Press release 17th Dec 2020

Government increases dirty money risk for UK property market and company services to ‘high’

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December 17 - Transparency International UK today welcomes the publication of the Government’s latest national risk assessment for money laundering and terrorist finance. This highlights key sectors routinely exposed to those seeking to move dirty money through the UK, and is supposed to help the Government, regulators and private sector focus their efforts on tackling illicit financial flows.

The report increases the money laundering risk for the property market and trust and company service industry from ‘medium’ to ‘high’. Property bought with complex corporate structures remains a key obstacle to law enforcement agencies investigating suspicious wealth. It also recognises those incorporating and managing UK companies should be subjected to greater scrutiny.

Transparency International UK’s own research from last year supports this analysis. We found more than £5 billion worth of UK property bought with suspicious wealth, and thousands of UK companies with similar features to those used in major corruption and money laundering schemes.[1]

The document highlights the need for more to be done by Government, regulators and the private sector alike to protect the UK from illicit wealth. To help tackle the UK’s role in global corruption, the Government should prioritise legislation to reveal the real owners of overseas companies owning UK property [2], a measure it committed to back in 2016, and reform company law [3]. Regulators should also take tougher action on rogue firms offering services to criminals.

Steve Goodrich, Senior Research Manager of Transparency International said:

“We welcome the Government’s recognition that the property market is a key target for those looking to launder their ill-gotten gains. We’ve known for years that secretive offshore companies have been used to move dirty money into high-end homes here, so it’s high-time this threat was recognised properly. Ministers should heed the Treasury’s analysis and legislate for greater transparency over the property market as a matter of priority.”

“This analysis confirms UK shell companies, and those who manage them, remain a major threat to the integrity of the global financial system. Our research has found Companies House lacks the powers and capabilities to stop criminals from abusing businesses incorporated here for serious financial crimes. Reform of UK company law is well overdue, and we look forward to legislation being brought before Parliament in the new year.” 

Notes to Editors:

[1] Transparency International’s analysis of more than 400 corruption and money laundering cases – amounting to an estimated £325 billion (US$412 billion) - identified nearly 600 UK businesses, institutions, and individuals who have helped corrupt individuals, unwittingly or otherwise, obtain, move and defend their ill-gotten gains.

[2] The UK Government committed to introduce transparency over the real owners of overseas companies holding UK property back at the 2016 anti-corruption summit. The Government has drafted a Bill, which has been through pre-legislative scrutiny, and committed to introducing legislation in the December 2019 Queen’s speech.

[3] The UK Government consulted on proposed reforms to Companies House back in 2019, and published its response in September 2020. It has committed to legislating for change ‘when parliamentary time allows.’