New BBC Panorama exposes failure of UK to stop flow of dirty money
TI calls for police investigation with cooperation from British Virgin Islands

23^rd April 2018, London – Transparency International is calling on the UK National Crime Agency to investigate the London assets of an offshore corporate network at the centre of a new BBC Panorama film.

Using data from the Panama and Paradise Papers, Panorama found a number of individuals named in an Italian Police report into the ‘Odessa oil mafia’ had used a complex network of companies based in the British Virgin Islands – known as “The Rubicon Group” to hide their activities. The leaks show a number of companies in the Rubicon Group have been controlled by Gennadiy Trukhanov, the Mayor of Odessa – Ukraine’s third largest city. Trukhanov is a named subject of a current investigation by Ukraine’s National Anti-Corruption Bureau.

Companies within the Rubicon Group have been used to purchase 8 high-end London properties. It is the secrecy afforded by the British Virgin Islands that has allowed these individuals with questionable sources of income to hide their identities and anonymously channel wealth into seemingly legitimate assets, such as UK property.

The National Crime Agency should investigate the assets owned by this group and consider how to act on them. They should require the cooperation of the British Virgin Islands authorities to help establish the true owners of companies used to purchase these assets and if necessary, apply for one of the new Unexplained Wealth Orders.

Duncan Hames, Director of Policy at Transparency International UK, said:

“This investigation further illustrates the extent to which the UK’s Overseas Territories and Crown Dependencies, are at the heart of a secretive financial system that offers a way for individuals to obscure their identities and sources of wealth. The BVI and other UK Overseas Territories are obliged to cooperate fully with any investigation the National Crime Agency decides to pursue.”

 “These jurisdictions are the Achilles heel of the UK’s defences against money laundering. The Government must not ignore the role of its overseas territories when committing to crack down on dirty money.”

The BBC’s investigation also shines a light on the professional enablers within the UK who help with the formation and administration of shell companies to be used by individuals such as Trukhanov. In the case of the Rubicon Group, one UK based accountant played this role. Despite carrying out these activities and operating within the UK his work is apparently not scrutinised by any formal UK money laundering supervisor – a breach of British money laundering regulations.

Hames, said:

“Time and time again we have seen UK based professionals helping to facilitate the laundering of suspicious funds. In this instance we have an individual creating and selling shell companies on behalf of a group with an extremely shady past. This demonstrates the weaknesses that exist within the UK’s anti-money laundering defences which allow illicit funds to flow through our financial system.”

Following this investigation, Transparency International recommends:

1. The UK Government should immediately bring forward legislation for a register that reveals the real owners of overseas companies used to buy UK property

2. The UK Government should call on the British Overseas Territories and Crown Dependencies to urgently bring their transparency over company ownership in line with UK standards

3. The UK Government should stop agents that are not registered with a UK anti-money laundering supervisor from carrying out regulated activity in the UK

***ENDS***

Notes:

• In response to the investigation by Ukraine’s National Anti-Corruption Bureau, Gennadiy Trukhanov denied any wrong-doing and said “all decisions taken by the city council and executive committee are consistent with the letter of the law”.
• Previous research from Transparency International UK found £4.4 billion worth of UK property bought with suspicious wealth, £762 million of which is owned by individuals from Ukraine.
• Across England and Wales there are more than 86,000 properties owned by companies based in secrecy havens with almost 40,000 in London.