget and makes clear he can’t afford the properties on his official wage. In response, he is told that the estate agents are comfortable and familiar with dealing in such matters and that they know lawyers who can help make sure that the purchase is made in secret through anonymous companies based in offshore financial centres. 

The casual familiarity displayed by the estate agents, adds to the suspicion that corrupt oligarchs buying property is not an unusual phenomenon in the London luxury markets.

Corrupt wealth that is laundered into London represents misery and hardship from where it was stolen. It is taken from government budgets; stealing from what should fund vital public services, schools and hospitals around the world. 

Even if lawyers and estate agents are not willfully complicit in money laundering the proceeds of corruption, they may be willing to turn a blind eye to suspicions. Agencies and firms may also be negligent and fail to put in place systems to meet their responsibilities to spot money laundering. This is so damaging because the estate agents and lawyers, as well as bankers, are the front line of defence in how our anti-money laundering system is supposed to work.

Money laundering regulations require professionals across a range of sectors to identify suspicious activity by establishing the true owner – the beneficial owner – of assets. Those professionals – in estate agencies, law and finance – should investigate whether there are any grounds for concern about criminal and corrupt sources of wealth. The problem is that money launderers can easily create offshore companies to hold wealth and assets and provide secrecy for the beneficial owners.

Even when real estate agents are committed in good faith to comply with the anti-money laundering regulations, the difficulty for them to obtain information may be overwhelming. As pointed out by the Royal Institute of Chartered Surveyors “When you have a company hidden offshore it is … almost impossible for your average estate agent to find out what on earth is going on.”

Anonymous, secret companies, often set up in offshore jurisdictions, are powerful tools for the corrupt and for money launders in general, they are also a key barrier for ethical professionals seeking to carry out proper checks.

Our research ‘Corruption on your doorstep – How corrupt capital is used to buy property in the UK’  found that over £180m worth of property in UK has been brought under criminal investigation as the suspected proceeds of international corruption since 2004. However law enforcement agencies describe this as only “the tip of the iceberg”. Offshore company secrecy presents a large barrier to criminal investigations and private sector due diligence. 

Find out how London professionals can help conceal and launder stolen wealth from around the world.

We found that over 75% of the UK properties under criminal investigation for grand corruption use offshore corporate secrecy to hide the ownership of the property. Across the England and Wales, at least £122bn worth of property was held by companies registered in secrecy jurisdictions in July 2014. In total, over 36,000 London properties are owned by offshore companies. Almost one in ten properties in the City of Westminster (9.3 per cent), 7.3 per cent of properties in Kensington & Chelsea and 4.5 per cent in the City of London are owned by a company registered in an offshore secrecy jurisdiction. These companies, almost entirely, are based in British Overseas Territories and Crown Dependencies, rather than other secrecy jurisdictions like Delaware or Lichtenstein.

Find out how many secret companies own property in your London borough.

While it is important to continue to press for transparency in the offshore territories we believe that the UK doesn’t have to wait for legislation to require greater company transparency in the offshore territories. TI-UK believes that any foreign company intending to hold a property title in the UK should be held to the same standards of transparency required of UK-registered companies. The UK has taken very positive steps to legislate to establish a public register of beneficial ownership of companies. It is important to level the playing field and close the loophole whereby offshore companies that invest in UK assets, including property, can remain secret.

We were delighted and proud to advise and work with Amos Pictures alongside Global Witness on this documentary. 

If you are outraged by the documentary and the ease by which corrupt money can be laundered into UK property through anonymous offshore companies – please sign our petition to bring transparency to company ownership of properties.

The Prime Minister has recognised that “corruption is the cancer at the heart of so many of the problems we face around the world” and provided international leadership on the need to tackle corporate secrecy, including ahead of the recent G7 meeting in Munich.

However, the UK’s international authority in anti-corruption efforts will depend on the credibility of the UK’s performance on addressing domestic corruption – within the UK, and in the Crown Dependencies and Overseas Territories. His government must ensure that the world’s leading financial centre is not a centre of global money laundering or provider of services to the world’s corrupt elite – whether in property, finance, professional services, luxury goods, golden visas, corruption-resources-corruption-resources-education or sport. 

 

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Read 5010 times Last modified on Wednesday, 11 November 2015 10:07
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Nick Maxwell

Nick is TI-UK's Head of Strategic Engagement. You can view his full bio here, and tweet him @NickJMaxwell.

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