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London Can’t Afford to Turn a Blind Eye to Corrupt Money

Written by Scott Edwards on Tuesday, 30 September 2014

Boris Johnson’s call for new homes in London to be sold first to Londoners, “not to oligarchs” made headlines this week. But what he must consider is the ease with which an overseas buyer can invest in a London property using stolen assets – the proceeds of corruption.

Boris Johnson’s call for new homes in London to be sold first to Londoners “not to oligarchs”, made headlines this week.

The Mayor of London making this demand at the Conservative party conference in Birmingham highlights a growing acknowledgement that a vast number of properties in the city are being used as safe investments by the world’s mega-wealthy.  In fact foreign buyers bought up to 75% of new homes in central London over the past year and foreign buyers reportedly accounted for 49% of all properties above £1m. £7bn of foreign investment was spent on high-end London homes in 2013. 

But what Johnson must consider when addressing the overheated top-end of London’s property market is the ease with which an overseas buyer can invest in a London property using stolen assets – the proceeds of corruption.

Currently corrupt politicians, officials and resources-resources-businesspeople are able to launder money through the UK, buying much sought-after London lifestyles at very little personal risk. In London’s most exclusive postcodes, property is often bought using anonymous shell companies based in off-shore jurisdictions, such as the British Virgin Islands or the Channel Islands, with not even the Land Registry knowing who the real owner is.

If corrupt individuals are able to buy London properties using stolen public funds London represents one half of an equation that allows corruption to flourish. Money originally intended for corruption-resources-corruption-resources-health or corruption-resources-corruption-resources-education in a developing country is instead transferred to pay for an empty London property that slowly accumulates wealth for the buyer.

Encouragingly, the UK has committed to establishing a public register of company beneficial ownership and to increase powers to seize criminal assets. But more needs to be done particularly in the British Overseas Territories and other ‘secrecy havens’.

Estate agents in the UK aren’t reporting suspicions of money laundering at anywhere near the rate they should be. Out of all ‘suspicious activity reports’ in 2013, estate agents only account for 0.07% of the total. This sector in the UK needs to wake up to its responsibilities.

In December last year we launched a report, Closing Down the Safe Havens: Ending impunity for corrupt individuals by seizing and recovering their assets in the UK that highlights the blocks in the system which are preventing stolen funds being identified, frozen and seized.

The TI movement has also launched a new campaign, Unmask the Corrupt which has kicked off by asking G20 countries to make it impossible for the corrupt to hide their identify behind secret companies. We urge everyone reading this blog to sign up: unmaskthecorrupt.com

And, if Johnson really wants to put Londoners first, we urge him to join TI in calling for more to be done to prevent corrupt money being invested in London’s properties. Londoners deserve better than their city being used as a cleaning closet for stolen money.


Read 10351 times Last modified on Tuesday, 24 November 2015 12:18

Scott Edwards

Scott is TI-UK's Communications Officer. You can view his full bio here.

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