Why Cameron’s promise to stop money laundering in London property is a lie

6th August 2015 / United Kingdom

Foreigners must not be able to buy UK homes with “plundered or laundered cash” as part a global effort to defeat corruption, David Cameron has said.

Who is he kidding!

London has become the money-laundering capital of the world with hundreds of billions in stolen funds illegally hidden in the city’s booming property market

Some 36,342 properties in London have been bought through hidden companies in offshore havens and while a some of those will have been kept secret for legitimate privacy purposes, vast numbers are thought to have been bought anonymously to hide stolen money.

One only has to look at HSBC’s private Swiss subsidiary that took deposits between 2005 and 2007 from warlords, arms traffickers, drug dealers, dictators and a host of politicians past and present to see the scale of illegal money moved from one place to another.

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Donald Toon, the director of economic crime at the National Crime Agency, spoke after a spike in receipts from a tax on homes bought up by companies, trusts and investment funds rather than individuals.

The cash-strapped government is hardly likely to stop the cheapest, easiest and most profitable tax take in the country. Toon spoke after provisional tax receipts showed the Treasury had made £142m from the annual tax on enveloped dwellings in just the first three months of the financial year. Think of the stamp duty, renovation work causing VAT payments. The government stands to make hundreds of millions.

Corrupt officials and oligarchs from all over the world can get visas in the UK from the Home Office for a payment of £1million, increasing by over 600 per cent since the Tories came to office in 2010.

Lets take the example of Kazakhstan – a dictatorship utterly mired in corruption. Tony Blair is an advisor to the authorities there because of Kazakhstan’s vast oil reserves and proximity to Afghanistan.

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 mystery owner of a £147m London property empire which included the Elvis and Beatles’ Stores can be linked to a former Kazakh secret police chief accused of murder, torture and money-laundering, new evidence from Global Witness reveals. The property includes 221 Baker Street – where Sherlock Homes would have lived had he and his fictional apartment 221b really existed.

In 2009, an unknown individual acquired a network of offshore-owned companies which in turn invested in £147 million worth of prime property in some of the capital’s most famous addresses. Documents seen by Global Witness reveal how the managers of these companies are linked to Rakhat Aliyev, the former Kazakh secret police chief found hanged in an Austrian prison in February 2015 while awaiting trial for the murder of two bankers in his home country.

Aliyev had previously been convicted of the bankers’ kidnapping in Kazakhstan, and since 2005 faced money-laundering investigations in several European countries including Germany, Austria and Malta. However, this is the first time that the links between Aliyev and London properties have been revealed. The London property transactions went through at the same time as Aliyev’s business interests were being investigated by EU authorities and Interpol. Aliyev died before he could face trial for the crimes of which he was accused.

Increasingly, London’s high-end property market is one of the go-to destinations to give questionable funds a veneer of respectability. This kind of access to the financial system entrenches the corruption that keeps citizens in poor countries poor and threatens global stability.

“Like other great world cities, London appears increasingly attractive to the wrong people for the wrong reasons. Even Holmes and Watson would have their work cut out investigating the suspect cash flooding into its property market, because the system is so riddled with loopholes. Our research shows property is a big blind spot in the UK’s anti-corruption fight, and that has dire consequences. Some of the Gaddafi family’s stolen loot ended up in London – a famous example but far from a one-off. Unless we know who is behind these companies and where their money has come, the cash will keep pouring in,” said Chido Dunn, Senior Campaigner at Global Witness.

It is far too easy for the criminal and corrupt to launder money through luxury property, hiding the real owners behind anonymous companies, often registered in secrecy jurisdictions like the BVI and hidden behind “nominee” directors. At least £122bn worth of property in England and Wales is now owned by companies registered offshore, and 75% of properties whose owners are under investigation for corruption made use of this kind of secrecy. This is probably the tip of the iceberg as it is known that over 100,000 properties are foreign owned in England and Wales.

David Cameron says he is calling for all companies that own UK property to be required to tell the Land Registry who their beneficial owners are, and for the UK to convince the British Overseas Territories and Crown Dependencies to create their own public registers of beneficial ownership. They won’t.

This is just another political ‘sound-bite’ from Cameron as the mainstream press has been looking for somewhere to pin the housing crisis, most crucially in the capital. The Tory party are funded by bankers and oligarchs whose illegal money is hidden in offshore accounts used to buy property in London where visas can be bought – all at the same time, increasing the tax take and depriving its own citizens of their right to buy in a property market that has financially locked them out.

If all the properties in London were forcibly sold as proceeds of crime the housing market would collapse overnight. Successive governments have allowed this situation to build, albeit it has more recently become much worse.

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