Anti-corruption organisation Global Witness has said that an area of British land more than three times the size of Greater London is now allegedly owned by secret companies in offshore jurisdictions like the British Virgin Islands.
Global Witness reported on data that was leaked to magazine Private Eye, and said the veil of secrecy makes it impossible to identify who actually owns this land and whether it was bought with clean money.
This, it said, leaves the U.K.’s housing market wide open to abuse by corrupt politicians, tax evaders, money launderers and other criminals.
The findings come as the effectiveness of the U.K. government’s proposals to crack down on tax haven secrecy in the wake of the “Panama Papers” is being questioned.
“If the owners of property in the U.K. are hidden behind secret companies registered offshore, it’s impossible to know who they are and where they got their money,” said Chido Dunn of Global Witness.
“We don’t want dictators, tax evaders and other criminals using the British property market and banks to stash their loot and launder their cash – it’s bad for the economy, it’s bad for security and it’s bad for house prices,”
The value of U.K. property owned offshore is estimated to be more than £170 billion, and much of it is owned through companies in U.K. tax havens.
Last year Global Witness revealed that big chunks of Baker Street are owned through offshore companies by a mysterious figure with close ties to a former Kazakh secret police chief accused of murder and money-laundering. Following this, the Prime Minister announced that he would consult on ways to make the U.K.’s property market more transparent to stop the dirty money from pouring in.
Global Witness is calling for the U.K. government to announce concrete measures at the U.K.’s Anti-Corruption Summit on 12 May that will:
- Create a public register of beneficial ownership for foreign companies that purchase land or property in England and Wales;
- Ensure that this register encompasses properties currently owned by foreign companies (estimated at £ 170 billion worth), along with new purchases; and
- Ensure that this register is properly implemented and enforced.
While the government has shown leadership by putting these issues on the agenda, the proof will be in the implementation of any measures announced at the summit.
The Panama Papers have also revealed the role that U.K.-linked tax havens, such as the British Virgin Islands, play in facilitating corruption and money laundering. Over half of the anonymously owned companies listed in the Panama Papers were set up in the U.K.’s tax havens, or “Overseas Territories.”
Global Witness said the U.K. has the power to address one of the root causes of offshore secrecy by requiring the Overseas Territories to create public registers of the real owners of companies registered there, as is happening in U.K. itself.
This, it added, would make it much harder for the world’s criminal and corrupt to hide their money there, and mark a huge step towards the global standard of transparency that U.K. Prime Minister David Cameron has said he wants to see.
The Prime Minister has said that he wants to see the Overseas Territories create full public registries of company owners. But so far, they have only agreed to set up private registries which are accessible to U.K. law enforcement.
Given the scale of the criminality revealed by the Panama Papers and previous work by Global Witness, U.K. law enforcement won’t have the resources to stem the tide of suspect funds. To deter those with something to hide, this information needs to be available to a much wider pool of people, including civil society, journalists and the public.
Global Witness concluded: “If we want to break our links to terror financing, dodgy dictators and other criminals we have to address the role the U.K.’s Overseas Territories play by creating public registries of company owners, like we’re getting in the U.K.
“The measures announced so far, such as private registers, won’t cut it. As things stand it will be a question of when, not if, the next great corruption scandal hits the U.K. tax havens.”
