New Transparency International UK analysis finds £5.9 billion worth of suspicious funds has been used to purchase UK properties through shell companies registered in Britain’s Overseas Territories.

Since 2016, Transparency International UK has identified £11.1 billion of questionable funds invested in over 1,600 UK properties. Of this, more than half of these assets by value (£5.9bn) were purchased using shell companies registered in UK Overseas Territories. The secrecy provided by these offshore financial centres makes them attractive to individuals seeking to conceal the ownership of assets.

The British Virgin Islands (BVI) stands out as the worst offender. Over 90% of suspect funds invested into the UK via an Overseas Territory went through the British Virgin Islands, equivalent to £5.5 billion in value.

This new analysis follows previous 2018 research that identified 237 large scale corruption and money laundering cases, which used corporate vehicles registered in the UK’s Overseas Territories.  In total, these cases amount to £250 billion worth of funds diverted by rigged procurement, bribery, embezzlement and the unlawful acquisition of state assets across 79 different countries. Researchers identified the British Virgin Islands used in 92% of these corruption cases.

Last week, the UK is playing host for ministers from the Overseas Territories to discuss a range of issues, including their previous commitments to implement public registers of beneficial owners. Anti-corruption campaigners warned that despite UK Government’s continued expectation that the Overseas Territories provide the public with access to information about companies incorporated in their jurisdictions, inaction from major financial hubs within the Territories - such as the British Virgin Islands, risks undermining the Foreign Secretary’s campaign to crack down on dirty money

Margot Mollat, Senior Policy Manager at Transparency International UK said:

“Corporate secrecy in the UK's Overseas Territories plays a central role in enabling corruption, money laundering, and the evasion of tax and sanctions on a global scale.

“Our new research highlights the Overseas Territories’ role as global hubs for suspicious and illicit wealth. The secrecy provided by these jurisdictions have made them destinations of choice for corrupt individuals seeking to conceal criminal acts and enjoy the proceeds of their crimes with impunity. Greater transparency is essential to trace these financial flows, not only within the property sector but in the broader fight against corruption and money laundering.

"But as inaction from these jurisdictions continues, the Government should establish clear transparency standards for British Overseas Territories. At the very least, these should be in line with EU practice, granting journalists, researchers, and academics who can demonstrate a 'legitimate interest' full access to registers."

Notes to editors:

• Since 2016, Transparency International UK has been collating information on suspect funds being invested in UK property. The total figure now stands at £11.1 billion. This is an update to the previous figure published in 2022 which found that £6.7bn of suspicious funds had been invested in the UK property market since 2016.
• Of this total, 494 properties – worth £5.9 billion were purchased using shell companies registered in the UK’s Overseas Territories. Of which 475, worth almost £5.5bn, were bought using entities in the British Virgin Islands.
• Our definition of suspect wealth covers allegations at a range of stages, from prima facie evidence of corruption through to successful prosecution.
• In 2022, the UK introduced its Register of Overseas Entities, which requires overseas entities owning companies in the UK to publish the name of their beneficial owner. However, where the overseas entity is held via a trust, this information is currently exempt from publication. The previous government has consulted on this, but the response is still due to be published.
• The scale of money in the UK property sector funnelled through Overseas Territories is just the tip of the iceberg. Our previous 2018 research, using evidence from 237 corruption cases from the last 30 years, found that shell companies registered in our Overseas Territories had been involved in large corruption cases, inflicting £250bn of economic damage across 79 different countries.
• Following public outrage in the wake of the Panama Papers, the UK Parliament introduced the Sanctions and Anti-Money Laundering Act (2018) which required the UK’s Overseas Territories to publish details about their companies’ beneficial owners. According to the legislation, a failure to do so by 2020 should have resulted in an Order in Council, which would have mandated Overseas Territories to open up their corporate registers.
• Subsequent voluntary commitments were made by the Overseas Territories, who accepted to voluntary bring forward public registers if the deadline was extended to 2023, on technical grounds.
• But in December of last year, Overseas Territories argued that a recent European Court of Justice ruling – which found EU public registers to be in breach of data privacy – meant that they would pause their efforts to introduce public registers and follow best practices in the EU granting access to those who can demonstrate a ‘legitimate interest’ by the end of 2024 or in early 2025.
• As a new deadline looms, Stephen Doughty, Minister of State for the FCDO, confirmed that public registers of beneficial owners would be on the agenda during this week’s Joint Ministerial Council.
• Over 40 MPs and civil society organisations have reiterated calls on Overseas Territories to introduce public registers. Gibraltar and Montserrat already have public registers in place.
• Stephen Doughty has previously said that ‘full public accessibility remains [the Government’s] expectation’ and that 'legitimate interest should be delivered to a clear timetable, as an interim step.’ He also said the Government ‘outlined a set of minimum requirements that the UK Government would expect to see in any 'legitimate interest' regime.’
• In its response to a consultation by the Cayman Island on their proposed regulation on legitimate interest, Transparency International UK submitted evidence on what would constitute a good legitimate interest access register – and therefore, genuine progress towards corporate transparency.