An area of British land more than three times the size of Greater London is owned by secret companies in offshore jurisdictions like the British Virgin Islands, Global Witness and Private Eye revealed today (1). This veil of secrecy makes it impossible to identify who actually owns this land and whether it was bought with clean money, leaving the UK’s housing market wide open to abuse by corrupt politicians, tax evader, money launderers and other criminals. The findings come as the effectiveness of the UK government’s proposals to crack down on tax haven secrecy in the wake of the “Panama Papers” are being closely questioned.
Calls for the UK government to act to crack down on its tax havens are growing, but it has yet to announce any effective measures (2). Over half of the anonymously owned companies listed in the Panama Papers were set up in the UK’s tax havens, or “Overseas Territories,” which means the UK has the power to help address one of the root causes of offshore secrecy and the crimes it enables. It can do this by requiring the Overseas Territories to create public registers of the real owners of companies registered there, as it is doing in mainland UK. This 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 UK Prime Minister David Cameron has said he wants to see.
“This scandal is not just about tax evasion, and the sticking plaster measures announced so far will not fix it. If the owners of property in the UK are hidden behind secret companies registered offshore, it’s impossible to know who they are and where they got their money. We don’t want dictators, tax evaders and other criminals using our property market and banks to stash their loot and launder their cash - it’s bad for our economy, it’s bad for our security and it’s bad for our house prices,” said Chido Dunn of Global Witness.
The Prime Minister has said that he want to see the Overseas Territories create full public registries of company owners, as the UK is going to do. But so far, they have only agreed to set up private registries which are accessible to UK law enforcement. Given the scale of the criminality revealed by the Panama Papers and previous work by Global Witness, UK 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.
The value of UK property owned offshore is estimated to be over £170 billion. Following revelations from Global Witness last year that big chunks of Baker Street are owned by a mysterious figure with close ties to a former Kazakh secret police chief accused of murder and money-laundering, the Prime Minister announced that he would consult on ways to make the UK’s property market more transparent and to stop the dirty money from pouring in.
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 £170bn worth), along with new purchases; and
- Ensure that this register is properly implemented and enforced.
These are promising first steps but they will only be as good as their implementation - and the government has yet to announce what this will look like. Furthermore, this week has shown that action is needed to tackle the systemic cause of this problem.
“Bringing transparency to the UK property market is very welcome, but the government is treating one symptom and not the cause,” said Dunn. “If we want to break our links to terror financing, dodgy dictators and other criminals we have to address the role the UK’s Overseas Territories play by creating public registries of company owners, like we’re getting in the UK. The measures announced so far won’t cut it - as things stand it will be a question of when, not if, the next great corruption scandal hits the UK.”
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